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- 24 Jan 2009
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The Internet: The upside of the downturn

The next few months will prove particularly difficult for the luxury industry as the realisation sets in that the so-called ‘recession-proof’ luxury consumer isn’t so ‘recession-proof’ after all. 

In truth, no one knows how long it will take to work our way out of this economic quagmire, nor what the landscape will look like afterwards. It’s probably safe to assume, however, that it will be very different to what we’ve become accustomed over the past ten years, or so. 

Geographic expansion, especially via the construction of bright, shiny flagship stores in far-off places is expensive.  So too are the glitzy, theatrical fashion shows that have come to define New York, Paris and Milan fashion weeks and that are closely tied to the image of many luxury brands themselves. Luxury brands may have little choice but to look beyond traditional methods of marketing and distributing their goods.  Perhaps this would be an opportune time to start reconsidering their scepticism vis-à-vis the internet.

This scepticism is nothing new to Natalie Massenet. At Net-a-Porter’s bustling London headquarters, the online luxury retailer’s Founder and Chairman openly admits that when she first told people back in the late Nineties of her plan to sell full-price luxury fashion brands on the internet, she encountered her share of naysayers. In fact, many told her it simply couldn’t be done — but she pushed on.

Net-A-Porter website

“My idea was based on nothing more clever or complicated than the belief that if I wanted to shop online for beautiful clothes, other women did too,” she states matter-of-factly. “I assumed it already existed, so I kept looking up websites recommended in leading fashion magazines and I would find these mom and pop-type sites that didn’t look professional, and I kept thinking ‘Is this it?’ I decided then that it should exist. And when no one else wanted to do it, I decided to do it.”

The growing popularity (not to mention influence) of Net-a-Porter has confirmed Massenet’s initial instincts. But, she concedes, there are still a number of luxury labels Net-a-Porter would love to carry which (for now) are just not ready to take the plunge.

One would think that an industry consumed by expansion and the need to keep selling more products to more people would see in the internet as an excellent opportunity. What better, more cost-effective way to expand a brand’s customer base and geographical reach than selling its products online? Yet, judging by their websites, many luxury brands seem to consider the internet as little more than a platform to display their products – nothing but a high-tech brochure. 

90_alex-bolen_medium Alex Bolen, CEO of Oscar de la Renta, a brand renowned for form-fitting cocktail dresses and exquisitely crafted ball gowns, attributes the luxury industry’s reluctance at least in part to the fear of losing control.  

“We’re control freaks,” he bluntly declares. “We’re accustomed to controlling every aspect of the process from product, to presentation, to message whereas the dynamics of the internet fly in the face of this. The loss of control can be off-putting.”

Unlike many luxury executives however, Bolen is enthusiastic about the use of the internet to develop the Oscar de la Renta brand. As far as he’s concerned, the loss of control and the risks associated with the internet are well worth it, for what he describes as “the opportunity to engage with the customer front and centre without any filters.”

An oft-heard justification for the lingering scepticism regarding online luxury is the inability of brands to reproduce what is referred to as ‘the luxury experience’ — that particular magic associated with shopping for luxury goods in a gorgeous store where every detail has been designed to enhance a shopper’s experience.

However, both Bolen and Massenet seem to agree that it’s not so much about recreating the same experience online, than it is of creating a new, exciting way of discovering the products that is different, but equally as pleasurable for the customer. 

Massenet likens it to re-programming our Pavlovian responses. “Instead of getting excited when you walk through the doors of your favourite boutique, you get excited by clicking on your favourite item and the ‘Purchase Now’ button.” She also suggests that for many women, the process is less important than the end result. “It’s about getting the beautiful product; the dress or the bag or whatever it is they want.”

While it may sound simple enough, there is considerably more to a pleasurable online shopping experience than meets the eye. Both Oscar de la Renta and Net-a-Porter have invested significant thought and money behind-the-scenes to ensure a smooth process for the sites’ customers. 

Online customers at Oscar de la Renta have access to personal shoppers to advise them on proper fit. For its part, Net-a-Porter works closely with brands on issues such as quality control.  “In some instances, we’ve actually identified problems and worked with individual brands to correct quality and sizing issues. When our client opens the box, we want her purchase to be absolutely perfect,” explains Massenet. 

84_nap-box_medium Then of course, there is that distinctive black packaging immediately recognizable to the fashion cognoscenti. “It’s the most beautiful packaging in the world,” she says. “It’s expensive for us, but it’s an important part of the experience for our customers.”

These investments appear to be paying off. Massenet recently added coveted names like Lanvin, Balmain and Givenchy to her roster of fashion labels. Plans are also afoot for opening a distribution centre in Asia to extend same-day delivery service to its customers in the East, a perk already available in London and New York City.

At Oscar de la Renta, a customer recently purchased a sable coat worth a cool US$120,000 from the brand’s online store (with the gentle nudge from a personal shopper). 

Taking into account that roughly a decade ago, the internet was essentially a marketplace for little more than books and bargain hunting, attitudes and shopping behaviours are changing quickly.

These successes are not isolated. In the U.S., Comstore data shows that while online sales dipped in November, Cyber Monday sales actually rose 15 percent over 2007 to $846 million. Similarly, Drapers reported that online shoppers in the U.K. spent upwards of £1 million in one minute, leading retail trade body IMRG to predict a 15 percent increase in final quarter online spending over last year. And, a study of online shopping behaviour of French consumers released by Xerfi, a market research firm, anticipates a 10 percent increase in online transactions over the course of 2009, even while household spending remains virtually stagnant.

These numbers are in stark contrast with overall performance reported by high-street retailers where even deep discounts on everything from consumer electronics to premium and luxury apparel have yielded disappointing results. It’s clear that what we’re witnessing is a gradual, but sustained shift in buying behaviour. But, the potential for online innovation doesn’t stop at shopping.  The opportunities to seduce the customer, build brand loyalty and indeed redefine ‘the luxury experience’ are continuously evolving.

Halston’s fall 2008 collection
For instance, Net-a-Porter broke new ground in February 2008 when customers were offered the chance not only to watch the Halston runway show on its site, but also to purchase key pieces from the collection the very next day. To a committed follower of fashion with no hope of snagging a prized invitation to New York Fashion Week, that’s tantamount to bringing the mountain to Mohammed. It’s also about as close to instant gratification as one can get in fashion retail terms.

The concept was repeated recently when Net-a-Porter teamed up with Alexander McQueen to offer pre-registered customers an exclusive opportunity to view a ‘private’ runway show and purchase eight looks from the Pre-Spring 2009 collection, a full two months before the items were available elsewhere. Judging by how quickly some of the pieces sell out following these events, in a matter of hours in a few cases, even a hardened sceptic would have to concede that well-orchestrated internet-based initiatives such as these deliver like no traditional trunk show or private sale ever could.

87_viktorandrolf_medium Rapidly evolving technology also offers brands tremendous potential to unleash their creativity and redefine the manner in which they interact with their customers. In September, Dutch design duo Viktor & Rolf replaced their traditional live runway show with a slick virtual runway presentation, streamed on their website, enabling average customers around the globe to log on and discover their collection at the same time as the likes of Suzy Menkes and Anna Wintour, fashion’s most important editors.

“We were in the mood for something slightly hyped up, something nervous, like walking on fire. Something like a video clip, more than a fashion show,” explain the designers. 

From the perspective of a customer, the experience of discovering the collection for themselves without the usual filter of a fashion editor’s opinion is immensely empowering. Just imagine if customers had been able to click a button and place an order right there and then?

While scepticism remains, it is clear that the internet is a valuable tool for redefining the luxury shopping experience. It also presents an opportunity to adapt and survive during what looks increasingly like a long and deep recession. Under these circumstances, those luxury brands that are still holding out can no longer afford to do so.

Helene Le Blanc



Oscar de la Renta


Alexander McQueen Private Show

Viktor & Rolf Virtual Runway