Luxury
brands place a large emphasis on being customer centric, innovative, and
continuously improving quality. Luxury brands pride themselves on their brand
image. For example, even though two scarves may appear similar, the label
dictates so much: price, prestige, value, and image.
So where are people turning to buy
these products? Well, no longer do you have to travel to Italy to buy an
Italian leather product or travel to France to buy a premium scarf. With the
age of the internet these products can likely be found online. However, believe
it or not, there are still some fashion brands that don’t sell their products
online. Labels like Chanel, Céline, Hermes and Dior still require that customers
physically go to the store to purchase most, if not all, of their clothes and
handbags. So, if more and more customers are turning to the internet to make
their purchases, why have some brands refused to embrace e-commerce and
seemingly given up this potential opportunity?
University of Pennsylvania’s
Wharton School of Business article entitled “Selling Luxury: How High-end
Brands are Embracing the Internet,” sheds light on this question. The article begins with this paragraph,
“Online shoppers won’t find a price or an ‘add to cart’ button when they visit
the website of iconic watchmaker Patek Philippe. The most prominent visual on
the home page is not a limited edition timepiece but a commercial featuring a
father congratulating his son for winning a cricket match. The ad ends with the
slogan: ‘You never actually own a Patek Philippe. You merely look after it for
the next generation.’” Patek Philippe’s website is atypical. While you can read
about all the models, there is no way to purchase the product from the website.
And although it may seem like this strategy would hurt the brand and diminish
sales, Wharton marketing experts see it as “an excellent example of how some
high-end retailers are dealing with a dilemma born of the digital age.”
“Luxury is about scarcity,
exclusivity. The internet is about mass and reducing those boundaries, and so
it’s a real conflict,” said Barbara Kahn, a Wharton marketing professor and
director of the school’s Jay H. Baker Retailing Center. In the beginning of this blog, I mentioned
that luxury brands are unique. Luxury brands require a special type of
marketing. If you were able to go online and purchase a Burberry handbag on
clearance or from any retailer, you would likely begin to question the brand
and the image it is conveying. But if these luxury brands aren’t changing with
the times and adapting to the internet, are they missing out on sales? In
actuality, no. Wharton states that only 10% of sales in this market actually
happen online.
It is really all about the type of
business model the luxury brands choose to utilize. For Chanel, “fashion is
about clothing, and clothing you need to see, to feel, to understand.” And, the
marketing director at Dior stated that ready-to-wear items that are placed on
the internet are mainly used as a tool to market the label’s other goods. These
ready-to-wear items really only make up a small portion of the revenue for the
luxury brand. The other argument for not putting luxury brands on the internet
is to preserve the brand. Unlike brands in other industries, such as CPG,
Insurance, or Pharmaceutical, luxury brands do not always have the goal of
increasing sales. Often they want to preserve their brand image for years to
come. By maintaining the brick-and-mortar stores, luxury brands continue to
build relationships with their customers. They create a bond with them, they
get to know their likes and dislikes and can customize their products to each
person’s unique needs. Luxury is all about looking after the products for the
next generations, and while the internet may be beneficial for some products,
luxury brands will likely continue to be wary about placing their product on
the internet for the masses.
Source
One has experience working with numerous luxury brands. We understand their
unique nature and realize they require specialized services, management, and
marketing. Through a suite of procurement outsourcing, market research,
strategic sourcing, and consulting services, Source One will give your brand
the individual attention it deserves, allowing you to reach new markets, expand
into alternate luxury segments, or accomplish any other objectives identified
for your company.
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