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.