E-commerce and digital presence is one of the hottest topics of 2015 for all luxury brands, regardless the size and country of origin. Indeed, luxury sales realized online have increased significantly in 2014 reaching 14€bn, a rise of +50% vs. 2013 according to the latest research of Altagamma & McKinsey Digital Luxury Experience observatory. Impressive? Not really if we take into consideration that online sales of luxury goods is expected to triple to €70 billion by 2025, making E-commerce the world’s third largest luxury market, after China and the United States.
Online sales represents currently 6% of the global luxury market for personal goods and it is likely to grow up to 18% within the next 10 years. The merger of Yoox and Net-a-porter, the increased visibility of platforms selling luxury products like Farfetch, Gilt or Mytheresa, the recent boom for e-shops of iconic luxury brands shows that E-commerce is in its fastest stage of development. And it is just the tip of this digital iceberg as digital technologies impact not only sales but also luxury consumers’ attitudes and behaviors. Therefore, the question is no longer if and when luxury brands should embrace the digital opportunity, but how they should do it.
Recent key facts about online sales of luxury goods:
- The higher price point, the smaller share of E-Commerce in global sales of a luxury brand. For high-end brands such as Dior, Chanel, Cartier the share of online sales is just about 3.6%. For aspirational luxury brands (Burberry, Michael Kors) this share increases significantly from 7.5 to 8.5%.
- Digital is now the engine of the whole luxury shopping experience. 3 out of 4 luxury purchases, even if they still take place in stores, are influenced by what consumers see, do and hear online.
- Nearly all luxury buyers have at least one personal device such as smartphone or tablet. Globally, the figure is 95% and in most mature countries, it is 100%. These figures reveal a much higher rate of ownership than that of the general population, where an average of 60% of US adults have a smartphone.
- Luxury brands own websites, which represent 25% of online luxury sales, and the online offering of leading department stores are the fastest growing E-channels. On the other hand, sales at multi-brand full price or off-price sites have been less dynamic that in the past.
- The most active e-commerce categories are: beauty products and ready-to-wear fashion, both with 7.2 % of sales online, followed by accessoires at 6.2% and watches & jewelry with only 4.1%.
- Luxury shoppers are highly digital, mobile and social. 80% of luxury shoppers use social media on a monthly basis, whether it’s Instagram, Facebook or Twitter. Half are weekly users and more than 25% are daily social media users. Due to this fact luxury consumers have extremely high expectations for what they want in a multi-channel shopping experience. Luxury consumers are gaining more and more power relative to luxury brands. This raises the question of who is really creating the message defining the brand identity – the brand itself or its consumers.