He rates the online operations of key players like Net-A-Porter, Mytheresa and Matchesfashion highly, but he says too many brands are falling behind.Yet Wolff also feels that while it’s easy to criticise luxury brands for being slow to the online party, their reticence has been understandable, as has the variable quality of user experiences on their sites.
“Historically luxury businesses believed that their proposition was better suited to a store experience and were slow to invest online. You can understand that because online takes away exclusivity and luxury has always been built around exclusivity,” he told FashionNetwork.com. “There is now a realisation that consumers are prepared to buy [luxury] online as opposed to a belief just a few years back that consumers never would. It’s taken quite a while for thinking and culture to change [but] that’s clearly been put to bed now.”Yet many leading brands still don’t operate their own webstores and also don’t have the in-house skills and capabilities that many omnichannel retailers further down the price scale have developed.CHANGE AHEADHowever, that could be change fast as online becomes an increasingly important part of the luxury sector.In fact, Wolff says that while current estimates are that it accounts for only 9% of the luxury sector, lagging the mass- and mid-markets: “The latest forecast for 2025 is looking at maybe up to 25% online penetration, still behind the main clothing and footwear market, which in the UK is already at least 20%, but 25% will be a substantial number.”And already today, that 9% figure masks a much healthier performance in some categories with beauty one of the growth drivers and handbags and other accessories also doing well online.So what will drive the market to that 25% level? Wolff thinks it will be a mixture of consumer demand and the brands themselves. “Consumers are ahead of the luxury brandsคำพูดจาก สล็อตเว็บตรง. Even if they want to buy in-store, they will use the website to research online and some of the stats suggest that up to 70% of consumers are going online first,” he says.Wolff believes that this could mean there’s change ahead at those brands that currently use third-party webstore companiesคำพูดจาก สล็อตเว็บตรง. While Yoox Net-A-Porter and others have built a strong business of running stores for other brands (some of them really big names), he expects more labels will want to fully control their brands themselves.
Not that companies like YNAP will take this lying down and they’re already ramping up their efforts to retain big brands that have the resources to go solo.Its 10-year relationship with Valentino is moving up a notch with the Next Era project set to make the brand experience truly omnichannel. That’s something third-party sellers had not previously been able to offer and it’s likely to spread to further brands in the future.But many labels, as their online business grows, will still want to take that business in-house. The consumer journey has many touch points and as omnichannel becomes ingrained in brand thinking, “the luxury brands [will] need to control as many of those touch points as possible,” Wolff says. “That influential part, that ROPO Journey as we would call it (research online purchase off-line) is actually more important than the transactional elements of the site,” he adds, giving a further reason why luxury labels would want to control their websites in-house.SLOW JOURNEYSo why has it taken so long to reach this point? “Luxury brands holding back earlier was understandable because it wasn’t always clear that the market existed and so labels had little way of working out whether any investment in online would be worthwhile,” says Wolff.“The reason they have taken on many of these third-party turn-key services is that luxury brands didn’t want to make the upfront capex investment required to build an omnichannel business, they didn’t really know the scale of business they would be likely to have.”And he still sees plenty of growth potential for such services even if many big-name brands decide to go it alone. “They provide a useful service for brands at the beginning of their e-commerce and omnichannel journey,” explains Wolff. “The challenge comes when these brands are at the stage where they want to take control and they have a better idea of the scale of business they have and more understanding within the business. It’s still quite a major step to then take control and create all the skills and infrastructure required to run your own business… but the larger brands absolutely should be doing that.“There’s an interesting tension here in that third-party operators really want the bigger brands with the prospect of higher volumes rather than small brands where there is a higher set-up cost and minimal ongoing volume. When you move to a third-party, typically they want to contract you probably for five to seven years because they recognise that volume is going to come maybe in year three or four and they don’t want you moving on at that point in the lifecycle. That’s a challenge for all third-party operators, not just in luxury retail.”And we might we see even more challenges to their luxury goods model in the future as brand-owning groups take their e-commerce operations in-house not just for single brands, but for the entire group. After all, LVMH’s 24 Sèvres is a good example of a luxury brand owner diving deep into e-commerce and selling its brands online.
But Wolff says we are not seeing a pure version of that model just yet: “24 Sèvres has set up a business that is not just their own brands but other brands as well. Effectively they’re going into direct competition with Net-A-Porter or Mytheresa. But yes, there is an opportunity for groups like Kering, Richemont and LVMH to think about a group operating model for e-commerce while the front-end, the consumer-facing experience, is very much part of each individual brand.”He thinks there is definitely mileage from a group point of view, in having a single e-commerce technology platform, a shared contact centre and warehousing requirements, and other skills and capabilities that are provided at a group rather than a brand level. Clearly, the whole online luxury sector is in a major state of flux at present and there will be lots of change ahead. But whatever model brands choose, Wolff thinks they need to keep one key point in mind. “The brands need to be taking more ownership of their destiny and thinking about what their e-commerce and omnichannel business looks like,” he says.