The lux­ury re­tail ex­pe­ri­ence goes some­thing like this: you glide into a glossy, fra­grant store in the nicest part of town; you are greeted and fussed over by ded­i­cated staff; you sip cham­pagne while try­ing on the sea­son’s new looks; you glide out again with some crisply wrapped pack­ages. Surely you wouldn’t swap this for a trans­ac­tion on your smart­phone?

But in­deed, that is what a grow­ing pro­por­tion of lux­ury shop­pers are do­ing – es­pe­cially now that they can con­sult an on­line stylist in the process and (de­pend­ing where they live) have their pack­age de­liv­ered to home or work in as lit­tle as 90 min­utes. With no-fuss re­turns, shop­pers are happy to spend $50,000 on some­thing they haven’t tried on, even buy­ing mul­ti­ple sizes to send back what doesn’t fit. And while the world’s lead­ing lux­ury brands and depart­ment stores have all opened on­line stores in re­cent years, the com­pa­nies win­ning the race for lux­ury shop­pers on­line are, for the most part, purely dig­i­tal multi-brand busi­nesses.

On­line lux­ury sales have gone from €3 bil­lion ($4.5bn) in 2009 to €20bn last year, ac­cord­ing to global man­age­ment con­sul­tancy McKin­sey & Com­pany. That still rep­re­sents only 8 per cent of to­tal lux­ury pur­chases, but the share is pre­dicted to more than dou­ble by 2025 and be worth €74bn. This ac­tual and po­ten­tial growth is re­flected in the fren­zied ac­tiv­ity in the dig­i­tal space, with big on­line play­ers see­ing record sales: Match­es­fash­ has recorded a 61 per cent in­crease in rev­enue in 2016 to £204m ($350m), Yoox Net-a-Porter has seen a 17 per cent in­crease in sales to €1.87bn for the same pe­riod and Far­fetch sold $US800m ($1100m) worth. Far­fetch, val­ued at $US1bn, re­cently hired Net-aPorter founder Natalie Massenet for its board.

But the big­gest move this year has been the lon­gawaited en­try of lux­ury gi­ant LVMH into the multi­brand dig­i­tal space with, an on­line ex­ten­sion of its iconic Paris depart­ment store Le Bon Marché. More than 60 peo­ple worked on the site, spear­headed by for­mer Ap­ple mu­sic ex­ec­u­tive Ian Rodgers, and it was so top-se­cret it was only re­ferred to by its co­de­name Baby­lon be­fore its launch last month. It stocks more than 150 brands, at least 20 of them from LVMH’s sta­ble, and it is the only multi-brand plat­form to of­fer two of fash­ion’s big­gest names: Louis Vuit­ton and Dior. So why have lux­ury con­sumers and brands fi­nally gone on­line? What has taken them so long and what does it mean for the in­dus­try that has his­tor­i­cally traded on its ex­clu­siv­ity?

“The growth that is hap­pen­ing right now in lux­ury is com­ing from the fact that the con­sumer has more con­fi­dence, there is more prod­uct avail­abil­ity and we are be­com­ing more so­phis­ti­cated in terms of how we com­mu­ni­cate with those con­sumers,” Tom Chap­man, founder of Match­es­fash­, tells WISH from his of­fice in Lon­don. “Tech­nol­ogy has largely en­abled this. Mo­bile has a mas­sive in­flu­ence with 65 per cent of our traf­fic and 50 per cent of rev­enue com­ing from mo­bile. That is huge growth from where we were be­fore. We started our busi­ness nearly 10 years ago and where were we then? Ama­zon took 24 days to de­liver a book and Steve Jobs had re­cently made the an­nounce­ment about his new prod­uct: the iPhone. We are see­ing this in­cred­i­ble rate of change in tech­nol­ogy and that is only get­ting faster and faster.”

Tech­nol­ogy is of course the key to many as­pects of the growth of on­line lux­ury shop­ping. Con­sumers now spend the most time on their smart­phones (four times as much as on their desk­tops, ac­cord­ing to McKin­sey) and spend it not only shop­ping but re­search­ing on so­cial media sites like In­sta­gram and Face­book. It is not only the mil­len­ni­als but also the older con­sumer, with baby boomers spend­ing 16.4 hours on­line per week com­pared to the mil­len­ni­als’ 17.5 hours. Bos­ton Con­sult­ing Group has found that 60 per cent of lux­ury sales are dig­i­tally in­flu­enced – and that in­cludes pur­chases in­store. “Gone are the days when lux­ury re­volved around tra­di­tional mar­ket­ing and face-to-face in­ter­ac­tions ex­clu­sively at the store,” the group says.

Tech­no­log­i­cal ad­vances have changed not just what hap­pens front-of-house, but also be­hind the scenes, with

vastly im­proved lo­gis­tics, de­liv­ery times and ease of re­turns. “We ship in 90 min­utes in cen­tral Lon­don, next day to the whole of Europe and the east coast of the US,” Chap­man says. “That kind of de­liv­ery time two years ago just wasn’t a re­al­ity.”

Even more im­por­tant is the ease of re­turn­ing an item, mean­ing lux­ury on­line shop­pers can have the con­fi­dence to buy de­signer ready-to-wear and ac­ces­sories. “Re­turns are a great thing be­cause it means your con­sumer is out there and they don’t have that bar­rier of pur­chas­ing some­thing be­cause they are ter­ri­fied of the re­turns process,” he says. “A cus­tomer who buys two or three pairs of shoes be­cause they want to have one is ac­tu­ally a great cus­tomer for us be­cause that is a cus­tomer with huge po­ten­tial value in pur­chas­ing power. She is able to put all of them on her credit card and ac­cept that they are an easy re­turn.”, a multi-brand site based in Ger­many, has also seen the div­i­dends from ef­fi­cient re­turns. “In re­cent sea­sons we have seen a clear ten­dency to­wards shop­ping ex­tremely ex­pen­sive pieces (Bal­main dresses for €20,000 or Fendi state­ment coats for up to €30,000) as the cus­tomer be­comes more com­fort­able with and trust­ing of on­line shop­ping,” the com­pany says in its pro­file doc­u­ment., which has re­cently hired Aus­tralian Chris Kyve­tos as its buy­ing di­rec­tor, is pro­ject­ing £100m in sales and had a 52 per cent in­crease in mo­bile traf­fic in 2016 on the pre­vi­ous year.

On­line lux­ury re­tail “is go­ing through a ma­tur­ing phase”, Kyve­tos tells WISH from his of­fice in Mu­nich. The Syd­ney boy worked at Har­rolds and set up lux­ury streetwear re­tailer Sneaker­boy be­fore head­ing over to “In the last few years it seemed to be a space where it was all about pages and pages of on­line mer­chan­dise more than it was con­nec­tiv­ity and con­ve­nience. I feel like it is now go­ing through a bit of a clean-up.” A lux­ury web­site is now more like a bou­tique, he says, with a care­fully cu­rated col­lec­tion of cloth­ing, but with the in­fras­truc­ture of a depart­ment store be­hind it.

Tech­nol­ogy is also al­low­ing com­pa­nies to con­nect with con­sumers more than ever, whether through their pur­chas­ing sys­tem, In­sta­gram or cus­tom apps. Chap­man, who started his busi­ness with a sin­gle bou­tique in Lon­don in 1987 be­fore mov­ing on­line a decade ago, says Match­es­fash­ has in­vested in a tech­nol­ogy lab­o­ra­tory and built a mo­bile sales sys­tem that al­lows a “sin­gle view” of the con­sumer wher­ever they are. “If we come to Aus­tralia and do a pop-up or if they are on the phone or if they are in the re­tail store in Lon­don, the sales­per­son has full knowl­edge of the cus­tomer in­ter­ac­tions with us,” he says. “Whether they have vis­ited us on­line or re­turned an item, they know ab­so­lutely ev­ery­thing about that cus­tomer. And it is this sin­gle view of a cus­tomer that is cen­tral to us and is the cen­tre of ev­ery­thing we do.”

The other emerg­ing trend in this field is that it is not a choice be­tween bricks-and-mor­tar stores and dig­i­tal – cus­tomers want both and more. They may look at the prod­ucts on­line and then go into a store or vice versa. The may want ed­i­to­rial con­tent on web­sites (and even phys­i­cal mag­a­zines as Net-A-Porter has done with Porter) or ac­cess to an on­line stylist or cap­sule col­lec­tions or fash­ion shows.

Far­fetch chief strat­egy of­fi­cer Stephanie Phair tells WISH that phys­i­cal stores are not go­ing away, but com­pa­nies need some dig­i­tal con­nec­tion with the cus­tomer. “Dig­i­tal is ev­ery­where and cus­tomers en­gage with it at all points in their jour­ney,” Phair says. “It is no longer the case that brands or re­tail­ers need a web­site in silo; rather they must think about how can they put the cus­tomer at the cen­tre of their ex­pe­ri­ence.” Chap­man also refers to the dif­fer­ent parts of his busi­ness not as dig­i­tal or phys­i­cal but just as cus­tomer “touch­points”. “Our fo­cus is re­ally driv­ing as many cus­tomer touch­points as we can be­cause the greater num­ber of touch­points we have with the cus­tomer, the greater re­ten­tion rate we have with them,” he says.

The other big factor that is driv­ing more peo­ple on­line – and to multi­brand sites – is con­ve­nience. Ac­cord­ing to McKin­sey, al­most 40 per cent of cus­tomers do re­search for pur­chases on multi­brand sites (up one per cent on the pre­vi­ous year) com­pared with 31 per cent on of­fi­cial brand sites (down 12 per cent). “Multi­brand web­sites are ex­pected to cap­ture a greater por­tion of the growth in on­line lux­ury fash­ion as sin­gle-brand sites have more lim­ited growth po­ten­tial,” the re­port says. “Multi-brand e-tail­ers al­low large lux­ury brands the op­por­tu­nity to reach both time-pressed cus­tomers who don’t have time to shop on mul­ti­ple mono-brand sites and more ru­ral cus­tomers who aren’t eas­ily able to visit ur­ban bou­tiques.”

But with such growth (and po­ten­tial) in the lux­ury on­line shop­ping space comes in­creased com­pe­ti­tion and a few fail­ures along the way, most no­tably the re­cent ven­ture by Vogue pub­lisher Condé Nast, whose foray into on­line shop­ping,, did not even last a year. Ac­cord­ing to McKin­sey & Com­pany’s global head of lux­ury, An­to­nia Achille, it is the age of dig­i­tal Dar­win­ism in the world of lux­ury on­line.

“The bat­tle has just be­gun: more scal­able, ag­ile and tech­nol­ogy-savvy e-tail­ers are emerg­ing,” she re­cently wrote for the Busi­ness of Fash­ion web­site. “Dar­win­ism will claim its vic­tims. E-tail­ers need to run faster than the wind and only the ones grow­ing at 50 per cent plus year-on-year while main­tain­ing an ag­ile, in­ven­tory-light model will gen­er­ate su­pe­rior share­holder value.”

So what hap­pens next? Ac­cord­ing to Phair, the lux­ury world will keep evolv­ing as the tech­nol­ogy does, but it will al­ways be about ex­pe­ri­ence. “In 20 years, it may be that the idea of a dis­tinc­tion be­tween phys­i­cal and dig­i­tal will be com­pletely alien to cus­tomers – even so far as no one un­der­stand­ing (or re­mem­ber­ing) that once upon a time stores did not have a dig­i­tal point of ac­cess, or con­versely that web­sites did not have a phys­i­cal point where cus­tomers could en­joy the re­tail ex­pe­ri­ence and am­plify it.”

Chap­man takes this con­cept one step fur­ther, hav­ing come back from a tech­nol­ogy con­fer­ence where all the talk was in­ter­net/vir­tual re­al­ity in your glasses – your nor­mal specs, that is, not Google Glass. “We have to re­main ag­ile and em­brace these things,” he says. “We can’t be paral­ysed by fear.” W

“In 20 years, it may be that the dis­tinc­tion be­tween phys­i­cal and dig­i­tal will be com­pletely alien to cus­tomers.”

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