LVMH’s digital drive takes time despite Apple hire

PARIS: When LVMH hired former Apple music executive Ian Rogers to craft a digital strategy, investors may have hoped for some quick results. If so, they are probably disappointed.

Almost a year later, aside from drafting in more digitally-savvy people and taking part in a technology start-up fair, his impact on the world’s biggest luxury goods group has yet to become visible.

Changing mentalities and priorities at LVMH takes time, according to sources close to the 78 billion euro ( US$ 88 billion)group controlled by France’s richest man, Bernard Arnault.

LVMH’s online strategy appears inconsistent across its more than 70 businesses and brands. Some labels such as Louis Vuitton and Fendi have made great strides along with cosmetics retailer Sephora, but Celine stands out as an apparent laggard.

Arnault hired Rogers, a 44year- old American who once worked with the Beastie Boys hip hop band, to challenge the digital mindset of his executives.

Rivals Prada and Hermes are revamping their websites to offer a wider choice of products and communicate better about the brand with videos, photos and drawings, on top of other digital content.

Online sales have become the industry’s most important engine of growth.

Analysts expect internet transactions will represent 20 per cent of all luxury sales in a decade, up from 7- 8 per cent now. LVMH’s total online sales are less than 5 per cent, they estimate.

Adapting to the Web, to sell and communicate with customers, is a challenge for many in the business.

Chris Morton, chief executive of Lyst.com, a multi-brand online luxury retailer in which Arnault’s family investment company has a small stake, said no company in the industry could afford to ignore the Web.

“A luxury brand that avoids the internet is effectively refusing to engage with its customers where they are increasingly spending time and money,” he said.

“It is not listening to what its customers want, which is dangerous in any consumer-facing industry.”

More than 60 per cent of luxury goods purchases, online or instore, depend on what customers see on the Web about the brand, analysts say.

“The question is no longer whether luxury brands should enter the digital world, but how,” said Nathalie Remy, partner at consultancy McKinsey. — Reuters