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Luxury giants now looking to increase their digital programs to boost web sales significantly

by Giulia Crivelli

“Up until three or four years ago, luxury brands didn’t have a digital program. Being present on social networks, e-com merce, and multichannel systems weren’t considered priorities. Not anymore: seeing as how the Internet has sped up, the investments that began in 2013 are already showing excellent results.”

This is how Marco Pozzi, senior advisor at Contactlab, introduced the results of the fifth edition of the Digital Competitive Map (created together with the analysts at Exane).

It’s an honest-to-goodness map of digital behaviors—in particular, the ways that e-commerce is approached—based on a sample of 32 luxury brands. Italian brands (14 in total) are the most represented overall, with Armani, Bottega Veneta, Brunello Cucinelli, Bulgari, Dolce&Gabbana, Fendi, Ferragamo, Gucci, Loro Piana, Moncler, Prada, Tod’s, Valentino, and Zegna.

Eight more are French (Balenciaga, Cartier, Céline, Chanel, Dior, Hèrmes, Saint Laurent, and Louis Vuitton); the others are Burberry, Hugo Boss, Michael Kors, Ralph Lauren, Ray-Ban, Tiffany, Tory Burch, and Swatch.

“Burberry still retains its digital leadership in 2016, followed by Tory Burch and Louis Vuitton,” said Pozzi. “But the Italian brands have had the greatest improvements, with Dolce&Gabbana, Fendi, and Ferragamo; the most-improved foreign brands were Michael Kors, Hugo Boss, and Chanel. In order to create the Digital Competitive Map, we use hundreds of parameters and this year, for the first time, there’s been a real surge forward in ‘cross-channel’ services—like the ability to exchange or return products in stores, or the ability to make appointments in real stores, maybe to personalize an order.”

The digital leadership isn’t just gained by investing in platforms, logistics, or dedicated personnel, but also by studying the geographical characteristics.

“In the United States, the percentage of online sales to overall sales is already 20%, a goal that everybody should aim to reach, whereas the current global average is 6-7%. Increasing your range isn’t enough to triple your turnover; you also need to concentrate on the clients’ needs, which vary from country to country,” said Contactlab’s analyst Pozzi.

The most significant case is China, where the brands have to improve their “style suggestions” and delivery options.

“There are still very few luxury brands that sell to the Chinese online, as they prefer to go to local e-retailers that guarantee real-time styling services and extremely quick delivery times. Aside from YNAP—which has invested a great deal in Asia and has a logistics center in Hong Kong—for the Chinese or other people from East Asian countries, buying from a European site means waiting a long time,” explains Marco Pozzi.

Further improvements can be made through synergy with the social networks. “They need to be active and produce content, and even in this case, Dolce&Gabbana had the best performance of 2016. Directly linking users to the e-stores is crucial: only 50% of the Instagram and Twitter accounts do so.”

This is a missed opportunity, as was the failure to train in-store personnel to help clients who have left the digital realm for the real world. It doesn’t matter if the client prefers to buy online or offline: if treated in the right way, with exceptional availability and no delays, they end up spending 50% more per year on luxury goods (according to Contactlab/Exane).

“The proof that the company leaders consider the Internet a priority can be seen by the way that the websites have been completely restyled,” concludes Pozzi, “In 2016, Brunello Cucinelli and Zegna revolutionized their online presence by taking everything in-house. So did Dolce&Gabbana, which left YNAP for the Level Group, and Balenciaga, Burberry, and Fendi.”