By: Simon Brooke
June 26, 2014
Those waiting for the long-predicted explosion of luxury retailing onlines are still holding their breath. While some reports have estimated that global online retail sales have increased by as much as 17 per cent a year since 2007, growth in the effete world of luxury goods is nothing like as fast. Having viewed e-commerce with suspicion for many years, several successful brands have dipped a well-manicured toe in the digital waters-many prompted by the success of Net-a-Porter-but most have held back. Miuccia Prada summed up the sector’s attitude to web sales and e-commerce last year when she declared: “We think that, for luxury, it’s not right…Personally, I’m not interested.”
The new area for growth in luxury retailing is still not internet-based-it’s in the streets and shopping centres. Yes, bricks and mortar are back. In the luxury shopping capitals of the world-London, Paris, New York, and increasingly cities such as Shanghai and Dubai-well-established brands alongside up-and-coming names are opening new locations as well as expanding and refurbishing existing stores. Many are making significant investments: Versace, for instance, has recently sold a 20 per cent stake to private equity house Blackstone so that the brand can develop new venues.
“Luxury brands recognize the reality that only at most 10 to 15 per cent of sales are conducted online and the store, adapted for the future, will always be the main channel of customer engagement,” says Milton Pedraza, CEO of New York-based boutique research and consulting firm The Luxury Institute. “There are many cities across the world that present opportunities in growth for luxury brands and they are selectively opening stores there.”
The Italian trade body Fondazione Altagamma estimates that although online luxury shopping rose by 28 per cent last year, compared with 2012, it still only comprised 4.5 per cent of overall global luxury sales, further evidence that the luxury industry prefers “on street” to “online”. In an industry worth $300 billion, an estimated 90 per cent of luxury purchases still take place in stores.
Click the link to read the entire article which includes quotes from Milton Pedraza, CEO of Luxury Institute: http://edition.pagesuite-professional.co.uk/Launch.aspx?EID=915643ec-109b-4ba4-a154-fc2360651b30