Italian luxury brands finally see value in online

Visiting one of Italy’s temples of high fashion on Milan’s exclusive Via Montenapoleone can be a daunting experience. The uniformed doormen, impeccably groomed staff and eye-watering price tags generate an aura of exclusivity that could easily deter the more casual browser.

However, increasingly there is an alternative. The latest Prada gown, Dolce & Gabbana floral bikini, and other Made in Italy items are becoming more readily available online as Italy’s luxury houses aggressively, and belatedly, embrace e-commerce.

It has been a slow start. Concern over counterfeiting and the protection of brand image has led to a dogged focus on bricks and mortar stores. Now sluggish sales, and the need to attract the Millennial customer, who is forecast to make up 45 per cent of the market by 2025, has forced a change of heart.

Last year, the “core” personal luxury goods market globally was flat at €249bn, marking the third consecutive year of modest growth at constant exchange rates. Growth through to 2020 is seen at a modest 3-4 per cent a year. But, within that, pure online sales, now just 8 per cent of the total, are expected to jump to €74bn by 2025, making up a fifth of overall consumption, according to a report by Italian luxury industry association Altagamma, compiled in association with McKinsey.

It’s not just pure online sales either, analysis shows that even if the item is not bought online, the internet influenced some 74 per cent of sales, the report said.  

Almost all luxury customers have smartphones, so the latest buzz in the high-end retail sector is “omni-channel”. Brands are seeking smoothly to integrate online, mobile and retail store experiences, allowing the client to buy online and pick up in a store, have the goods delivered online, or to browse online and buy in the shop.

The success of the Italian e-tailer Yoox, which merged with Net-a-Porter in 2015 to become online luxury powerhouse YNAP, has also helped to improve confidence among reluctant luxury brands. Armani, Valentino, JustCavalli, Emilio Pucci, Moschino and Moncler are among the Italian names that have entrusted Yoox to manage their online stores.

YNAP continues to lead the way in luxury e-commerce, introducing innovations such as personalised shopping services for ultra-high-end clientele. The delivery man will wait while you try on that red Valentino ballgown in the comfort of your home, and take it back if it doesn’t do the job.

Milan-listed fashion giant Prada overhauled its digital strategy last year, hiring a new team fully dedicated to e-commerce. It is rolling out in China, South Korea, Australia, New Zealand and Russia by the end of this year, with more countries to follow. China is fast becoming a huge luxury market online.

Last year’s sales give an idea of the potential. Prada’s overall revenue fell 10 per cent to €3.14bn, but its wholesale division, which accounts for 18 per cent of the total, gained 15 per cent. This was mainly due to e-tailer partnerships with products launched on Net-a-Porter and in July and in September.

Fendi, an Italian brand now owned by the LVMH group, has also upped its e-commerce game and was awarded the “best improver” in the Altagamma Digital Luxury Awards. It has focused on improving content, mindful of the need to create a buzz and story about its designs. The site takes the viewer straight into the catwalk show, where models wearing the latest in mens’ floral blazers strut confidently about.

To be sure, putting luxury fashion online does create challenges. Brands need to replicate the luxury experience in stores. A client paying more than €1,000 for a shirt expects it to arrive in the same elegant packaging it would receive in the store. And  online experience is all about the ease of returns. For those who didn’t think they could buy shoes online, for example, they have learnt simply to buy four sizes and send back the three wrong ones.

At present the UK’s luxury houses are leading the pack online, though others are moving fast to close the gap. For the consumer, the ease of ordering from an office in Shanghai may just outweigh the pleasure of that après shop prosecco.