Have you got more than a few minutes to spare? This report is pretty long (for a blog post anyway). It may be telling us something we think we know already but it should make scary reading for many people working in luxury goods.
The fact is, too many high-end designer brands could do one helluva lot more when it comes to providing a luxury experience to customers who buy products online, according to new research from fashion and luxury brands specialist ContactLab.
Ok, that’s not exactly be a revelation but after the recent L2 report that slammed the digital offer of some top luxury labels, it’s certainly an additional wake-up call.
ContactLab said luxury brands could actually be losing consumers who aren’t satisfied with their service. And it found that two of the worst offenders for not getting digital right included a fashion brand seen as the most innovative design-wise and a jeweller that really should know better (more of them later).
How they did it
The Online Purchase Experience Ranking report, produced by ContactLab in conjunction with Exane BNP Paribas, certainly makes interesting reading.
The reseracher’s analysts developed 67 parameters to measure the service offered by luxury retailers from online ordering, to delivery, as well as packaging and returns.
It looked at 29 recognisable global luxury brands, including four major e-tailers and it wasn’t impressed!
So what’s the story? It wasn’t about flashy digital features. Instead the team studied the consumer journey by purchasing two items from each brand, one for men and one for women, analysing each individual step. Those items were a men’s cardholder and a women’s belt, not hugely valuable compared to many other items on the luxury sites and so unlikely to trigger any extra special service.
The brands examined included Gucci, Louis Vuitton, Prada, Burberry, Hermès, Cartier, Tiffany, and Armani, among other leading luxury players.
Winners and losers
The top five brands by physical touchpoints such as delivery, packaging, documentation and returns were brands Fendi, Cartier, Louis Vuitton, and pureplay e-tailers Mytheresa and Mr Porter. Funnily enough, digital star Burberry was only 12th highest.
The top five by digital touch points such as abandoned carts, ordering, and purchasing and returns communications were Balenciaga, Net-a-Porter, Saint Laurent, Zegna and Armani. This time Burberry wasn’t even in the top half of the list.
So who came bottom? For physical touch points it was Givenchy, Prada, Valentino, Armani and Tiffany. Prompting the question how can Tiffany get it so wrong when jewellery peer Cartier gets it so right?
And for digital touch points it was Hermès, Ferragamo, Loro Piana, and once again, Tiffany and Prada.
So it looks like they’re the kids in the corner with the digital dunce’s cap on.
ContactLab CEO Massimo Fubini said: “There is definitely work to be done in the luxury sector. Consumers pay a lot of money for products from these luxury brands and they expect the whole experience to have that luxury feeling, from the moment they order the item to the moment it arrives at their door. Brands must go that bit further at every single stage of the consumer journey, but very few are fulfilling their full potential.
“Many brands are missing the little touches which make all the difference, such as covering the product in standard parcel paper rather than delivering it in a more luxurious manner. Some brands, such as Fendi, Cartier, Tod’s and Net-a-Porter do show best practice when it comes to packaging and focus on maintaining that feeling of luxury throughout the whole consumer journey.”
So what else did they discover?
- LVMH has clearly made digital development a priority. Fendi’s number one position and Louis Vuitton’s honourable placing – as well as other factors – point to virtuous competition being unleashed within the group, which can only benefit performance.
- In a similar vein, Richemont should benefit from Cartier’s know-how and from its relations with Yoox/Net-a-Porter (NAP).
- Kering, by contrast, seems to be losing some of its lustre. Once the Gucci relaunch is on track, analysts will be expecting senior management to address its shortcomings in digital.
- ContactLab expects pureplay “first mover advantage” to erode at some point. For instance, while Net-à-porter scores high on online shopping experience it’s below both Cartier and Fendi so it can’t take its position for granted as latecomers catch up.
- Established luxury names increasing their digital footprint have an advantage compared to pureplay e-tailers. ContactLab said that if luxury brands embark on digital, the imperative for them is to be at least as good as the “industry standard” (ie Yoox/NaP). The economics are bound to be stronger for those luxury brands (and incumbent multibrand retailers) than for the pureplays. Customer acquisition costs will remain lower for luxury goods incumbents for a very long time, given their cumulated brand investments and relative scale.
- The study found that the brands analysed are reaching less than half of their maximum potential on both Physical Touch Points (46%) and Digital Touch Points (45%).
- It also found that e-tailers generally perform better than most monobrands, in particular Net-a-Porter and Mr Porter – which score well on both physical and digital touch points.
- ContactLab also said that the “powered-by Yoox” brands whose e-stores are run by e-tail giant Yoox, generally perform well on digital.
So, while it’s not exactly a wipeout for the luxury sector, it’s clear that some labels charging high prices for their goods really need to get their acts together digitally – and fast.