Luxury Products Slow to Move Online

Online retail sales continue to grow. Forrester Research predicts that consumers will spend $44.7 billion on online shopping this holiday season. That’s about 11% of the amount consumers will spend at traditional stores, projected 62190_rolexto reach $392.9 billion. By now, consumers of all ages are well-​versed in purchasing books, CDs, and apparel online. But there’s one category where online retailing has yet to achieve a significant percentage of sales activity: luxury.

Writing for BusinessWeek, Lauren Sherman points out that marketers like Ralph Lauren and Tiffany have gradually created an online presence for themselves. But others, like Marc Jacobs and Chanel do not want to sell online, especially when it comes to apparel.  In general,  “luxury retailers argue that customer service online isn't what it's like in a boutique, and shopping over the Web could ruin brand perception.” Despite the concern about brand degradation,  Pam Danziger, president of Unity Marketing, calls the attitude “outdated”. Certainly, these retailers are concerned about the purchasing experience for consumers of luxury goods. But as consultant Kate Newlin points out, today’s consumers know that online purchasing allows for a “heightened customer service experience because of convenience and efficiency.”

Luxury product marketers may be forced to build an online presence and redefine what this unique shopping experience entails in order to maintain market share. There are a couple of factors that could lead these marketers to the online channel sooner rather than later.  First, with every passing year, a larger percentage of the population has grown up using the Internet and has a general comfort level when purchasing goods online. Second, conspicuous consumption is currently out of fashion and purchasing items online allows higher-​income consumers some privacy. Nobody is predicting when the shift to online might occur in luxury but it's segment worth watching.

[Sherman, Lauren. Online Luxury Retail Remains Elusive. BusinessWeek, 11.19.09]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.