Out of fashion? Low Christmas sales signal crisis for luxury clothing brands


With the London Fashion week kicking off today, low Christmas sales mark a crisis in the industry, according to new research.


The low sales numbers during the holiday season show that the designer industry is not on the right track.

Customer engagement specialists ContactLab point out that the Luxury brands loose consumers because they are failing in giving a luxury experience to customers who buy products online. The poor sales results in the holiday season confirm the urgency for a future-proof sales strategy for top designer brands.

The negative seasonal results were typified by Tiffany & Co., who reported a year-on-year decrease of four per cent in total sales for November and December across Europe. Burberry also suffered, missing its group’s target for the last quarter of 2015.

The issue is pervasive across the industry with the share price of Richemont , one of the leading global luxury goods companies comprising big brands such as Cartier and Mont Blanc, dropping by 2.9 per cent after the holiday season. With London Fashion week less than a month away, luxury retailers must act in the face of a growing crisis.

“The Online Purchase Experience Ranking” study, which was produced in conjunction with Exane BNP Paribas, revealed that brands are only utilising best practice during the consumer journey around 50 per cent of the time. Analysts developed 67 parameters to measure the service offered by luxury retailers, analysing the complete purchase process – from the online ordering experience, to delivery, as well as packaging and returns.

The research and subsequent analysis is a world first in examining online purchasing experiences and the consumer journey in the luxury retail sector. It looked at 29 recognisable global luxury brands, including 4 major e-tailers, analysing physical and digital customer experience touch points. Digital touch points refer to the online process, such as choosing an item or checking out, whereas physical touch points refer to direct customer engagement with the product, such as at the time of delivery, or when an item is returned.

ContactLab then mapped their findings onto an “Online Purchasing Experience Ranking,” which measures the physical touch points on one axis and the digital touch points on the other.

Massimo Fubini, CEO of ContactLab, comments: “There is definitely work to be done in the luxury sector if brands are going to increase online sales year-on-year. 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.

“Our research and subsequent analysis found that 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. The high-end fashion world has struggled, at times, to transfer the luxury experience of their bricks-and-mortar stores into their online offerings, but paying attention to the entire journey and offering added value at every step will allow these retailers to capitalise on the possibilities offered by the internet.”

ContactLab’s team of experts studied the consumer journey by purchasing two items from each brand, one for men and one for women, analysing each individual step. The brands examined by the analysts included Gucci, Louis Vuitton, Prada, Burberry, Hermes, Cartier, Tiffany, and Armani, among other leading luxury players.
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%). ContactLab’s expert analysts discovered that new Ecommerce entry Fendi, and Cartier, are significantly leading on Physical Customer Engagement, delivering a luxury online experience similar to that consumers find in-store. Meanwhile, Balenciaga is ranked first on Digital Customer Engagement, followed by Net-a-Porter, Zegna, and Saint Laurent.

It also revealed that e-tailers generally perform better than most mono-brands, in particular Net-a-Porter and Mr. Porter – which score well on both physical and digital touch points. The analysts also discovered that “powered-by Yoox” brands generally perform well on digital touch points, but trail behind on physical touch points. “Powered-by Yoox” refers to brands whose online stores are run by the internet retailing company Yoox Group; among these, Zegna and Elite brands (joint venture between Yoox and Kering) such as Balenciaga, Saint Laurent and Bottega Veneta, all rank highly in the Online Purchasing Experience Matrix.

Marco Pozzi, Senior Advisor for ContactLab, comments: “Our analysis reveals that Fendi is leading the way in many respects, engineering a very distinctive web and Ecommerce experience, which provides a luxury consumer journey from beginning to end.”

ContactLab, a world-leading digital customer engagement solutions company, found that the majority of brands send welcome emails, while three brands – Bulgari, Tiffany, and Luisaviaroma – only send double-opt in emails. Whereas, Dolce & Gabbana is the only brand which sends both double opt-in and welcome emails.

Analysts also discovered that 50 per cent of brands personalize engagement through welcome emails by client name and salutation gender, only Armani differentiate by gender in the content, and Coach is the only brand offering Progressive Profiling. While only six brands include a link to a “Store Finder” in their emails.

Massimo adds: “This study shows that companies need to focus on each step of the online purchasing process. Digital customer engagement tools, particularly, allow brands to engage with customers effectively, which is a key element in engineering a luxury consumer journey. Direct digital marketing through emails, text messages and push notifications , gives fashion and luxury brands a perfect opportunity to engage with their prospects and clients, increasing purchasing loyalty and, as a consequence, customer profitability. Maintaining best practice with digital direct marketing and engaging personally with individuals in a seamless manner helps the consumer feel engaged throughout the whole process, creating the feeling that they are receiving both a luxury product, and a high-class service.”

The Online Experience Ranking is available for free download here

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