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Digital investment pays off as ecommerce spurs growth for British luxury brands

September 10, 2015

Luxury labels boost a digital recruitment drive

  • Digital investment sparks a surge in sales at 57% of luxury brands
  • 90% of British Luxury Brands forecast a dramatic growth in digital sales over the next 5 years
  • Typical high-end fashion consumer uses five “channels” to shop
  • Luxury shoppers at 81% of brands are browsing online before visiting stores

Digital investment is paying off in style for the British luxury industry as brands experience a surge in sales as a direct result of building sophisticated, imaginative ecommerce offerings.

In a new report by global trend forecaster WGSN, 57% of senior executives from luxury brands reveal a significant increase in sales as a result of investment in digital capabilities. Momentum is set to accelerate further – nine out of ten expect digital sales to increase over the next five years, with 69% anticipating that online revenue will increase “greatly”.

Launched today at a Walpole Breakfast Roundtable which brought together WGSN trend experts and senior directors from Walpole members Astley Clarke, Bremont, Cadogan Estate, David Collins Studio, Ettinger, Farfetch, and Gieves and Hawkes, the report identifies a broad range of benefits from digital expansion beyond immediate sales growth, in addition to the evolving role of the physical store.

Alongside sales impact, brand and reputation is cited by 80% of respondents as a benefit of technological diversification, while 53% have seen an improvement in customer loyalty. The findings add weight to the research released by McKinsey in July 2015 suggesting that luxury ecommerce is having a significant economic impact. This research forecasted that the platform would reach $21 billion globally by 2020, driving 40% of sales growth for luxury brands.

The WSGN report also highlights that talent was cited as a big investment area for nine out of ten respondents. Luxury companies are seeking to build their in-house capabilities, hiring staff from technology giants, as seen with the recent LVMH appointment of Ian Rogers, a senior executive from Apple, as its chief digital officer. It seems the previous moves of luxury leaders such as former Burberry CEO Angela Ahrendts to the technology sector is not a one way street.

Carla Buzasi, global chief content officer, WGSN, said: “The digital revolution has changed retail beyond all recognition, offering new opportunities for brands and businesses. In the luxury sector, after a somewhat slow start, there are many brands now succeeding in creating a compelling luxury experience online to complement the shopping experience in store, and in some cases replace it all together. The most forward-thinking luxury brands have learnt to use graphics, video and social media to bring out the very best of their products. Nevertheless, the traditional store hasn’t lost its space in the retail ecosystem. Boutiques and flagship stores alike have to be inventive and experimental to lure shoppers in, while canny consumers are complementing both experiences by researching online, using click and collect, or switching from in-store to online shopping depending on their needs at the time.”

Michelle Emmerson, CEO of Walpole, said: “The luxury goods industry has moved to the forefront of British technological innovation and brands’ online service is stronger than ever. Far from replacing bricks-and-mortar shops, the research suggests luxury consumers use websites or smartphone apps to browse ranges of designer apparel and footwear, fine wines and spirits, accessories, luxury jewellery, timepieces or high end beauty before travelling to shops to sample, or try on, products. The superior personal touch of the physical store is irreplaceable and there is every reason to believe that both digital and physical shops can prosper in partnership.”

Cadogan Estate, the London property empire that owns prime retail space in Kensington and Chelsea, believes that digital forces are transforming the attitudes of affluent shoppers, with consumers expecting a seamless online and off-line experience. Cadogan, the long term owners of much of Chelsea, including key retail destinations Sloane Street and Duke of York Square, reports that despite this, bricks and mortar stores will retain their position at the heart of the purchasing pattern.

Hugh Seaborn, chief executive of Cadogan, said: “In the past few years, digital forces have swept through the retail industry, transforming consumer’s behaviour and their approach to shopping. However, especially with the rise of social media, the most satisfying purchase remains one that comes with wonderful memories. Within an environment of great connectivity, vitality, world-class culture and heritage, shopping will never cease to be a desirable experience.”

Asked how their customers were using digital services, 81% of luxury goods executives say shoppers are researching online prior to purchasing goods in stores. Additionally, 78% report that consumers are buying on the internet. The same proportion, 78%, believes shoppers are using websites or social media to find out about new product ranges. And 63% say customers are most likely to use digital to find out about upcoming launches.

Video has emerged as a crucial tool in creating a luxury experience online. Tools such as Snapchat and Periscope have brought catwalk shows to a broader audience. Of the senior executives surveyed, 48% said they offered video content on their sites.

Notes to editors:

1. WGSN surveyed 33 luxury brands during August 2015

2. The British luxury industry’s sales reached £32.2 billion in 2013, valuing the sector at 2.2% of GDP according to a report by Frontier Economics (released 31August 2015)

 

About WGSN

WGSN is a global foresight business. Our experts provide deep insight and analysis of consumer, fashion and design trends. We inspire our clients to plan and trade their range with unparalleled confidence and accuracy. Together, we Create Tomorrow. www.wgsn.com

WGSN is the World’s Global Style Network, comprising of market-leading products including WGSN Fashion Trend, WGSN Lifestyle & Interiors, WGSN INstock, WGSN StyleTrial, and WGSN Mindset bespoke consulting services.

About Walpole:

Walpole is a unique alliance of 170 of Britain’s finest luxury brands, including Burberry, Alexander McQueen, Rolls-Royce, Boodles, Harrods and Jimmy Choo.

Walpole promotes, protects and develops the unique qualities of UK luxury: the long tradition, rich heritage, superior craftsmanship, innovation, design, style, and impeccable service at the heart of the industry – currently worth over £32 billion to the UK economy, a leading creator of jobs and major contributor to the British economy.

Dedicated to nurturing the next generation of Britain’s luxury brands, Walpole also runs the annual mentoring programmes Brands of Tomorrow, Crafted and the Programme in Luxury Management at London Business School. These initiatives connect Britain’s most talented up-and-coming entrepreneurs, craftsmen and leaders with a network of senior mentors from Walpole’s established membership.

A report from the international consultancy Frontier Economics (September 2015) reveals that the value of sales from British luxury industries reached £32.2 billion in 2013, valuing the sector at 2.2% of the UK’s GDP. The report also forecasts that the luxury industry will employ nearly 158,000 people by 2019.

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