Luxury Brands Still Online-Averse, Despite Poor Holiday Projections

0 Comment(s) | Posted Nov 18, 2009 by Pat Morrell

Patrick Morrell

 “Because of continuing legal battles over online sales of counterfeit goods, concerns about undermining carefully honed brand images and a history of costly failures, many in the fashion business remain wary of the Internet.  But executives say that attitudes are softening as brands realize that the Web provides one of the last untapped sources of potential growth.”

Such is the state of luxury brands and the Internet according to the New York Times.  Reporter Eric Pfanner’s article looks at how – and if – elite labels with dwindling sales and pessimistic Q4 sales projections will adapt online as they head into the revenue-crucial Holiday sales season. 

But beyond Hugo Boss’s, Net-à-Porter’s, and Burberry’s (yes, it’s safe to say we scooped the New York Times) examples of successful online investment and growth, no other noteworthy luxury brand can seem to read the tea leaves.

The vast majority remain mired in uneasiness and inactivity; according to Pfanner, they are concerned that the elite nature of their products will be tarnished by widespread online sale (and that the price may drop correspondingly), and that a time-honored, well-honed brand will see dilution amidst the diversity of opinion, should it fall amid the throngs of social media-ites.

But this seems to be ship-sinking logic, a strain of thinking has been rationally argued against time and time again.  Across the board, luxury brand sales and profits are on the decline.  Perhaps some brands can temporary balance the boat with traditional sales and marketing strategies to weather the current economic storm, but in the post-recession world they’ll remain behind on customer trends.  Online purchasing capability and infrastructure has been standard for years.  And social media engagement – i.e. connecting personally and genuinely with interested customers through real-time online portals – will soon be an equally standard competitive expectation. 

I concede the caveats for the Cartiers and Louis Vuittons of the world – their marketability is in many ways based upon their relative inaccessibility. 

But as Dana Gers argued in her October 14 Forbes article, “Numbers aside, social media strikes at the heart of what luxury brands offer: passion.”  There are millions of loyal customers waiting for the passions to be stoked and driven to action.  Luxury brands are framing the discussion around social media inaccurately, and in a way that is self-defeating – focusing on the minor caveats while ignoring the massive profitability and brands improvement (and therefore compounded profitability) made possible by real-time customer engagement.

While the luxury brand ivory towers may provide a great view, it’s one that is distracting these lauded brands from the undeniable trends happening on the ground. 

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