Altagamma, the association of Italian luxury brands, organized yesterday in Milan, the 2012 edition of its Retail Insight event with top executives attending. The report by Altagamma and McKinsey highlights that, presently, luxury online sales, worldwide, represent 3,2% of total sales, equivalent of 6,2 billion euros. McKinsey’s Marco Mazzu (Partner) who spoke at the event said ”Purchases made in stores by generated by online decisions, the digital market increases by 17,5 billion euros or 10% of total luxury sales in 2011”. By 2016, the Altagamma / McKinsey study indicates that luxury online sales will reach 15 billion euros.
With the occasion of the event, Altagamma also presented its latest index of the Best Performers in the Luxury Digital World, with 154 international brands, of which 39 Italian brands. The best performers on the Customers Decision Journey in fashion apparel are: Burberry for awareness; Loro Piana for consideration and Moncler for loyalty. The best performers in fashion accessories are: Louis Vuitton for awareness, Gucci for consideration and Jimmy Choo for loyalty.
The internet has become instrumental in the pre-acquisition phase of luxury products, today, over 72% of consumers rely on the internet to compare products, on average 4 different sources, but less from social media and bloggers. Online consumers are increasingly becoming more sophisticated and demanding – better service, faster deliveries and dedicated offers.
Altagamma also presented at the event its Retail Evolution report, a study of the major luxury retail players in the past 20 years. According to Altagamma, mono-brand retailing is the winning business model for the future of luxury brands and which are, thus, able to optimize production and retail performance. Retail integration is the winning formula for high-end brands, whose strategies increasingly focus on single-brand channels, including flagship stores, e-commerce, shop-in-shops, and outlets, in traditional markets and in new ones.
Size brings an advantage over competitors in terms of retail productivity, because of an ability to cope with rising rents and the lower impact of the advertising budget on sales income (thanks to the greater bargaining power of the mega brands). Sales productivity is problematic for small businesses and for a number of specific categories. Retail growth prospects vary significantly by category. Watches have a presence of 15-20% in single-brand retail compared to 75-90% for leather goods.
The top speakers at the event also highlighted the importance of customer service. Michele Norsa, CEO of Salvatore Ferragamo said ”Customers are travelling more and we must have the ability to innovate and improve the quality of space and lighting. Retail means capital expenditures. Also, in light of the evolution of markets, there is a need now to renovate stores faster, compared to the past, when a store concept could last for 20 years”.
Fabio Gnocchi, Commercial Director of Brunello Cucinelli, attending the Altagamma event, said wholesale is equally important to mono-brand retail and he spoke about the importance of the assesment of the house collections by the buyers of major department stores, who confirm whether the company’s product development matches market demand.
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