There are three main approaches to the digital channel:
- Big players with a digital multi-channel approach meaning that they are present on their website and on multi-branded platforms, usually they make full use of social media and they are really engage in the strategy of fashion tech
- Players more focused on own digital stores, they use digital as a marketing tool or as an entry point for aspirational customers
- Players that are more niche, specialized in terms of products categories, that use the digital world as a showroom
We expect that the digital channel will become just a channel among the many others
companies will develop their digital branding strategy and their digital branded customer experience.
To better establish the brand awareness and image, brands are entering into collaborations with online players. This is the case of Vente-Priveé, a French company that introduced the innovative model of flash sales in Europe, and we learn about it in future posts.
Who are the competitors if to characterise them by different business models? The players in fashion and luxury digital world are:
- Full Price Players. There are two business models: brand websites managed directly by brands or powered by other e-tailers and multibrands websites, that can be: Hybrid, players that started offline and at a certain moment in time they engaged e-tailing quietly successfully (for example, Department stores like Neiman Marcus or Multibrand boutiques like Luisa Via Roma) and Pure Play E-tailers (this is the case of brands platforms such as Asos, Net-a-porter, Zalando)
- Online Outlets, where the leader is the Italian group Yoox
- Event or flash Sales, in this case players are competing on timing, a certain assortments on a limited time (such as Vente-Priveé)
A recent study by McKinsey and Altagamma found out that the evolution of pure online sales will rise from 4% of total sales in 2012 to 6% of total luxury sales expected for 2017; 25% of off-line sales will be influenced by the digital journey of the customers, so yet we can cay that the Retail channel with physical stores still remains the main.
About 65% of the business online is made up of two categories that are luxury accessories and beauty. The best performing format is the online monobrand store, in particular of brands and department stores. For a long Fashion and luxury companies have resisted the e-commerce channel and associated the online with discounting and counterfeiting, but researches show that digital arena is growing rapidly.
Here we should state that need to consider also pre-buying behaviour for digital business.
The main source of information that customer uses to make an order is usually Multibrand Retailer websites:
- retailer websites or apps are the first digital information source in all countries – most notably in the USA, UK, Germany, France and China
- price comparison services are next (45%). These are most widely used in Germany, the Netherlands, Denmark, Sweden and Italy
- in total, 29% of consumers use brand websites or apps, this feature is higher in the USA, UK, Belgium, Sweden, Denmark and Australia
- in total, reviews by online users or consumers are used by 35% of shoppers (especially in Germany, the Netherlands, Denmark and Italy)
Influences are not consulted in the buying process
When looking for information on a product or service:
- only 15% use them during the research process
- the immediate social cycle ( trends, family, colleagues) are the real influencers. They are consulted by 35% of buyers.
So, we can see how is Fashion Tech important for business in fashion and luxury sector:
- it approves product lifecycle management
- it advances merchandising tools
- it increases in-store retail operations
All the data presented on slides considers only year 2016.