This year luxury brands, including jewellery, started to turn their attention towards the opportunities offered by the briskly expanding electronic commerce. In June, De Beers Diamond Jewellers ventured its wares for online sales.
The “Kommersant” Daily reported that recently this line of business was taken notice of by the French jewellery company of Boucheron.
Some time ago, the manufacturers of luxury products were wary of everything that might hurt their carefully cultivated image of exclusivity, or reduce sales at their traditional retail outlets, the daily noted. For example, the watchmakers Rolex and Patek Philippe simply refuse to sell their products online. Rolex is known for actively pursuing Internet sites selling its watches, using serial numbers to track suppliers.
But the e-commerce numbers are hard to ignore. According to the U.S.-based Forrester Research Institute, online sales accounted for $259.2 billion this year, up 18% from 2006. According to the same source, e-sales of luxury products alone are expected to generate $2.5 billion this year, growing to $7 billion by 2010. “While it’s still a small percentage of overall retail sales, it’s still the fastest growing segment”, said Victoria Bracewall Lewis, a senior analyst for Forrester.
Apparel, long thought to be the toughest sale online, is one of its fastest-growing segments, industry executives say. New video features enable customers to view an item from multiple angles, helping them feel more comfortable about making an expensive purchase. “The technology makes it easier to overcome the barrier of customers not being able to touch it and feel it,” said Brendan Hoffman, President and Chief Executive of Neiman Marcus Direct, which generates more than $500 million a year in revenue.
In a recent survey by the New York-based Luxury Institute, more than half of the respondents with a net worth of more than $5 million said they bought apparel on the Internet.
Evidence of the luxury industry’s new attitude toward the Web can be found throughout cyberspace, says the daily, from Neiman Marcus promoting its site on YouTube to an Armani store showing up in the virtual world of Second Life. Once-scorned, bloggers are now routinely invited to events.
In many ways, the Internet is helping to democratize fashion, drawing customers who would never step into a swanky store, says David Wolfe, creative director of the Doneger Group, the New York-based retail analyst.
At the same time, he added, as online sales grow, the brands risk losing the “cool mystique” that makes customers covet their products. “If you allow the mystique to disappear, it becomes just another brand,” he said.
The diamond manufacturer Kristall of Smolensk started its e-commerce as early as November 2006. Its General Director Maxim Shkadov says his company’s system of Web-sales is expanding and this is yet another evidence of its solid business image and reputation: “E-buyers of diamonds ready to pay a good deal of money on the Internet are not afraid to be cheated. This attitude alone means a lot.”
We understand that this project will never bring in great profits, says Shkadov. It rather pursues an educational aim giving consumers a possibility to find out more about diamonds, how they are made and priced: “Consumers will make up their minds as to buy or not to buy diamonds in the long run, but the knowledge obtained at the Web-portal may come in useful during a visit to a jewellery store.”
