Even with online sales as a proportion of total retail sales now into the double-digits (10.6 percent, to be exact), there’s no question that brick and mortar is still a critical component of retailers’ and brands’ revenue strategies and will continue to be for the foreseeable future. In L2’s new Intelligence Report: Multichannel Retail, in which we analyzed extensive email marketing, site, social media and mobile data for 79 prestige retailers, it became clear that some brands like Sephora, Nordstrom, and Zales have recognized the effectiveness of using digital to influence in-store sales and implemented measures to maximize this relationship. It’s no surprise that among those that have been slowest to the multichannel game are the iconic luxury brands that (for the most part) were also last to e-commerce, last to mobile apps, and still lagging in social media fluency. Given luxury’s general lack of e-commerce and m-commerce sophistication (no cart continuity, limited stock availability, quick shipping/returns, etc.), it is a safe bet that the highest end of high-end brands sell even less than 10.6 percent of their sales online. And yet, with more than 90 percent of sales generated by in-store purchases, luxury retail continues to trail its more modestly-priced counterparts at successfully using digital channels to get consumers in the door.
For some luxury brands, this deficit isn’t necessarily ignorance but stems from the fact that they’ve outsourced e-commerce to a third-party the way Dolce & Gabbana and Zegna have with Yoox. This decision, while it may make financial sense on one hand, results in the brands’ inability to provide basic services such as brand-tailored customer service and “buy online, return in-store,” a highly popular option with customers that is currently available at three-quarters of the retailers in the study. Additionally, Zegna’s store locator lives on a separate microsite that inexplicably does not allow users to obtain directions to any brick and mortar locations.
Email marketing is another area in which luxury brands like Prada, Dior, and Dolce & Gabbana continue to struggle, multichannel-wise. As you can see in the graphic above, among these three brands there wasn’t a single mention in all of their email marketing in Q4 2012 or Q1 2013 promoting their stores–or even the inclusion of a simple store locator button. Chanel, Tiffany & Co., and Gucci, however, all promoted free shipping in more than 90 percent of their emails, indicating a strong priority on online sales. In the past two quarters, none of the 16 luxury brands in our study publicized an exclusive in-store sale, in-store pickup, or an event or service at a freestanding retail store (the two exceptions being Barneys New York and Bergdorf Goodman, which promoted events in 5 percent and 7 percent of their respective emails).
Despite luxury’s poor performance, there were a few best practices bright spots. Tiffany & Co., Cartier, Prada, and Zegna, for example, all link to store locators in all of their of emails. And Chanel (on its fashion site), TAG Heuer, and Louis Vuitton all employ best-in-class tactics around store locators. Louis Vuitton also being one of three brands in the study with a mobile site that enables specific store locations to be shared via email, complete with a link to the selected location on Google Maps. For more findings from our Intelligence Report: Multichannel Retail, please download an excerpt and watch our original video on the subject.