Branded in the past as digital laggards, fashion brands have finally started investing online to catch up. Both Kering and LVMH have slashed print advertising budgets and put digital first, seeing substantial annual growth as a result. Genius brand Gucci also allocated over half of its advertising budget toward digital in 2018, underlining the fact that leaders are embracing digital channels as core growth drivers. Digital advertising is key for brands seeking to maintain awareness among luxury consumers, especially millennials, an age group that accounts for 60% of Gucci’s customers.
Still, brands face an uphill battle as retail partners turn into frenemies, as observed in Gartner L2’s Digital IQ Index: Fashion Global. Online shoppers still have little incentive to shop on brand sites instead of retailers, as many brands fall behind when it comes to offering services that are considered table stakes among luxury department stores and retailers, like expedited delivery and returns or around-the-clock customer service. As partners become competitors, these brands will need to up the ante and invest more heavily in digital advertising and brand channels if they want to capture consumers and grow e-commerce revenue.
But is the time, effort, and money spent on improving direct-to-consumer sales worth it? Most likely—online sales are expected to comprise 25% of the market by 2025 up from an estimated 9% last year. Though it can be costly, doing up their digital presence might be worth the price for luxury brands.