Web shapes luxury sales

05 June 2012

ROME: The internet is playing an increasingly powerful role when it comes to influencing the sales of luxury goods, according to a report.

Altagamma, the trade body, and McKinsey, the consultancy, stated that online sales of high-end offerings hit €6.2bn in 2011, and expanded by three times the rate of the market as a whole, which is now worth €190bn.

Looking forward, the two organisations predicted that the web would yield revenues of some €15bn by 2016.

More broadly, the analysis from 2011 suggested 15% of offline demand, valued at €25bn, are "directly generated" by "online experiences" such as product research and comparisons.

Additionally, €34bn of offline category purchases were influenced by these activities, pointing to the growing integration between channels.

Elsewhere, the findings showed that over 50% of digital sales could be attributed to sites charging the full price for high-end lines, rather than other vendors providing discounts.

However, it was also discovered that internet users abandon around 20% of purchases as they reach ecommerce checkouts because they are not happy with a certain element of the payment process or delivery fees.

"People are becoming clearer about what they want to do, where they want to go, what they like," Marco Mazzù, co-head of branding and marketing in Europe, the Middle East and Africa, at McKinsey told the Financial Times.

As a reflection of efforts to boost consumer engagement, the number of brands actively making use of Facebook rose by 63% year on year, with Twitter seeing an even more impressive fourfold gain.

Less positively, the study revealed that despite the fact many of the featured luxury labels had often accrued tens of millions of fans, this has not yet translated into increased sales.

One possible reason behind this result was that most people “following” were not able to meet the prices they commanded.

Altagamma and McKinsey polled over 300 luxury groups, including LVMH, PPR and Richemont, assessed 700 websites and 2.5m online comments, and surveyed 2,500 shoppers in China, France, Italy, the UK and US.

Data sourced from Financial Times; additional content by Warc staff