Gucci and Coach Inc. upstaged Burberry Group Plc to take the top spot in a study of luxury fashion brands’ digital strategies.
The handbag makers, whose sales are declining as they seek a wealthier clientele, shared first place in the study of 90 brands conducted by researcher L2, Inc. Burberry, ranked top in the previous three editions of the study, fell to sixth.
Investments by Kering SA owned Gucci and Coach in their e-commerce offerings has positioned both for future growth, even though the effect is still to be felt in terms of rising revenue, L2 said.
“Despite some of the struggles they’ve had with their business, Coach is probably one of the strongest multichannel retailers out there,” said Maureen Mullen, head of research and advisory at L2 in New York. Gucci, which was an early adopter of new advertising formats such as social-network aggregator Flipboard, also rates highly, she said.
L2 ranked brands on website and e-commerce capability, digital marketing, social media and mobile. While only 5 percent of luxury sales are made via the Internet, almost 50 percent start online, showing how the lines are blurring between physical and virtual distribution, L2 said.
Gucci, a maker of $650 loafers and $2,950 handbags, also ranked first in a recent study on luxury e-commerce by Exane BNP Paribas and Contactlab. They found that the Florence, Italy based company had the deepest offer of styles available for online purchase across most luxury categories.
With Internet sales growing at about four times the pace of the total personal luxury market, being strong online can boost revenue growth and improve the return on invested capital, according to Exane analyst Luca Solca.
Gucci and New York-based Coach are revamping stores and raising average prices as they seek to claw back market share amid a slowdown in Asia. In October, Coach predicted sales would worsen before improving. Gucci, whose comparable revenue fell 1.9 percent in the third quarter, has said it’s confident of returning to positive trends “in the near future.”
While Burberry has done a “fantastic” job talking about digital innovation, “sometimes the functionality doesn’t match up to the hype,” Mullen said. An example of this is Burberry’s collect-in-store service, which has a delay of 24 hours compared with same-day pick-up for other brands, she said.
Credit: BoF | Edited by ModeMaison PR
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