The internet as a retail location

The internet is the most accessible platform for retailing the products of global brands as well as enhancing brand equity and customer relationships. This includes luxury fashion brands, which thrive on global awareness and operations.

The famous retailing adage, which states that 'the three most important things in retail are location location location', recognizes location as the central aspect of retail, and this reasoning can also be applied to the internet,

E-retail characteristics

• Fast and convenient shopping

• More product variety and access

• Global availability

• Mass online class

• Lack of human contact

• Low switching cost (1-click)

Advantages of e-retail

Disadvantages of e-retail

For the e-retailer

For the e-retailer

• Convenient location

• Cost-effective

• Global audience

• Round the clock service

• Opportunity for data mining and relationship marketing

• Small to large scale operations

• Competitive advantage services

• High capital investment and ongoing costs

• Complex logistics (related to global deliveries, returns, exchanges and refunds)

• Low impact sales

• Less impulse purchase

• Legal complications

• Challenging post-sales

For the consumer

For the consumer

• Extensive product variety

• Convenient

• Up-to-date information

• Round the clock availability

• Product personalization

• Favourable prices

• Instant gratification

• Security worries

• Delivery timing

• Delivery costs

• Lack of human contact

• Non-physical goods

• After-sales services difficulties

• E-CRM inaccessibility

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Figure 6.1 E-retail attributes

Source: Adapted from Dennis, Fenech and Merryllis (2004) E-Retailing, Routledge, London.

as a retail location. Although the internet is an important retail location, a large number of luxury fashion brands do not recognize it as such. The few brands that acknowledge and utilize the Internet as a sales channel mostly provide a sparse product range and limited delivery to a few destinations. Also there are some luxury brands that have shown such a low commitment to e-retail that they have implemented a website constituting of one page, with neither information nor e-retail. The brands that have adopted this stance also do not recognize their website as a retail location in their print media advertisements.

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The offline store

Figure 6.2 Louis Vuitton Stores are found in exclusive luxury locations like the Sandton City Shopping Centre in South Africa (2004)

The offline store

Figure 6.2 Louis Vuitton Stores are found in exclusive luxury locations like the Sandton City Shopping Centre in South Africa (2004)

Luxury Retail Storage
The online store
Louis Vuitton Sandton City

Figure 6.3 Louis Vuitton's 'exclusive' online store for the European market. The exclusive retail strategy is yet to be implemented in the US market (2006)

Figure 6.3 Louis Vuitton's 'exclusive' online store for the European market. The exclusive retail strategy is yet to be implemented in the US market (2006)

The e-retail of luxury fashion goods is still in its early introductory phase. The current situation indicates that the majority of luxury brands are yet to realize and tap the enormous market potential that exists in the e-retail economy. As a sales platform, the internet is almost unexploited by luxury fashion brands and the few who have done so, approach it with apprehension. The reluctance of luxury brands to adopt e-retail is mainly from a fear of diluting the brand image through more product accessibility, and negatively affecting the offline sales channels. Several luxury brands are also concerned that the luxury retail atmosphere and overall high-impact experience cannot be reproduced online. Another point of view is that since luxury goods are sensory in nature and involve an innate emotional response, they cannot be sold online because of the difficulty of reproducing the sensory attributes required in their appreciation. As a result, several luxury brands including Chanel, Versace and Valentino are yet to adopt e-retail through their own websites. Other brands like Hermès and Armani have launched limited e-retail websites with a narrow product range distributed in a small number of markets. Yet the products of other brands like Chloé and Roberto Cavalli are retailed through separate e-commerce websites and e-malls. However, the majority of the global luxury fashion brands have not currently implemented e-retail activities.

The sensory nature of luxury goods has been particularly cited as one of the major reasons for the slow adoption of e-retail by luxury brands. This is because luxury consumers are known to appreciate the high aesthetics of luxury products when viewed physically, through the utilization of the human senses of sight, touch and feel. These senses also draw out the emotional and psychological brand responses from consumers. As a result, luxury products such as apparel, leather goods, jewellery, wristwatches, fragrances, cosmetics and other accessories are classified as sensory goods. The online reproduction of the sensory elements required for luxury goods retailing has been a major source of concern for luxury brands. Also, the conventional luxury shopping experience, which is summed up in the store visit, the immersion within the highly creative and prestigious retail atmosphere and the interaction with the products is sensed to be lacking online. The majority of luxury brands are of the opinion that the e-retail shopping experience lacks these prominent features and that a computer screen cannot reproduce the level of interaction required for luxury goods retailing. The reality, however, is that the value of luxury goods to consumers does not decrease as a result of the lack of some of the sensory elements online. Also, there are current e-retail strategies that can be used to replicate the sensory elements online, compensate for the lack of human presence and enhance the shopping experience.

The current global retail environment requires e-retail as an indispensable aspect of retailing and a means of reaching and satisfying luxury consumers. The issues related to physically viewing and interacting with products before purchase is becoming less important for consumers especially those with prior experience with the brand. In addition, consumers increasingly utilize both the offline and online channels in a single purchase, making e-retail a complement of the overall shopping experience.

The major factor that has currently made the e-retail of luxury goods mandatory is the luxury consumer psychology which has changed. Convenience and accessibility which are both prominent benefits of e-retail now rank high among their expectations. A wealthy luxury consumer living in a Scottish village castle no longer wants to be obliged to travel to Edinburgh or London to purchase luxury goods. Consumers desire to have the luxury retail experience online and in the comfort of their homes or offices. Since they now frequently interact with the internet, their level of expectation of convenience from luxury brands has increased. The luxury consumer group has comfortably adapted to technology and is currently evolving to adapting technology to their needs and their lifestyles.

The time has come for luxury brands to change their stance regarding e-retail. There is a current need for luxury brands to design merchandizing, retailing, marketing and logistics strategies to incorporate the internet. This will form an effective tool for integrating the online and offline retailing activities. The prevailing issue is whether it is realistic to imagine that the physical luxury retail store environment can be replicated on the internet. Or that luxury goods can be successfully sold online without diluting their brand aura and brand equity.

The challenge of selling luxury goods online is evidently enormous as the online luxury shopping experience is considerably different from the conventional physical shopping experience. Also the sensory nature of luxury goods requires a face-to-face contact rather than the face-to-screen contact provided by the internet. The internet also seemingly lacks the exclusivity and prestige qualities of the offline locations of luxury fashion stores. In addition, the online luxury consumer has a different set of needs from the offline luxury consumer although some of the offline consumers also shop online and vice versa. These needs have to be understood and satisfied by luxury brands.

Therefore the questions relating to creating a high-status website atmosphere, replacing the human senses in the virtual environment, satisfying the high demands of online consumers and matching 'high class' with the 'mass class' of the internet world are justified. However, the application of feasible e-retail strategies makes the successful e-retail of luxury goods possible. Prior to investigating these strategies, let's take a look at the online consumer and understand how their evolution has affected e-retail.

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