Milan, October 13th, 2014 - ContactLab presents The Digital Frontier: Ready? Steady! Go!, a new in-depth report (download the free abstract at http://www.contactlab.com/en/resources/digital-frontier-ready-steady-go) that takes a snapshot of the current state of 30 top players in high-end fashion to highlight digital’s role as a communications and sales tool, as well as its impact on overall sales. This research continues the collaboration between Exane BNP Paribas, the leader in Equity research, and ContactLab, the only Italian company included by Gartner in its Market Guide for Email Marketing released in June 2014.

Today (2014), 10% of luxury brand sales are already strictly linked to digital strategies and this figure is continually growing; the analysis data suggest that as the ‘physical’ space gradually diminishes for building new stores, digital will increasingly become the key driving factor for sales growth. It is estimated that by 2020 c.40% of growth in the luxury market will come from online, assuming that the luxury market grows annually by 5-6% and stimulates growth of 20-30% in the e-commerce channel.

Moreover, as clearly proven by previous surveys, our research strongly shows that consumers registered to loyalty programs via email spend more in store than consumers who do not receive digital direct marketing from brands; the same trend is seen worldwide, but particularly in the UK where digital consumers display a tendency to spend significantly more on their purchases. Sales generated by consumers who gave brands their email addresses account for 20% of total sales in mono-brand stores; this figure has been increasing since 2011 and it is expected to continue to grow year on year. Moreover, consumers who receive digital direct marketing tend to purchase more through e-commerce and more clients in general show a clearer tendency towards cross-channel purchases, spending on average 30% more than in-store only clients.

“A new paradigm is emerging that classifies consumers based on their exposure to digital direct marketing messages from brands (email receivers vs not receivers), breaking down the traditional dichotomy between the retail channel and e-commerce”, explains Massimo Fubini, the Founder and CEO of ContactLab. “Luxury brands therefore need to equip themselves to devise a digital strategy able to generate a significant impact on global revenues, no matter from which channel they come from”.

The sales and profit earning potential would naturally be higher if more clients were registered to loyalty programs. However, stores often still do not efficiently and systematically organize the call for consumers to leave their email addresses. Brands could use the time of purchase as a touchpoint to register consumers to their programs, providing reassurance and information on the special content and benefits. Any resistance from consumers to leave their details could, in fact, be due to their concern of being flooded by spam or non-customized emails which, as such, are irrelevant and of little value. For example, the analysis by ContactLab and Exane shows that only half of the brands analyzed ask their consumers to indicate whether they are male or female.

“Luxury players would gain many material benefits if they could expand the audience of consumers connected to their brands through a digital direct marketing program”, says Mr Fubini, “as can be seen by certain brands examined in the survey, which already produce a major part of their sales from digital. Emails are the best way to build relationships over time and will be much more effective if they guarantee clients access to customized and relevant content, which the brand can send to their inbox based on their profiles and preferences. It is therefore essential to convey the importance of consumers leaving their email addresses so they can remain in contact with their favorite brands. Consequently, it is becoming increasingly important that brands create a culture among store managers, who should be the first ones to receive training and to be made aware of the importance of using the in-store experience as a touchpoint to register consumers to loyalty programs”.

E-commerce penetration in the USA (just above 10%) is apparently reaching a plateau for mono-brand e-commerce European players: in fact, in 2014, there was a slight increase (except for in shoe sales) in the revenue percentage generated by online sales out of total sales in both channels (e-commerce + in-store). This is in stark contrast with USA department stores, who generate >15% of their revenues online thanks to the wide range of products sold online and their focus on the services offered to consumers.

European e-commerce penetration is far lower, at c.2–3%, with the UK breaking away from the rest at 7–8% of its revenue generated by mono-brand e-commerce. Among the categories which drive mono-brand e-stores, we note high-end products for kids, jewelry (product categories often linked to ‘gifting’) and both men’s and women’s shoes.

ContactLab has enhanced the new survey by creating the Digital Competitive Map, which uses 66 different quantitative parameters to measure the engagement capabilities of various luxury players with their own audiences and then compares these brands. For each individual brand, the map indicates the quality of their website navigation experience and their level of e-commerce service, along with the strategic management decision to develop this channel in terms of the wide range of products offered and the number of countries covered (in particular, countries witnessing strong growth such as China, Russia and Brazil).

The map particularly takes into account parameters such as the range of offers, the ease of website navigation on various devices, the logistics, the conditions of sale and the cross-channel integration guaranteed by each brand on the online sales channel used.

“Luxury goods players will have no other choice but to embrace the digital channel. The global personal luxury goods market is growing at a more moderate pace in comparison to the recent past, while online sales grow year on year at between 25% and 30%. Online luxury is too good to miss. We expect an inflection point in the number of companies offering their products online and exploiting digital and physical synergies. The Digital Competitive Map allows us to track this inflection, and to measure luxury goods brands as they embrace and develop their digital forays. We present today the first results of this comprehensive analysis”, explains Luca Solca, the Managing Director Sector Head of Global Luxury Goods at Exane BNP Paribas. “Burberry is ahead of the other brands in winning the competition for the use of digital as a loyalty and sales tool. A few weeks ago, Louis Vuitton relaunched its digital offer, which has significantly improved it. Conversely, other LVMH brands such as Céline and Fendi are suffering from not having an e-commerce channel. Armani, Balenciaga, Zegna, Coach and Cartier are the best ‘followers’ both in terms of e-commerce penetration and in the Digital Customer Experience. Italian brands powered by Yoox have, on the one hand, accelerated in terms of e-commerce but they are still lagging in factors linked to the customization of the buying experience. Although ranking top in terms of digital customer experience proficiency, Gucci and Tiffany are penalized on the map in comparison with the brands that already cover the Chinese market with their e-commerce. The other French brands and any Italian brands not powered by Yoox are generally lagging behind”.

-----

About ContactLab (www.contactlab.com)

ContactLab is a market leader in digital direct marketing products and services. Over the years, ContactLab has expanded its offering by including added-value services to its leading technological platform for outbound messaging enabling the uptake of digital marketing as a strategic tool for business growth. Today, the company is a strategic partner managing a customer engagement model for top brands on a global scale.

For press inquries please write to viola[d0t]venturelli@contactlab[d0t]com

Published on: 3:48PM on 13th October 2014