July 25, 2005
By Michael Hastings, Newsweek International
© 2005 Newsweek, Inc.
Return to article listNo ‘high touch’
Luxury brands struggle mightily to maintain their image on the internet.
July 25-Aug. 1 issue—You cannot buy Prada shoes on Prada.com. In fact, there are no working links on the Web site. This is not a glitch. Since the late ‘90s, the site has been a single page, with only the name of the Italian fashion house and two photographs. No store locations or help numbers. Nothing. “I love Prada,” ponders Nina Dietzel, president of Web-design company 300FeetOut. “But what’s up with their ‘site’?”
Prada claims a new Web site is “under development.” But having a mysteriously useless home page, it admits, has an allure. It screams exclusivity: you can see, but you can’t click. It’s a uniquely Prada solution to this riddle: how to make your luxury brand work on the Internet without diminishing its value. In a sense, the Internet is antithetical to the “high touch” luxury experience. There is no pampering by sales staff, and customers have come to see the Net as a path to cheap prices, not top-dollar goods. There’s no velvet rope: anyone can place an order, or set up shop. That’s why Prada strives to maintain the link between its name and the extravagant experience of shopping at stores like its $40 million New York flagship, designed by Rem Koolhaas.
Unlike Prada, most luxury companies can’t afford to ignore the Web: in the United States, e-commerce accounted for $2.5 billion in luxury sales. That figure is expected to grow to $7 billion by 2010, says Forrester Research. It’s still a small fraction of the total market compared to other retail sectors, but five years ago analysts said there was “no way” luxury would sell online. They were betting customers wouldn’t pay that much on the Web, and top brands wouldn’t go slumming in this bargain basement. One of the first high-end luxury retailers, Ashford.com, had many well-publicized struggles, with its stock dropping to near rock bottom in 2001.
Most upscale labels have ended up selling on the Web anyway. Since 2003, Ferragamo, Burberry and Gucci have all launched sites. So have Barneys and Bergdorf’s. “Consumers expect it,” says Nicole Waxenblatt, who develops online ads for Grey Interactive, a top New York-based advertising firm. “You’re doing a disservice to your customers if you don’t have something on the Web.” In fact, even Ashford.com is now doing well as one of the few sites selling luxury at a discount (typically about 60 percent off). Bargain hunters have also taken to the auction site eBay, where one can find this year’s $500 Manolo Blahnik for $50, albeit slightly used.
One continuing problem, says Dietzel, is offering the bells and whistles consumers expect on a luxury site. Adding graphics and video can slow down a site, and annoy savvy clickers. Dietzel says her firm designs luxury sites with two goals in mind: simplicity and convenience. “It’s not a print brochure. People on the Internet have different expectations,” she says. Many stores also don’t offer a full selection of their goods online. It’s risky as well to try to replicate the in-store atmosphere. Diamond seller BlueNile.com claims to be the Tiffany’s of the online world, but looks like something on the Home Shopping Network. (Nevertheless, sales hit $169.2 million in 2004.)
Companies like Neiman Marcus that have strong catalog sales have made the transition to the Web more easily; online sales are the company’s fastest-growing source of revenue. Swiss watchmakers Breitling and Patek Philippe have taken another tack with Web sites that offer only information, not sales. Breitling director of marketing Ben Balmer says a luxury brand needs to offer “a buying experience” that only a well-run store can provide. However, he notes that since 2002, it has presented 30 percent fewer catalogs in the United States, and seen sales rise more than 35 percent, thanks to exposure on the Internet. Prada may not need a working Web site after all.