It also lets designers test drive interest in products before they’re made, an increasingly important asset in the inventory fallout since the Covid-19 pandemic. "They can put up one sample and get a reaction rather than making 100 pieces and selling only 60,” says retail analyst Robert Burke.
According to Robert Burke, a retail consultant and principal of Robert Burke and Associates, Etro checks those boxes. "This is a brand with enormous potential," he said, noting its multi-categories menswear, women's, accessories, home, fragrance and gift items. "It's very identifiable and one of the few brands that's remained pure to its vision," he added, remarking on the lack of diffusion or secondary lines or brand collaborations.
He sees the family-business approach as a significant asset too. "You would be hard-pressed to have a more family-run organization and that is part of the allure. There is a face you can recognize associated with it." He praised their retail savvy that translated into real estate acquisitions such as the Madison Avenue building that houses the store and New York offices.
Still, he sees support from L Catterton to properly invest in the e-commerce platform a necessary boost. "It's so paramount to invest in and have a strong online presence. Today the markets have sped up so quickly—especially with the importance of China, the Middle East, Mexico and Brazil—it's not enough to be adequate digitally," he suggested.
“There hasn’t been in the last couple of decades an American brand that has launched that successfully,” says the luxury industry consultant Robert Burke. “The other designers of that time period were really going after European aesthetics.... Tory’s appeal is what’s always been appealing...about American sportswear: It’s uncomplicated. It’s easy.... She was just much more focused on appealing to a real woman.”
The first point to consider is how companies try to differentiate the experience of purchasing luxury online. When price is the differential that platforms attempt to compete on, it becomes very difficult for those selling luxury goods not to be compared to their competitors, especially when a comparison can be achieved by a simple click, says Robert Burke, chairman and CEO of consultancy Robert Burke Associates.
“What you have is a more competitive landscape than ever,” said Burke. “There are more players than there were five years ago or certainly 10 years ago. Today, more than ever, the customer is very savvy about comparing prices, and if you just focus on selling product and it just becomes about price, then if a particular item is $100 or $200 less on slightly unknown site compared to a 24S, Matches or MyTheresa, they will happily buy it from them.”
For platforms, where the added value for their customers lie, is in the curation and storytelling. “If you’re able to inject editorial storytelling, and focus on connecting and communicating with the customer, then the customer relies on you, and the focus of a particularly a well-edited site is really convenient for the customer if they feel that that site, speaks for them,” said Burke.
Indeed, one of the problems that 24S has faced, despite the backing of the world’s largest luxury conglomerate behind it, is seemingly the absence of a strong point of view. “Regardless of the investment you need to have a clear point of view,” said Burke. “It’s really thinking about how you fit into the white space in the market and there’s so much white space in the online market today.”
And while there doesn’t appear to be an easy fix-all solution or formula for companies to follow, what a lot of these platforms must remember is how to attract and maintain a sense of loyalty with the luxury consumer. “It’s really no different than physical retail,” said Burke. “Everyone likes to think that physical retail and digital are different, but the reality is it is exactly the same customer, now more so than ever before. It's the same customer.”
“So, it’s really about the product assortment and the brands you put on and doing special, unique collaboration with those brands,” he added. “And then it’s about communicating with the customer and really good customer service.”
It’s a big moment. “This is one of the most seismic changes in the retail industry that we’ve seen in decades. There was already a desire from brands to take more control as concession environments have built up more steam over the years. But the pandemic has given brands a chance to re-evaluate their dependency on multi-brand retailers,” says luxury industry advisor Robert Burke.
Wholesale can be profitable and low risk for brands if the terms are right. But brands rely on retailers to fulfil an agreement as to how their merchandise is sold, and these deals are sometimes abrogated by retailers during slow trading periods and lead to discount or buyback arrangements, says Burke. “Brands can’t control that and it’s always been a bone of contention.”
The challenges are multiple, notes Robert Burke. “Every brand today has a website and is trying to get the consumer’s attention. With changes in online advertising and social media algorithms, brands and retailers are figuring out how to stand out.”
“Etsy needs to have a younger customer base,” says luxury retail analyst Robert Burke. “Depop will offer an enormous reach for Etsy with the Gen Z customer.”
Etsy has ground to make up in the secondhand market, says Burke, which has also taken off during Covid-19 lockdowns.
“You will see more consolidation [of marketplaces] because there are enough independent players that are out there today that will benefit from being part of a bigger group,” says Burke. “As much as they want to be specialised, there’s strength in numbers when they’re combined.”
“Everyone has started to realise that more focused approaches, selections and marketing make sense,” says Robert Burke of Robert Burke Associates. “Bigger is not always better in the customer’s mind because time is money and they don’t want to wade through large segments of designers.”
Gen Z have different standards for who they consider successful and what they’re inspired by, and they can be a hard sell, says Burke, cautioning against an “if you build it, they will come” mentality.
“Gen Z customers are extremely savvy and hard sold. Where it used to be the brand which told the customer what they wanted, it’s now the reverse. Gen Z are a very discriminating customer so authenticity is key, and if they deem something not cool then there’s a risk that they will move on very quickly,” says Burke.
“Everyone has gotten more comfortable buying almost everything online. But jewellery was probably one of the biggest obstacles to get people to buy,” said Robert Burke, CEO of Robert Burke Associates. “We started to see it around five years ago, as companies like Moda Operandi began selling a few hundred thousand, million dollar pieces of jewellery online, and the female customer becoming much more comfortable buying these items, knowing that they can try it on and return it if needed. And then it just gained momentum, and gained momentum on every category of the jewellery business.”
“What it's going to be is really the true melding of the digital and the physical,” said Burke. “Brands need to be more, more accessible and attainable. To be able to communicate seamlessly with a consumer, whether they're in your store, or online and making that experience one, and also the importance of the transparency of the supply chain, sustainability, background of where the stones come from, and, and where their work is done.”
“The customer today is more demanding and more interested than ever about the origin of the pieces,” added Burke. “They are going to be just as likely to go online and look up the brands website. They expect to see prices today, it's not one of those mysteries any longer. Transparency is important. And they want to be able to shop online and physically go in and have the same experience. And then the companies that that merge the two, and also are able to market in a new way meaning in a digital format, whether that be Instagram, whether that be, whether that be Instagram that would be you to be direct to consumer that's kind of the future.”
A new kind of relationship between brands and retailers could emerge. “Clearly, the brands want to have their own dot com and control it. And, simultaneously, lots are pulling back on retail distribution with wholesale partners, particularly with department stores,” says luxury fashion consultant Robert Burke. “I think there is a good opportunity for speciality stores and retailers like The Webster or Dover Street Market.”
He notes a move towards a so-called “drop-ship” model, in which retailers list items for sale, but the brands themselves fulfil orders. Burke points to Nordstrom and Hudson Bay, which were both able to dramatically increase the number of styles offered.
It’s also a way to capitalise on the ongoing DTC push. “The brands are in control,” Robert Burke says. “I imagine that Farfetch is reading the writing on the wall. It’s best to partner than compete.”
“The reason [consumers] come to retailers often is because of their edit... and people are very much feeling that bigger is not better right now,” said Burke. “Time is money, and the customer doesn’t have unlimited time.”
“The most consistent characteristic design trait he possessed was he always made women look good and feel good. He understood them, listened to them and they knew and felt this. He was sensitive to their bodies and know how to appeal to a wide range of women. This became a signature approach at Lanvin.
His career had highs and major disappointments, nevertheless, he stayed true to his vision. He was just getting started in his new venture, always thinking ahead of the curve and what would be the new way to appeal to the customer. He did away with the fashion calendar rules and creating 400 to 600 SKU’s in a collection.
The fashion world adored Alber because he was real and down to earth, something rare in the industry. He had an amazing, self-depreciating sense of humor. He made everyone around him self-feel good.
I remember my first lunch I had with him many years ago. We sat down and he immediately asked me my sign. We ended up as both Gemini’s and talked little about fashion but more about life. He had charm, charisma, and a sense of humor was totally unique. He left us too early, and I am sure the best of his work was yet to come.”
But despite its history and reputation, the competition today to capture the luxury consumer is “extremely fierce”, says luxury industry consultant Robert Burke. “It’s a great time for speciality stores and you’re seeing stores like Dover Street Market, and in the US, The Webster, have incredible growth. Brands today seem to be more open to working with them than department stores, and they’re able to create more unique experiences for the customer.”
Some of this is not necessarily new technology but that seamless end-to-end shopping experience for customers is vital and therefore the “right” move for Browns, says Burke. “After eight to 10 months where they’re shopping predominantly online, we know there’s excitement from them to go back to physical stores, but they also expect it to be all one experience — and it should be.”
“Ralph and Buffy had a incredibly unique creative relationship. Designers today could only wish for someone like this to be by their side,” said Robert Burke, chief executive officer of Robert Burke Associates, who previously spent 11 years at Lauren. “I think Buffy was Ralph’s alter ego on everything. There was absolutely total trust for both of them. Ralph really relied on Buffy for so much. If you want to know what Ralph was thinking, Buffy knew his reaction, especially in the design and advertising front.”
Asked how he thinks Lauren will survive without her, Burke said, “It’s certainly going to be an evolution without Buffy there. He has some strong people in place now. It will be a transition.”
“The risk of carrying inventory and markdowns is so great,” said Robert Burke, a retail advisor. “This gives certain flexibility to the retailer but also offers more control for the brand … Wholesale will still exist, but it’s evolving quickly.”
“In the end, it may be worth the trade off,” Burke said. However, to make this new hybrid model work, retailers will need to balance broadening their offering with maintaining a strong point of view, something many have struggled with in recent years while prioritising growth.
“Part of the risk here is that more or bigger is not necessarily better,” he added. “The whole purpose of a specialty store or department store is to have a point of view. Without that, what’s the reason for being?”
The dominant players — among them Joor, NuOrder and Le New Black — are around to stay unless there are mergers, says Robert Burke, luxury retail consultant. “It’s very important for brands to be a part of these sites.” He says that they could operate in the market side-by-side, in the vein of UPS and FedEx or Netflix and Hulu. “It can be a lot for the brands, but it’s the price they are paying for getting the exposure with the different stores.”
“We definitely have seen strong recovery in the wealthy suburban markets,” said Robert Burke, chairman and CEO of Robert Burke Associates. “This has been something that was accelerated with the pandemic; many people are shopping locally. The [Simon-owned] Short Hills mall, just outside of New York City, has been very busy and very productive and much of that is because many of the people who would go into Manhattan for their shopping weekend are staying local.
“Even pre-pandemic, there was a customer who didn’t want to go into a big flagship necessarily, they wanted the intimacy of a local store,” Burke said.
That can work for brands, too.
“A few suburban stores can rival, when they’re put together, an international flagship,” Burke said. “The right ones, in the right locations can do very strong business. There’s going to be some lasting effect of the shopping patterns of the pandemic, where people feel comfortable being local.
“Brands that have not been interested in certain markets are now, certainly, and are looking at them very closely,” said Burke, noting more companies have been seeking his counsel on smaller markets over the past six months.
But winning in the suburbs is about more than planting a flag and Burke, as well as other retail and real estate experts contacted by WWD, emphasized not so much place as purpose — how stores are used and what role they will play as retail reawakens.
Burke said the companies that are succeeding now “have done a good job of clienteling their customer and treating all their customers almost like VIPs when they come in and retaining the customer.”
“The thought process oftentimes is all about the footfall and the metric about how many people walk by or walk into the stores. Now it’s really about the customer and retaining the customer and managing a strong customer base and that’s being done in the suburbs really well,” he said. “The pandemic for many brands made them better retailers and better in their customer service and their one-on-one marketing.”
“I believe they are going to be looking at it from a much more individual way,” said Robert Burke, CEO of Robert Burke Associates. “And looking at how to market, how to service their customer from an omnichannel stance. The reality is that many of the brands, as well as LVMH and Kering, are pulling back on their e-tail whether than be online or in-store and looking at the control of their individual brands more than ever.”
“Each brand needs to be treated in its own unique way,” he added. “I believe that that bigger is always not better for multi-brand online, and this consumer will be attracted to more curated customised specialised sites. It is kind of split, it’s not a one shoe fits all which we might have thought about five, six or seven years ago when you look at online.”
“There will be more of a seamless experience on customer service side,” noted Burke. “Appealing to net-worth customers is going to be extremely important and how you go about appeal to them and surfacing them is critical. And I think that will be the future of luxury.”
“There has never been this much change,” Burke continued. “We bring everything back to the pandemic, and the pandemic expediting the customers looking at shopping today. There is a risk that the customer can be overwhelmed and this is just my feeling, but there is so much out there and there is so much happening, that there may be a real opportunity, for the specialist store retailers whether it be a Matchesfashion, or a Webster or a MyTheresa to hone their extremely focused assortment and excellent customer service, and I’m sure that the brands are looking at it the same sort of way.”
“If anything, as we know, fashion goes in cycles and so sometimes, if the luxury consumer feels that things are too accessible, it becomes less appealing to them,” said Burke. “And it has to play into online. And therefore, maybe a conglomerate like LVMH or Kering would be more specialised by brand when they drill down on their online and have omnichannel as opposed to treating it all the same.”
Luxury brand consultant Robert Burke, of Robert Burke and Associates, surmises that the clothing line positioned at collection prices wasn't the best place to reach her customer. He noted luxury buyers stuck with tried-and-true names like Dior, Chanel, Louis Vuitton and Hermes.
Burke also felt that for the launch's fanfare, the drop method was not the right approach. "They left out the fashion show hype which would have reached millions more online, but her power is in her notoriety," said Burke.
There is also a lower threshold in luxury today to weather loss and unprofitability. "I don't know if there are five and ten-year plans anymore; there is so much at stake. And investors look to brands that grow organically," said Burke.
LVMH has their eye on the prize in this regard. "They are looking at where the customer and opportunity are now," said Burke, "Rihanna is a great brand and spokesperson for it. I think this is a process of taping into how to use her talent best to reach the younger, forward-thinking audience that knows her best."
There’s also been a renewed focus on Canada’s luxury sector, with the emergence of new players and investments in the market from already-existing ones. Canada’s two luxury hubs — Toronto and Vancouver — have proven to be resilient markets because they’re less reliant on tourist dollars than their US counterparts, said Hafiz Mangalji, a director at Robert Burke Associates, a luxury retail consulting firm.
For retailers in Toronto’s tony Yorkville neighborhood, Mangalji estimates that 50 percent of their business was local.
“Now that customer is there one hundred percent of the time and they’re spending all of their time in just a three- or four-kilometer radius,” he said. “That spending really hasn’t gone away.”
That customer is also growing in number. While the country’s biggest spenders have long been concentrated in Toronto and Vancouver, the influx of Chinese wealth in recent years has led to unprecedented interest from top-tier brands and retailers. Because of that, more recently, Mangalji said, brands have seen Canada “as the gateway to China, especially Vancouver.”
All this represents a mindset shift on the part of luxury brands and retailers, who, in the past, “didn’t really take the Canadian market seriously,” said Mangalji. After all, with a population of 38 million people — slightly smaller than that of California — the country could only contribute so much in terms of sales.
Amazon may never be a credible destination for luxury fashion, but it could be the platform that solves fashion’s many back-end inefficiencies. “If they can solve the really deep problems in the fashion industry, that becomes a marketable product,” said retail consultant Robert Burke.
