Passion For Shoes: 2020

Bain & Company Thousands of people have died, and millions have lost their jobs. In the first quarter of 2020, global luxury sales will decline year-over-year by 25 to 30 percent, according to a new report from Bain. Right now, analysts are estimating that the market could contract up to 35 percent this year. But before the crisis turned the world upside down, luxury goods purveyors, including French conglomerates LVMH and Kering, as well as Swiss group Richemont, had won over a generation of consumers obsessed with newness, exclusivity and glamour. Success came from high-touch retail experiences and endless streams of novel products that ranged in price from prohibitively expensive for most to downright affordable for many. But that love affair has also been kindled by the digital age, which has allowed shoppers to engage with their favourite brands whenever and wherever they want. It all began with the launch of online luxury retailer Net-a-Porter in London in June 2000. Part magazine, part virtual store, Net-a-Porter was just the first of many multi-brand online players that would enter the category. The same year in Milan, Yoox, an online outlet store, opened its doors, selling second-season designer clothes to a group of consumers who had never been able to access them before. In 2010, €4.3 billion (about $4.7 billion) worth of personal luxury goods were sold online, and Net-a-Porter was the most trusted digital seller of luxury goods, not to mention the hottest fashion start-up in the business. That year, Richemont acquired a majority stake in the business for £350 million (about $434 billion). By 2019, consumers were buying €33.3 billion (about $37 billion) worth of personal luxury goods online globally each year. However, where at the start of the decade Net-a-Porter appeared poised to become the online luxury market’s Amazon, the sector had become more fragmented and chaotic than ever. A second wave of competitors had emerged to volley for that spending, including other multi-brand retailers such as MatchesFashion and Moda Operandi, as well as rental platforms, second-hand sellers, marketplaces and peer-to-peer services. Each of these upstarts, from consigner The RealReal to hype-sneaker trader StockX and luxury marketplace Farfetch, had its own spin on the luxury e-commerce model. But while they began to dislodge Net-a-Porter as the dominant player, they also faced their own troubles. None emerged as the market leader. Multi-brand retailers are now competing for customers in a fashion market where supply outweighs demand. Discount culture has taken hold, especially in the US, where stores online and off routinely slash their prices (and margins), forcing some retailers into bankruptcy — including world-famous store Barneys New York — and others into unprofitability. “I really don’t see a world in which you’re going to have all of these competing multi-brand retailers who are all selling the exact same inventory,” said Jennifer Hyman, chief executive of fashion rental service Rent the Runway. “They did not disrupt themselves.” But perhaps most disruptive is the growing competition from brands which have, in recent years, made their own e-commerce channels a bigger priority. Today, the online luxury establishment is running out of time to develop winning strategies, just as the coronavirus crisis pushes the economy into what is expected to be a deep recession, accelerating drastic changes in consumer behaviour that were already underway. This isn’t a gradual evolution, but an inflection point for the online luxury market, where further consolidation, contraction and more store closures are predicted. source; businessoffashion1apr.20