Online luxury fashion sales are set to grow at a rate of 18% between now and 2018 in the UK and a whopping 70% in China. The way consumers interact with brands is becoming increasingly digitalised, with 50% of UK consumers using search engines to find luxury goods. Online sites provide, according to McKinsey & Company, a rich opportunity to increase sales growth.
Luxury brands have been slow to move their offerings onto the digital market, with most brands only recently offering their goods through their own branded websites or through multi-brand e-tailors. In recent research from McKinsey & Company, the state of the women’s online luxury fashion market is assessed. To determine the market and its trends, McKinsey completed a consumer surveys in seven markets around the world, assessing among others market growth rates and key consumer behaviour.
Key findings from the survey are that the online luxury goods market is expected to grow rapidly over the coming years in all global regions, up from the current 3% of the total luxury fashion to 17% of the market, which equates to roughly $12 billion. This growth will be fuelled both through developments in Western markets as well as expansion into developing markets, with annual sales of online women’s fashion between now and 2018 expected to grow by 18% in the UK, 17% in the US and a massive 70% in China.
While the exclusivity of luxury brands remains important, with ever increasing numbers of wealthy individuals that want to be recognised as “in the club”, while wearing attractive apparel, brands have started to expand into e-tailors. These platforms have the benefit of being sought out by certain kinds of affluent consumers, while the brand only websites can continue to leverage its range of classic class offerings. These e-tailer websites, according to the research, will also see the greatest growth in the coming period – something exclusive brands can take advantage of.
From a UK perspective, the research identified a number of relevant trends, with luxury brand sites, search engine engagement and exclusivity nominated as channels UK shoppers use to access high end brands. 54% of UK luxury goods consumers nominated Selfridges.com, a multi-brand e-tailor, as their favourite place to shop. Another favoured multi-brand e-tailor among UK consumers is the US site Net-a-Porter, with garners 42% approval. Farfetch, an e-commerce venture that ships products directly from stores, is highly rated by 36% of respondents. Overall, 56% of British luxury consumers say they have shopped with at least one, placing multi-brand stores as an important channel in the market.
In terms of researching goods, British consumers are more likely to hit search engines, with direct referral and search engine engagement about equal in terms of acquisition. Other factors influence the choice to engage online the UK, with 75% of consumers pointing out a convenient return policy as important to their purchase choice, and free shipping being influential to 73%. While 40% indicate access to goods not available in-store piquing their interest. Consumers (48%) also increased their purchase volume if they were offered online deals or if they offered exclusive brands that no other store had. One consequence of the high volume in “organic” search engine customer acquisitions in the UK is that new entrants still have the opportunity to capture the attention of consumers.
McKinsey concludes that: “These findings highlight important execution considerations for luxury players around the globe. The commonalities among the U.S., UK and German markets reveal that online sites, whether mono-brand or multi-brand, have a distinct opportunity to drive sales through both a better approach to pricing and the offer of unique products or brands that aren’t available elsewhere online.”