The main reason luxury brands are investing in ecommerce is because of the luxury customer. The luxury customer for the last 10 years has been shopping more online and even more so in the last 3 years when they were locked at home during the covid pandemic.

During this time some bricks and mortar retail focused luxury companies lost up to 90% of their revenue.

Luxury Ecommerce Grew at a faster rate in 2019

Many large luxury brands are working on making their business more digital. In the most part they are investing in new technology to improve the customer experience on their websites, building new websites to enter new countries and re-educating their employees on data and tech.

This is often referred to as Luxury Digital Transformation.

There are many luxury companies generating billions and 100’s of millions of dollars every year.

They are profitable and looking to be more profitable.

The biggest challenge they have is keeping up with the ever changing behaviour and demands of customers.

Luxury Customers are emerging in new markets all the time and brands have to be where they are shopping.

Enter new markets, release new products quickly and trade while protecting their profit margins.

For example China became the 2nd biggest luxury market in the world in 2023.

Luxury brands need the chinese luxury customer to grow their business and to do this luxury brands have either had to build more retail stores, websites and stores in airports to meet this demand.

This requires agility in your strategy, mindset ,technology and the structure of your teams.

Billion Dollar Heritage Beauty Leader

Revlon Cosmetics was founded in 1932 and by the time it listed on the stock market in 1996 it was one of the leading billion dollar heritage beauty companies.

90’s Trailblaizers

The company thrived through the 90’s even buying it’s competitor Elizabeth Arden and the company became famous for it’s celebrity lead advertising campaigns.

Revlon also purchased and launched celebrity branded cosmetics lines. It became successful with this model. This is what it was very good at and stuck too for many years.

Left Behind

However Revlon did not adapt well to the rise in customers shopping online and the rise in popularity of pure play online only beauty brands like Kylie Cosmetics and Fenty Beauty.

They did not take ecommerce seriously or invest enough in digital transformation or technology.

Revlon's CEO Deborah Peelman said in 2018 the company was learning from brands like Kylie Cosmetics to be more nimble or agile in their approach to doing business.

As a predominantly bricks and mortar business with a small percentage of the business revenue coming through online.

Bankruptcy

Revlon was seriously affected by the coivd-19 pandemic in 2020 and lost 20% of revenue in that year.

In June of 2022 Revlon filed for bankruptcy in the united states.

A billion dollar heritage company selling luxury products that had been a market leader for years went out of business because it failed to transform digitally and meet the changing needs of it’s customers.

Just because the luxury company you lead has been successful for decades does not mean it will survive the digital age.

In fact in my opinion the bigger your market share as a luxury brand the more vulnerable and at risk you are of failing at the latest and most important hurdle the market has thrown up.

Luxury Digital Transformation.

Don’t Underestimate the Ecommerce Pure Play Startups

There are luxury startup founders fantisicing everyday about your market share and now more than ever with technology they are well equipped to take it from you.

The rise in online shopping is a great opportunity that will and has already created winners and losers.

What is happening in the market is similar to the transition from customers purchasing in shops to the rise in popularity of department stores 60 years ago.

I would argue the rise in online shopping is the biggest change in customer behaviour in the history of the luxury industry.

Listen and React Fast to Customer Behaviour

To survive luxury leaders must invest in data and insights and listen to the customers needs and pay attention to changes in the market. Every single day.

Things change constantly in the luxury market and uncertaintiy is the new normal.

A luxury companies ability to move fast to the ever changing customer needs and the unpredictable market is what will deliver success or failure.