For the past two decades, the luxury shopping industry was a kingdom dominated by huge multi-brand e-tailers. The ingenuity of Natalie Massenet’s Net-a-Porter in 2000 created an exciting new move towards the world of ‘internet shopping’. The royal family of luxury digital commerce comprised Net-a-Porter, MatchesFashion and Farfetch, with MyTheresa and SSense in supporting roles. Although each with their own identities and point of view, all combined the speed and accessibility of a blossoming digital era with the white-glove finesse of luxury. Towards the end of the late 2000s, many traditional bricks-and-mortar department stores, including Selfridges, Harrods and Browns, crossed the border into e-commerce, bringing their sought-after products to wider audiences than ever before. These e-tail titans had the power to catapult a small independent label into stardom within weeks, through the might of visibility and distribution. When I began my career in the late Noughties, the ‘buys’ (otherwise known as product selection and curation) of Net-a-Porter, Matches et al were reported on keenly; being stocked by one of these juggernauts was an indication that a respective brand was destined for success.
Shoppers fell hard for the luxury online fashion model, and women veered towards different e-tail juggernauts depending on their sensibility. If you wanted big-name brands like Gucci or Dior, you headed for Net-a-Porter; for a tasteful mix of rising and established labels, Matches was the go-to. Farfetch was the only place to head for little-known boutiques, curated from around the world. Wealthy customers loved having their designer shopping brought to their homes in branded vans and presented in elegant boxes. The internet, to some extent at least, democratised fashion; all of sudden you didn’t need to live in an expensive capital city to shop the brands you saw in high-end magazines – they could be sent to your door with just a few clicks.
Today, the landscape looks a little different; those halcyon days are over. Those once thriving multi-brand luxury e-commerce platforms are in decline and shoppers are turning elsewhere for their prestige wardrobe fix. In the past few months, we’ve seen many of them face varying levels of difficulties. Most recently, Matches entered administration only three months after being bought by Mike Ashley’s Frasers Group. Weeks later, 200 of its stocked brands are owned substantial sums of money without access to unsold inventory, as reported by the New York Times. Over at Farfetch, the situation doesn’t look much cheerier. In December, the company was rescued from near collapse by the South Korean e-commerce group Coupang in a last-minute rescue deal. At Yoox-Net-a-Porter (commonly known as YNAP), there is also concern after a deal failed between Richemont, its parent group, and Farfetch last year.
The questions now focus on the causes behind the decline, and what the future is for the multi-brand platform. Have they really lost their sparkle? The answer to the first question has, in part, been credited to an identity crisis across the platforms. “A lot of the problems come from these companies losing focus of what made them initially successful,” explains the luxury consultant Hélène Holzmann, whose past and present clients include Chanel, Selfridges and Buccellati. “Take Farfetch, which was very good at bringing unknown brands to market and linking special stores across the world and giving them visibility and a distribution network. You could find an item on Farfetch that you couldn’t find anywhere else. The curation was incredible. When they expanded and went for those big luxury brands, they lost their way. The problem now with these multi-brand platforms is the lack of differentiation. They all stock the same high-end labels, and put less effort into exclusives.”
“The internet, to some extent at least, democratised fashion”
The other long-standing issue is overstock – the unsold garments left over from seasonal buys – which often leads to promotions and discounting. The pandemic only acerbated this problem, when retailers were lumbered with mountains of unwanted clothes. “It’s hard for the multi-brand stores when they’re left with this inventory to negotiate with labels who care so much about about their reputation and value; they want to be seen as selling at full price,” says Fiona Ward, the fashion features editor at The Future Laboratory, a forecasting and research service. “It made some of those labels want more control over their e-commerce. There’s also the issue surrounding when a product can go on sale. Now many luxury brands have their own e-commerce operations, so you end up having the same product available at vastly different prices.”
The pandemic led to further challenges for online luxury platforms. Without being able to depend on sales from their physical stores, many big luxury brands amped up their own e-commerce offering, investing in their own respective websites more than ever before. Suddenly, customers could shop the full collection of their favourite label directly, rather than a small edit available on the likes of Farfetch and Net-a-Porter. Luxury items that were never accessible online before, suddenly were. “Luxury jewellery, pre-Covid, wasn’t widely available online,” says Holzmann. “Post-Covid you could visit the Bulgari website and for the first time be able to buy a £2 million piece of jewellery. What this meant was that those luxury brands became less dependent on the multi-brand luxury sites and attracted shoppers away from them.”
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The pandemic also gave us a renewed appreciation and hunger for social interaction and human connection. Whereas shopping online had felt quick and convenient before, after years of not being able to step inside a store, many were desperate to try clothes on in a changing room with a sales assistant on hand to offer advice and assistance. Having the time to spend browsing physical rails and trying multiple options suddenly felt like the ultimate treat, with an influx of influencers sharing changing-room selfies and documenting their favourite in-store finds. Essentially, online shopping lost its novelty when it became the only available option, which posed a big threat for big luxury e-tailers. “The nature of retail has changed to become, at its best, more experiential, when you can delight in the tactility and discovery, plus the events or entertainment that some physical retailing offers,” says Ward.
“Online shopping lost its novelty when it became the only available option”
The multiple lockdowns created a heightened desire for high customer service, and – when we could shop in stores again – those physical shops were ready to meet our needs. Luxury department stores, such as Harrods and Selfridges, were and still are in a strong position with their dining, wellness and cultural offerings. “The longer the customer stays in store, the more likely they are to buy,” explains Holzmann. “Look at Ralph Lauren’s coffee house and bar on Bond Street, which is part of the shop (and is now an international coffee chain found worldwide); it’s a way of retaining customer attention in a way that’s much harder online. Digital can’t compete.” Ward highlights Selfridges’ newly-opened Joke Shop, which sells nostalgic and amusing objects and clothing. “What a clever idea,” says Ward. “God, we all need a laugh right now. Selfridges has become a cultural destination in its own right. Luxury department stores just need to find their focus to thrive.”
It isn’t necessarily all gloom for the luxury multi-brand stores. The Munich-based MyTheresa (which initially launched as a boutique in the 1980s, before launching its website in 2006) proves that there are ways of delivering exemplary customer service online by offering money-can’t-buy experiences to its highest spending clients. Targeting a company’s wealthiest customers, who remain protected from any cost of living crisis, could be a fruitful way forward – or at least it has been for MyTheresa. Last September, Italian designer Brunello Cucinelli celebrated his 70th birthday and the 45th anniversary of the brand with a star-studded party in Umbria, Italy. MyTheresa managed to acquire a handful of invites for its top-spending clients. “As a result, the customer remains loyal to the shop, but also needs to buy something new for the event,” says Holzmann. “It was clever on many levels.”
“The eco-system of small labels could disappear without the multi-brand e-tailers”
Unexpected help could also come in the form of the independent small brands that rely on the infrastructure of monolithic digital platforms for survival. Although ostensibly, it might look as if these rising labels need the Farfetches and Net-a-Porters of the world more than vice versa, a symbiotic relationship is beneficial for both parties. “The independents still need the multi-brands for their infrastructure and visibility, and the multi-brands need them for their reputation and to give them a point of difference,” says Holzmann. “They are reliant on each other. The whole eco-system of small labels could disappear without the multi-brand e-tailers, but it’s a two-way street.”
“Without the big e-tailers, there are options for smaller brands, but boy do they have to be inventive,” adds Ward. “Telfar in the US is doing interesting things – they’ve launched a new retail model whereby the customer community is told that the quicker they are to sign up for a product drop, the cheaper it is to buy. They have an amazing loyalty scheme; for example, telling customers if they buy one product, they’ll get another item free. These were old-school retail tactics but are now being elevated to a new level.”
A luxury online shopping revolution is coming. Whatever happens next will be determined by how we want to shop now.