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UK Luxury Retailers Lag Behind Other Sectors in Ecommerce

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VL’s trip to the UK gave us a taste of the similarities and differences between retail, omnichannel, and data integration vis a vis the UK and North America. Ever since, we’ve been hot on the trail of more data, statistics, as well as knowledge comparing and contrasting the two markets. Recently, we came across a great tidbit from a recent conversation we had with Mark Goodwin of Graziashop on the status of luxury retail in the UK that has since led us on a trail of research that has unearthed some astounding statistics and facts about both their market and ours.

You would think that, because of the high profile and profit margins associated with luxury retail brands, these retailers would be the first to have high-end omnichannel outlets both online and in bricks-and-mortar.

What VL discovered surprised even us.

Keep reading to find out more!


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We started down the rabbit hole of research into luxury retailers in North America and the UK with a casual observation from Mark at Gradziashop:

“UK luxury retailers are lagging behind other UK sectors in ecommerce.”

This statement gave us pause. All assumptions would point to luxury retailers world-wide pioneering the omnichannel marketplace; certainly some high-profile Luxury brands like Sephora, Michael Kors, Burberry, and more are setting the bar high in terms of luxury e-commerce portals. The insinuation from Mark’s statement was that the bulk of luxury retailers weren’t like the Sephoras and Michael Kors of the world: they were, in fact, so far behind that other sectors were surpassing luxury retail in their e-commerce initiatives.

So we asked Mark to expand on his observations: why was this the case in the UK?

The key is that CPG [consumer packaged goods] and FMCG [fast-moving consumer goods] have been early adopters of ecommerce and related technologies due to their product types – hard goods and perishables. Additionally, these industries have the added bonus of having mass audiences and venues to sell their products into.

However, Luxury is a different sell, focused on exclusivity and brand reputation with smaller audiences that have higher disposable incomes. So these luxury good companies are very conservative in their outlook and in embracing new technologies, channels, social media and so forth due to their fear of brand erosion.”

Mark’s explanation made logical sense. So we at VL did some research to see how the UK luxury retail trend described above matched up with the North American luxury market. And we were surprised.

Only 40% of luxury retailers world-wide sell online.

That’s right, only 40% of luxury retailers sell online. Luxury omni-channel retail, it turns out, is a budding market. A great quote from Lucie Greene, worldwide director of JWT Intelligence, really puts luxury e-commerce into perspective across the globe: “E-commerce has been described as the ‘next China’ for luxury in terms of opportunity.”

Another interesting trend is how people consume these luxury retail goods world-wide. A trend in East Asia that is now pushing into the European market, possibly influenced by Gen M’s shopping habits, is that consumers are only going into the bricks-and-mortar luxury locations to sample, try on, and browse the goods, but not to buy. Instead, these consumers return home and buy the very same goods online, sometimes in the same day and from the same retailer. And they expect next-day delivery. The very psychology of consumption of luxury goods has changed – people do not want to be seen carrying out branded shopping bags from these luxury stores; they don’t want to be seen as ‘promoting the brands’. But they still want the goods in the end. Interesting. 

How does this relate to data integration?

Mark Goodwin of Graziashop summed up why the luxury retail space is such a hotly discussed item in the integration world in the UK:

“From an integration perspective, the ‘hot’ topics this side of the pond is firmly focused on the Luxury space as these Retailers/Brands are 2-3 years behind other sectors with ecommerce. These retailers have very different integration requirements with a high degree of ‘customized systems’ – also known as problems.

From a data integration standpoint, this now becomes very interesting as these businesses have very different business requirements and technology uses compared to that of the CPG and FMCG sectors. What works for one does not work for the other. This now translates to a very different set of business as usual operation requirements, data requirements, and integration touch points.

The reason why this is significant is that in the global downturn, the vast majority of sectors with the exception of luxury were affected. Luxury sales however increased during this period.”

What does this means for luxury retailers that aren’t in that 40% that are already embracing e-commerce? They should be planning for e-commerce if they want to survive in the new retail landscape, and they should most certainly be planning and strategizing for the data integration implications that come along with a shining omnichannel customer experience.

With Gen M driving how businesses operate, we can only expect more luxury brands to either embrace omnichannel retail (or die refusing to). From our conversation with Mark, it certainly sounds like the luxury retail sector is going to come knocking on VL’s door very hard, very soon – and we’re up for the challenges their unique integration requirements present.


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