Are the Rich Really Ready to Buy Luxe Online? Duh.
Retail sales slouched upwards roughly five percent during the holiday season, both online (18.1 percent) and in bricks-and-mortar (much more modestly), according to Mastercard Spending Pulse. While there are those who posit this as a ray of sunshine, rainbows and unicorns for conventional, mall-based chains, our view is that it’s just the reverberating toll of an echoing death knell. The industry is simply clutching ever more tightly to its lingering denial, which is, after all, only one of the five stages of grief. What comes next? Anger. Then bargaining. Then depression. Finally, acceptance.
Some portions of the retail world are late to the acceptance game but seem at last and after a terrible struggle to be getting there. Swiss luxury conglomerate Compagnie Financière Richemont is just the most recent case in point. One would have thought that Cartier, IWC, Montblanc and Van Cleef & Arpels would have been the cloistered last bastion of hushed service for the privileged and elite. However, it seems even they would rather purchase bespoke jewelry on line. Wait! What? Really? Yes. Richemont is an excellent illustration of the five stages of bricks-and-mortar grief, in action.
· First, denial, which was made manifest in the strategy of conglomeration itself, right? Each one of these venerable marks was perhaps sadly slipping a bit, but together? Much stronger was the thought. Backroom efficiencies, etc.
· Then, anger. Up the advertising. Bring in different (lower) price points. Bring in different (higher) price points. Fight. Fight. Fight. And furiously, too.
· Then, bargaining: Invest in Net-a-Porter, just in case, which was so three years ago. Then, bargain some more and divest a big chunk of that to form Yoox Net-a-Porter.
· Wait! What? The strategy didn’t work. Depression.
· Then, last week, buy it all back. Bet big on on-line retail, e.g. Acceptance.
This is the way the world is moving. Amazon has proven it at the commodity (Bounty! Tide! Charmin! Dash Buttons!) level. Amazon is proving it in fashion, food and nearly every other formidable category. Netflix proves it at the streaming level. FreshDirect, GrubHub and meal kit manufacturers prove it at the grocery level. Drizly proves it by bringing booze you can use in just about an hour. BirchBox proves it at the cosmetics level.
Here’s the buried headline: The market continues to migrate to convenience, even if convenience is defined as a $24,000 watch delivered to your door.
Deny at your own grief-stricken peril.