New York:
The Web site for Marc Jacobs, the flamboyant fashion designer with an estimated $5 billion brand, has many things: stylish videos of employees describing their jobs, footage from elite fashion shows and parties, and even a photo of the company's president staring down a camel in Egypt.
One thing it does not have: clothes for sale.
In the genteel world of luxury, companies long felt that the Web was no place for merchandising exclusive products. And there was a gentleman's agreement with department stores not to siphon sales by reaching out directly to wealthy customers.
Then, in came the recession, and out went the niceties. Department stores slashed prices on $1,200 handbags, while luxury lines fretted about losing their exclusivity. Now, comes September, marcjacobs.com is going retail, 10 years after most brands opened Web showrooms.
"I was so annoyed last year that I wished no one had our merchandise," said Robert Duffy, the president and vice chairman of Marc Jacobs. "All the department stores were panicked, and they were marking things down." Other luxury brands -- Jimmy Choo, Hugo Boss, Vince, Lancôme, St. John, Theory, Kiehl's, Lilly Pulitzer, Donna Karan and La Perla -- have started or soon will start selling their products through their Web sites. If it infuriates department stores or brings in customers who might have earned a glare from haughty clerks, who cares, as long as people are buying at full price? "These brands are finally taking the plunge to establish an online retail presence," said Jeffrey Max, chief executive of Venda, which handles technology for e-commerce sites. "The recession forced these manufacturers to realize they needed to look for revenue wherever they could."
Adding to the Web's appeal, profits are much higher on clothes sold directly to consumers, since no middleman takes a cut. And the brands can control pricing and styling on their sites. Hugo Boss uses the same models from its ads so its marketing is consistent, for instance, while Lacoste "won't have any discount pricing on the Web, never, never, ever," said Eric Bascle, director of strategic projects and e-commerce. When companies started to sell items online in the 1990s, most luxury brands paid little attention. By the mid-2000s, a few high-end companies were selling their products directly, but most still didn't bother.
"The classic luxury brand Web site is basically a Flash site with lots of beautiful imagery, but no one ever goes to it," said Aaron Shapiro, a partner at the Web design firm Huge. Brands whose boutiques have fresh flowers and fawning salespeople could not translate that to the Web.
"Luxury brands were a little hesitant or reticent, because they were struggling with how to convey and create an experience that was rich," said Mark Brashear, chairman and chief executive for the Americas at Hugo Boss, which introduced its e-commerce site in April.
But by the time the luxury market slid last year, attitudes were changing. Technology was improving, so sites could add features like zoom, videos and live help. And with budgets for store openings frozen, a Web store was a relatively cheap way to expand a business.
"An elegant, sophisticated online store with a high level of data security can be had for a few hundred thousand dollars now -- that's probably less than the legal fees to review a lease for a store on Fifth Avenue," Mr. Max said. And in 2009, as the worldwide luxury-goods industry fell 8 percent, to under $230 billion, luxury sales online were forecast to grow 20 percent, according to Bain & Company. Suddenly, the brands that had sniffed at e-commerce looked rather foolish.
"Early adopters are basically in a position now where they're even more ahead of the game and are doing some pretty significant business online," said Jem Ripley, vice president at the marketing firm Sapient Nitro, which is designing sites for Hugo Boss and Kiehl's. "You've got the late adopters coming forward now and seeing that they need to represent themselves."
Of course, shopping on the Web doesn't quite mimic the feeling of browsing at a store. For instance, while clerks at the lingerie store La Perla will measure a woman's bust to find the right bra size, on the Web, visitors are given a size chart and toll-free number. But other companies add functionality to their sites: at
sjk.com, St. John allows customers to shop from ad-campaign photographs, and a social networking section lets shoppers send messages to designers.
The difficulty of making a flat screen feel luxurious is one reason some brands refrained from selling products online, but for the final holdouts, battles with department stores pushed them over the edge. Department stores ordered too much inventory for 2009 and were left with piles of unsold clothes when consumer spending declined. The stores slashed prices -- meaning less revenue for the clothing makers, along with a potential image problem when a $500 shirt sold for $200.
And last week there was more bad news from luxury retailers, as new data for June showed that luxury department stores, like Neiman Marcus and Saks, fared worse than department stores in general compared with a year earlier. Unlike the snooty boutiques of Madison Avenue or Rodeo Drive, the sites will welcome anyone. "I don't think they're trying to exclude anybody," Mr. Ripley said.
The department stores are responding by reinforcing their loyalty programs, offering discounts and doing aggressive e-mail marketing to customers. But the brands are biting back by, for example, selling a wider range of colors or styles than one retailer would carry, or selling special products only online.
"I want to give people a reason to go there -- if I have the same stuff on our Web site that's at Neiman's and Saks," the site would have little appeal, Mr. Duffy of Marc Jacobs said. Asked if he was worried that retailers might be upset, Mr. Duffy said he was unconcerned. "How can they? That's ridiculous," he said of retailers who sell his line. "I'm the one that should get huffy that they have it on their Web site."