It is a phenomenon that evident in all product categories and across the chain of distribution. In December, for example, it was reported that the sports giant Nike was speeding up the pace of new product launches and expanding partnerships with online retailers, leading to a 41 percent rise in digital sales in final quarter of the year.
One month earlier the Spanish clothing giant, Zara, announced that it was planning to expand online sales to an additional 106 countries through a dedicated online platform, mostly in Africa, making the companies fashion line available online in 202 countries.
Online sales at Zara’s mother company, Inditex, had already risen by 41 percent in 2017 to reach 10 percent of group net sales.
ONLINE IS LUXURY’S FASTEST GROWING DISTRIBUTION CATEGORY
It is a trend that is not passing the luxury product markets by. According to Bain & Company’s 2018 report, by 2025, the online channel will represent 25 percent of the market’s value, up from 10 percent today.
But actual sales only tell part of the story. According to Bain’s approximately half of all luxury purchases along the value chain will be digitally enabled as a result of new technologies. These include virtual reality displays, which already are quite widely used in the diamond and jewelry sectors, and mobile payments.
Online is far and away the luxury sectors fastest-growing channel, reports Bain, increasing 22 percent and reaching 10 percent penetration globally.
According to Bain, the Americas contributed 44 percent of global online luxury sales, but growth was particularly strong in Europe and Asia.
Accessories remained the top category sold online, ahead of apparel, while beauty and hard luxury—which includes jewelry and watches – are rising strongly.
The biggest online channels for luxury sales were e-tailers, with a 39 percent share, brands’ own websites, with a 31 percent share. and retailers’ websites, with a 30 percent share.
WHOLESALE GROWING SLOWLY, BUT STILL KING
But while the focus remains strongly on retail, according Bain wholesale is still the largest channel for luxury goods, accounting for 62 percent of all sales.
Nonetheless, the retail channel is growing at a steady rate, expanding by 4 percent in 2018. This, Bain says, is the result of as companies increasingly wanting to control the experience they deliver to customers.
Looking at the retail gain, 1 percent came from new-store openings and the remaining 3 percent came from same-store sales growth.
In contrast, wholesale grew only 1 percent, as specialty stores faced tough competition from the online channel.
Off-price stores and airport duty-free stores logged strong growth, with both categories gaining 7 percent, according to Bain.
Of particular interest is the secondhand market, which was driven by particularly by strong growth in Europe, which makes up more than half its size, as well as by growth among specialized online platforms. Watches and jewelry account for 80 percent of all purchases in the secondhand market.