Delivering luxury to doorsteps

MILAN • As Italy entered a new coronavirus lockdown and shut shops last month, Genoa-based jeweller Gismondi 1754 turned to messaging service WhatsApp to sell a €300,000 (S$480,300) diamond ring to a wealthy Swiss client.

At the same time, sales assistants at luxury puffer jacket brand Moncler were arranging gourmet dinner deliveries to customers' homes so they could dine in style while watching a video stream of the brand's latest collection.

The pandemic has forced luxury goods companies to use social media, video chat and virtual showrooms to woo rich customers in Europe and keep them shopping at a time when tourists, especially from China, have been absent for more than a year.

Retailers reopened in Britain and most of Italy on Monday, but they remain shut in France and access is restricted in Germany. In Berlin, for example, a negative Covid-19 test is required simply to enter most shops.

Senior executives in the industry said the trend of selling outside the traditional store network, while not replacing the need for physical shops, is here to stay.

"We are learning that we can also have a high level of service with a low level of physical contact," Moncler's chief executive Remo Ruffini said. "Distant sales are a new frontier, something in the middle between e-commerce and a traditional store."

Analysts say lockdowns and staycations mean wealthy Europeans have money to spend that they are not splurging on fancy hotels or Michelin-starred restaurants.

Designer brands are keen to capture some of that cash.

High-end labels such as Hermes, which used to be reluctant to sell online, have had to fully embrace e-commerce. Online revenues for the industry have doubled to nearly 20 per cent of sales in the past year alone, based on analyst estimates. Boston Consulting Group expects that percentage to rise to 25 per cent by 2023.

Luxury labels have also invested in transforming store assistants into personal shoppers who pamper their VICs - very important clients - by sending products to their homes and keeping in touch regularly. Most brands now stream products on social media and show customers specific product videos.

Before the pandemic, Gismondi would not have sold a €300,000 10-carat diamond ring without showing it to the client in person.

"I was on the phone chatting with the woman who is buying it and it came up that this was the dream of a lifetime for her," said Mr Massimo Gismondi, chief executive of the jewellery group.

From there, an exchange started via WhatsApp and video calls to find the perfect design for the ring that would be delivered to the client's home.

Mr Gismondi added: "People are craving for leisure, for returning to savouring life and spending."

French luxury group LVMH's star label Louis Vuitton, in addition to online sales, has started taking its shops to wealthy clients' doorsteps in the United States.

The "LV by Appointment" campaign brings a tailor-made shop on wheels to the customer, curated with a personalised selection of pieces - from leather goods to watches to perfumes - for those who opt for the service.

LVMH, the first to report results for the first quarter, set a bullish tone for the industry. Revenues bounced back, with its fashion and leather goods division surging 52 per cent - double analysts' forecasts.

Sales in Europe remained in negative territory, but the 9 per cent decline was a major improvement from the negative 24 per cent seen in the fourth quarter last year.

Luxury brands have had a strong recovery in China since shops began to reopen there last spring. But in Europe and the US, finding new ways to connect with customers has helped them to mitigate last year's sales declines.

Analysts say that improving sales in those two regions should help revenues this year.

Sales in Europe and the US accounted for 60 per cent of the total in 2019, and should come in at just under 50 per cent by 2025, consultancy Bain said.

Mr Francois-Henri Pinault, chief executive of Gucci owner Kering, said in February that the group's revenues from "distant sales" - or sales outside its global store network - rose sharply last year.

The group had trained 400 sales assistants in 16 countries for this purpose, he said.

One source at an Italian luxury fashion label said a brand's marketing department will typically provide a list of clients to contact, based on what they bought over the previous year.

The sales assistants then telephone customers, show them the latest arrivals via video chat and send them clothes or shoes to try.

"You create a strong relationship between the salesman and the customer," Prada's chief executive Patrizio Bertelli said. "We have gone from the shop assistant that simply shows you a product to someone who also does a bit of marketing, knows customers, their taste and habits, reaches out to them and sends them stuff at home."

A Milan-based public relations executive who spends on average €40,000 a year in Prada's stores said the brand has regularly sent her videos about its clothes since last year.

"If there is something I like, they send it home. They know my size and, if in doubt, they send more than one size. I buy what I like and send back the rest," she said.

Over the past year, cashmere sweater label Brunello Cucinelli has been organising video calls with 30 to 40 customers at once to keep them engaged.

"It allows us to have a dialogue with a number of people which, if we had to arrange a physical appointment, would take us perhaps three to four years," said the brand's co-chief executive Luca Lisandroni.

But he added that brands should not become too insistent in trying to sell their wares. "Some people like being contacted and stimulated. Others don't want to be solicited too much."

REUTERS