the thorny topic of how high-end, luxury brands tackle the rise of commodity e-commerce and their status as 'exclusive' entities. In our coverage of the digital transformation of the retail sector, we’ve returned time and again to
Do they make an online push themselves or - shudder - resign themselves to seeing their handbags and haute couture listed on Amazon or T-Mall rather than maintaining the chic of a 5th Avenue or Regent Street offline store?
Different retailers have tackled this in different ways. Louis Vuitton has displayed considerable e-commerce antipathy, whereas Hugo Boss seems to accept that the sector is changing and that digital cannot be seen as a luxury in its own right.
Over the past few days we’ve seen a couple of announcements from two leading luxury brands - Burberry and Chanel - that demonstrate that this ‘final frontier’ of e-commerce and digital in retail is being taken seriously. And both announcements have one thing in common - a London-based, privately-held digital retail platform and services provider, Farfetch.
Burberry has pitched itself in the past as a digital enthusiast. It was a regular use case exemplar at Salesforce conferences around the world only a few years ago, while former CEO Christopher Bailey made no bones about his view that a digital future was as important as high-end stores.
It was interesting that with Bailey set to step down as CEO this year, the firm’s last quarterly analyst call - from which he was absent - was notably lacking in digital strategy. There was a brief mention of an in-store app and a couple of very brief references to e-commerce, but none of the tech-enthusiasm of Bailey or his predecessor Angela Ahrendts.
But e-commerce does still feature on the Burberry agenda with the fashion house announcing a tie-up with Farfetch to put its entire inventory over on to the latter’s platform to expand its online reach into more than 150 countries. In a statement, Burberry said:
The partnership will see Burberry working closely with Farfetch on how the brand is presented on the Farfetch marketplace, ensuring the images and narrative provide a consistent and curated digital experience. Illustrative of the new relationship, Farfetch also offered an around-the-clock London delivery service for 24 hours after Burberry's show at London Fashion Week last weekend. This is going to be a very important relationship for Burberry moving forward.
It’s also one that the retailer hopes will open up its offerings to a younger, more fashion-savvy audience. Daniel Heaf, SVP Digital Commerce & Digital Marketing at Burberry, said:
Burberry has led the way in digital and this is a natural and significant evolution for us as we seek to reach a young fashion-conscious consumer. We want the digital expression of our brand to represent the very best in brand and product storytelling whether on our own platforms or through our partners, and Farfetch customers globally can now access the full Burberry offer.
In a separate - and perhaps more surprising announcement given its outlier status in the e-commerce world - French fashion house Chanel revealed that it has taken a minority state in Farfetch as part of a new relationship between the two firms to develop new digital initiatives, online and offline.
In particular, Chanel wants to create ”ultra-personalized” experiences within its stores and what’s being pitched as ‘Augmented Retail’, tech which can record and remember a shopper's preferences, offering up suggestions for future purchases.
Other initiatives are likely to include tech to enable customers to seamlessly sync on their devices all the products they looked at it in the physical store as well as smartphone applications allowing people to flag their preferences and sizes online before entering a store.
But that old luxury brand nervousness about corrupting the ‘elite’ aspect of shopping with Chanel lingers on. The retailer is pitching this as a multi-year exploration of digital and is emphatic that this is not, repeat not, about putting Chanel goods online.
Or as Chanel’s fashion president Bruno Pavlovsky puts it:
“We strongly believe that digital will never replace the feeling of being in a fitting room and trying on Chanel piece…We are not starting to sell Chanel on the Farfetch marketplace — I want to be very clear on that. Our position on e-commerce is the same.
That’s not something that needs to worry Farfetch, which pitches its mission statement as being to reinvent luxury retail offline as well as online. In the ongoing challenge of getting the real world/digital world balance right in omni-channel thinking, Farfetch still sees the physical experience as dominating the luxury sector.
So who is Farfetch? It was founded by Portuguese entrepreneur José Neves in 2007. Since its launch in 2008, Farfetch has extended its platform to customers in over 190 countries with items from over 700 of the world’s best boutiques and brands from over 40 countries.
It has various business arms - Store of The Future, which is “a customized suite of technologies developed to help brands and boutiques enhance the customer journey by bridging the offline and online worlds”; Farfetch Black & White, an infrastructure platform that luxury brands can use to develop their own e-commerce business; and London fashion boutique Browns, acquired in 2015 and used as a showcase for Farfetch tech such as touchscreen mirrors and IoT connected clothing racks.
Privately-held, Farfetch is backed by the likes of Advent, Index Ventures, Condé Nast International, Vitruvian, DST Global, IDG, Temasek, Eurazeo and JD.com. But there’s increasing scuttlebutt that an IPO with a valuation potentially as high as $5 billion is on the cards for later this year.
Of the two partnerships, Burberry’s displays more digital enthusiasm. With Chanel, it does still have an undercurrent of grudging inevitability, but at least the retailer has blinked. As for Farfetch, if those IPO rumours are true, having those two brands associated is going to do no harm at all.