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The first week of containment was a bad omen for fashion and luxury e-commerce. Declining conversion rates, falling online traffic, the effect of the coronavirus is irrevocable. However, e-commerce in the retail fashion and luxury sectors is showing good growth forecasts over the medium to long term. The major houses are even beginning to restructure themselves in response to the imminent transformation of the buying habits of new generations. Explanations.
A devastating impact of containment on the e-commerce of fashion and luxury brands
During the first week of containment in France, overall online traffic exploded by 13% according to Contentsquare, the Experience Analytics platform. However, luxury and fashion portals faced a collapse in traffic. Indeed, their traffic was halved during the period of containment: -52.91% for the retail fashion sector and -55.91% for the luxury sector. The jewellery and watches sector suffered from a similar fall in online traffic, of the order of -66.79%. The total conversion rate – i.e. the proportion that a classic visitor becomes a consumer – is also falling sharply in these sectors: -59.33% for fashion, -67.03% for luxury and -71.22% for jewellery.
Contentsquare has used the pyramid of needs of the American psychologist Abraham Maslow to explain this drop in traffic on fashion and luxury sites: in times of crisis, consumer will concentrate on their most basic needs such as food, security and social needs. The health crisis linked to the Covid-19 pandemic has therefore pushed the French to massively turn towards mass distribution (+161.92%), pharmacy (+7.89%) and telecommunications (+9.63%) and to abandon online fashion and luxury purchases deemed unnecessary.
If the period of confinement does not lend itself to the consumption of “second necessity” products on the Internet, the fashion and luxury market forecasts growth of online retail over the longer term.
Optimistic e-commerce forecasts for the fashion and luxury markets
Contentsquare revealed in 2019 that 66% of users worldwide access ready-to-wear sites via their mobile device. Simplified navigation (download time of 1.52 seconds per session), time savings compared to a classic shopping session, more generous and targeted offers, access to better product information, online shopping of fashion items is today, undeniably, an added value for the consumer: “The more fluid online browsing allows visitors to reach the product page more quickly. Companies perceive this as an opportunity and reduce the download time of their website. In 2019, this was 1.52 seconds per session. […] Finally, brands rely on an effective loyalty strategy and websites retain twice as many online visitors as physical stores. ” explains ContentSquare.
The prospects for e-commerce would be all the more gratifying as the world’s population increases, and with it the number of digital natives or “digital children”. Generation Y (the millennials), Generation Z, Generation Alpha, the share of digitalized generations in the world’s population will continue to grow, further disrupting existing consumption patterns and enabling a considerable expansion of e-commerce in the years to come. Fashion and luxury companies, which rely on the exceptionality of their boutique and point-of-sale activities, must therefore imperatively continue to innovate in order to learn how to satisfy digitally savvy customers.
Moreover, according to a report on global wealth in 2019, the number of “ultra high-net-worth individuals” is expected to grow by 22% over the next five years, meaning, in the background, the enrichment of new generations. Thus, according to Bain & Company, an international strategy and management consulting firm, generations Y and Z will represent 55% of the luxury market in 2025, contributing to 130% of the current market development.
E-commerce would then prove to be tomorrow’s breeding ground for success for fashion and luxury goods manufacturers, who are therefore working more and more to capture the attention of these new virtual customers, who are more numerous but also more demanding and therefore more volatile. These new types of consumers are forcing major brands to rethink the relationship with their customers, through better interaction but also through a more unique and personal shopping experience.
The poor results of e-commerce for the fashion and luxury sectors can therefore be explained by the exceptional period of confinement that France and the world are going through, and by a socio-economic crisis conjecture. However, the commercial transactions of fashion and luxury portals should see an upturn in the wake of the coronavirus crisis and in a context of strong digitisation of society. E-commerce therefore remains a tremendous opportunity for the major houses and a promising market.
Read also> Coronavirus: how is the fashion and luxury industry organized to fight it?
Featured photo: © Vestiaire Collective
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