London Fashion Week played host to an array of luxury British fashion brands as they showcased their latest Autumn/Winter 2019 designs in a variety of locations across the capital. However, the prestigious event is changing. This year, London was the first of the four global fashion week events to open its doors to the public. The plan is that each season will feature several hand-picked brands to stage public shows, with the inaugural catwalk shows in London featuring House of Holland and Self-Portrait.
Whilst this gives British brands a larger platform to target UK consumers, the demand for luxury fashion and goods is very much a global one. The global luxury market is growing rapidly, expected to grow by 3-5% YoY to reach €320-365 billion by 2025. Chinese consumers are leading this positive growth trend around the world as their share of global luxury spending continued to rise. Currently, China accounts for 32% of the world’s luxury goods purchases, set to rise to 40% by 2025.
The global online opportunity
Millennials and Gen Z are trending to be the primary engine of growth for the luxury market in the coming years. According to Bain and company, they will represent approximately 55% of the 2025 market and will contribute 130% of market growth between now and then, offsetting the decline in sales among older generations.
These young consumers, who have grown up with the internet, are more comfortable with shopping online, both on desktop and mobile. Luxury goods sales are now growing nearly three times faster online (14%) than in physical retail (5%). According to Forrester Analytics’ Luxury Retail Forecast, nearly 60 percent of luxury sales growth will originate from ecommerce by 2023.
A research from Deloitte has found that internet users ages 20 to 30 are roughly as likely to prefer online shopping for luxury goods as the in-store experience. In China, for example, shoppers age 37 and younger make up two-thirds of luxury goods digital buyers, according to a study conducted by the China E-Business Research Center (CECRC).
With international demand for luxury fashion spearheaded by digitally savvy young consumers, British luxury brands need to ensure that their online offering caters to this generation, who are across all digital touchpoints, no matter where in the world they are located.
The strategy for global success
Shipping and return offerings need to be adapted to local purchasing preferences too, so local market knowledge and best-practices is essential. In many markets, consumers are used to having a wide range of options, including, for example, express shipping or delivery to parcel shop. Luxury UK brands and retailers should make sure their offering is competitively priced within common market rates, in order to give shoppers a better incentive to buy. Another aspect that should never be overlooked is the local duties and taxes. All final costs should always be presented up-front at the point of purchase with the option to pre-pay at checkout for complete transparency and guaranteed landing cost. This is particularly crucial for luxury items as the high average order values usually go beyond most local thresholds.
Each market you are trying to reach is different but the one thing all have in common is the need for an easy and straight-forward shopping experience that is tailored to its unique characteristics. Any British luxury site that offers cross-border shopping should be able to support the local market it is serving with the same level of high-quality experience provided to UK shoppers. Mastering this will increase international customer base, boost conversion rates, global customer loyalty and ultimately lead to significant international growth.
Neil Kuschel, CEO Europe, Global-e