Luxury Goods Hit The Web

January 15, 2010
Filed under News

Contributed By Jenny Li

Luxury goods companies, which have suffered from declining sales, are hoping a more contemporary appeal will attract new consumers. Many of these companies are moving to the Internet to attract a new, younger generation of customers.

“The biggest thing that keeps me up at night is how we can continue to evolve this

organization in order to stay ahead of the curve,” Chief Executive of Burberry Angela Ahrendts said, according to the NYTimes.com article, “Burberry Looks Online for Ways to Gain Customers.”

Evolution has led the company to launch a new social networking site, artofthetrench.com, in an effort to adapt its trademark trench coat and other products.

“I think these sites may be quite effective if they create brand loyalty,” Advanced Placement Economics teacher Sally Meek said. “Also, the social networking aspect is different as the company can connect with the buyers who create their own online community.”

The site keeps its formality and pays homage to the company’s British heritage while

appealing to a younger demographic. The entire site is based upon user-sent pictures of people in Burberry’s trademark coat. The scrolling feature allows for quick browsing of the high-quality images, which can be filtered by popularity, gender, color, styling or weather, as if it were on an iPhone.

“These sites are probably going to be occupied by mostly aspirational buyers,” Meek said. “Everyone buys Coach because they can afford it. The new generation is aspiring to have status.”

After roughly an eight percent decline in sales this past year, the global market for luxury goods is expected to grow again next year when younger consumers and working women replace retiring baby boomers as the dominant consumer group.

“I get ideas on how to wear stuff by looking at models online,” junior Josey Yun said. “In fact, that is exactly what I was doing online at Forever21.com the other day.”

Previously, many luxury goods companies have shunned the Internet, seeing it as a place for bargain hunters to search for knock-offs and counterfeits. However, as aging customers in developed countries cut back on purchases due to the recession, the Internet is a prospect for growth.

“Markets function better when there is more competition,” Meek said. “The Internet expands the area over which companies can make trades, which better satisfies both the customer and the company.”

Due to the recession, companies reliant on sales from jewelry and watches suffered more than those selling clothes and less expensive merchandise. Also, companies that depended on department stores suffered because they had less control over pricing and inventory. Thus, some companies such as Salvatore Ferragamo, Prada and Bulgari launched online stores that are independent from department or boutique stores. Louis Vuitton also sells limited edition merchandise such as their Steven Sprouse collection handbags exclusively online.

“I would definitely look at those sites if I was interested in buying something,” junior Janie Holstine said. “But as for actually buying the merchandise, I probably would not get it online because you have the try the clothes or item on.”

Online advertising is also an up-and-coming marketing technique. Many companies use popular websites such as Facebook, where there are many potential customers.

“I believe that the aim of appealing to the younger generation may be effective if companies advertise on the right sites or print where young readers will see it,” Meek said. “Companies have to go where their audience is and in this case, it is the Internet.”

Many feel that online advertisements are far more effective in reaching out to the younger generation.

“I’m online all the time so the advertisements that I find there stick with me,” Yun said. “I’m not going to go buy a magazine to tell me what is trendy when I can simply type any web address into my computer.”

Luxury goods companies are hoping this is the view many potential customers will take.

“People don’t want to be just like everyone else,” Meek said. “The uniqueness of the high-end goods appeals to these buyers. So those companies have to get the information out there and access the people.”