Online Luxury Retail Remains Elusive

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Marc Jacobs, whose eponymous designer is also the creative director at Louis Vuitton, sells nothing on its Web site, although you can find Marc Jacobs' clothing, handbags, and shoes on outside vendor sites, such as online fashion boutique Net-a-porter.com. Same goes for LVMH brands Givenchy, Céline, and Kenzo.

There are still some brands that sell absolutely nothing online, save for beauty products. Consider Chanel. While the legendary Parisian fashion house sells cosmetics both on its own site as well as on a few other high-end e-tailers, such as LVNH's Sephora.com and Saks.com, its current fashion and accessories collections are not for sale online.

More Brand Control

Why? The team at a Chanel has cited brand protection as the major factor. Chanel designer Karl Lagerfeld even met European Competition Commissioner Neelie Kroes in February 2009 to urge the European Union to give brands more control over who sells its items over the Internet. Luxury retailers argue that customer service online isn't what it's like in a boutique, and shopping over the Web could ruin brand perception. (Businessweek.com made five attempts at contacting Chanel's corporate office—including three phone calls and two e-mails—but had received no response at the time this article was published.) The only place Internet shoppers can find Chanel's popular 2.55 purse, or that jade green tweed suit from the fall 2009 collection, is eBay (EBAY). And while the items may be brand new, they'll come from a secondary seller not authorized by Chanel.

This attitude is outdated, say those who study the luxury consumer. "It's totally backwards," says Pam Danzinger, president of Unity Marketing, a Stevens (Pa.)-based market research firm. "Today, people will buy anything online. If they trust the brand, they'll trust the Web site." According to a study released by Google (GOOG) and Unity Marketing in October 2008 that surveyed 1,000 people with a net worth of $1 million or more—and a yearly income of $175,000 or more—designer clothing was respondents' favorite thing to purchase online. Next came jewelry and accessories.

Consultant Kate Newlin, author of Passion Brands (April 2009, Prometheus Books), suggests luxury retailers need to understand that online provides, in many circumstances, a heightened customer service experience because of convenience and efficiency. She suggests that instead of limiting the availability of products online, these brands should take a cue from Apple (AAPL) and offer customized products, as well as a selection of refurbished goods, on the Web. (If customers are going to buy refurbished/secondhand items, they may as well buy them from the brand itself.)

Inconspicuous Consumption

Louis Vuitton already personalizes items with its monograming service, as does the Ralph Lauren Rugby brand. The company's "Make Your Own" feature allows shoppers to personalize cardigans, hats, and button-downs with unique color combinations and embroidery.

Newlin also argues that, in a time of inconspicuous consumption when buying from your home office might be more comfortable than hightailing it to Barneys for the latest Proenza Schouler tweed bustier dress. "If you want to buy, but you don't want to be seen buying, luxury online can be a social courtesy," she says.

That may be true, but will luxury apparel ever fully make the transition to e-commerce? With clothing, fit and fabric are much more difficult to discern over the Web.

"There's so much comfort with shopping on the Internet—the price advantage, the ease of shopping—that I think the advantages of e-commerce supersede the risk of an item not fitting," says Marshal Cohen, chief retail analyst at Port Washington (N.Y.)-based market research firm NPD. "More than 50% of the population has grown up with shopping on the Internet. It continues to be the biggest growth opportunity for fashion, and luxury in particular. They're not going to see the same level of growth in traditional outlets."

Click here to see the best e-commerce sites for the 2009 holiday season.

Lauren Sherman is a Brooklyn-based writer and founder of The Fashion Beat blog.

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