One of my most inspring professors sent this article to me yesterday. The write up from AdWeek talks about how new online retail channels may not be delivering the same value as brick and mortar distribution. It seems apparent that the online portals may only do well for brands selling discounted or low price items. The skill for selling $3000 handbags is not yet fully executable in the online world. As luxury brands use the concept of exclusivity to push their wares, the online model democratizes access and opens luxury brands to customers that are outside their target market. So the question I ask is, “is it worth it for high end retailers to spend their advertising budgets on platforms and models that may not be directly targeted at their captive market?” I would say “no”. However, I would say “yes” if the online channels utilized some level of exclusivity like Moda Operandi or Gilt Groupe (to a lesser extent).
I also see an opportunity for retailers to create their own online channels tied in with loyalty programs targeted to their brick and mortar customers. In this sense they would be encouraging online sales to customers who have a larger propensity to buy the high-priced items that may cause the value spender to hesitate. Maybe the program would be designed in tiers focused on customers who spend a certain amount at the retailer every month. The exclusivity of the online channel would be a value added service for loyalty members only.
In any case, the online model is developing fast and retailers need to quickly identify how its fits into their marketing portfolio. For upscale brands, I still believe that giving the consumer an opportunity to feel the product and talk with the brand expert will continue to be a very potent strategy in attracting and keeping the most discerning customers.