Online Luxury Flourishes

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It's Not Exclusive, but It's Lucrative: Why Luxe Went Online
By CATHY HORYN

It used to be one of the great free pleasures in New York to go into Tiffany & Company in the afternoon and hear the pens tapping on the counters. Each rap of a salesman's ballpoint signaled the sale of a diamond ring or a pair of cuff links. It intoned happiness and solvency, and, since Tiffany was not the sort of place to expose a customer to the indecency of baring his wallet in public, it summoned a manager, who performed the actual transaction at a discreet distance.

Tiffany stopped the practice of pen tapping almost 10 years ago; you probably didn't even notice. For one thing, people aren't embarrassed by the sight of money anymore and, for another, they don't have time to wait for the manager. They slap their credit cards on the counter, and there's no need to soften the blow with hushed voices. Today, in fact, the most persistent sound in luxury shopping is the mouse click. From now until the end of the holidays, Tiffany.com will receive 100,000 hits a day, roughly equal to the number of people who will visit a Tiffany store.

If mass retailing has been transformed by the availability of better-designed products, like Michael Graves teapots at Target, class has been transformed by technology and a consumer who is as well informed as she is impatient to have the latest gaud. Half the purchases on Neiman Marcus's Web site are by customers who do not live near one of its actual stores, said Brendan Hoffman, chief executive of Neiman Marcus Direct, which also operates the Web site of Bergdorf Goodman, a Neiman property.

Designers who travel the trunk-show circuit, selling their new clothes like Fuller brushes, have long known about the wealth in this country. But the Web has given merchants an unlimited portal to the rich, and changed the meaning of notions like status and exclusivity. "We're selling Chloé, Manolo Blahnik, Dolce & Gabbana," Mr. Hoffman said. "We see no price resistance on the Web."

Not long ago, the Neiman site offered Giorgio Armani's Le Collezione label, which has women's suits for around $1,200. The line sold out in less than a month, Mr. Hoffman said.

The speed of information has also induced consumers to buy earlier, giving merchants a greater chance to sell more goods at full price. "We saw some of our biggest purchases this year between Aug. 15 and Sept. 15," said Brian Bolke, an owner of Forty Five Ten, a boutique in Dallas, where some customers spent as much as $20,000.

Speed also agitates demand for special and hard-to-find products. Stores like Bergdorf's and Barneys New York now offer more small labels in their mix to woo shoppers who are turned off by the ubiquity of big brands — and the media buzz around them. "Our customers want more individuality," said Robert Burke, the fashion director at Bergdorf's.

But this desire for the hidden and seemingly exclusive helps even established designers. Oscar de la Renta had a $40,000 sheared mink jacket in his fall line. "We thought we'd sell a few," said the company's chief executive, Alex Bolen. "We sold 40."

Of course, the notion of trading up — exchanging one identity for a better one — has been going on in this country since the Mayflower. In their 1992 book, "Channels of Desire: Mass Images and the Shaping of American Consciousness," Stuart and Elizabeth Ewen point to the influence of silent films on the lives of immigrants. Such films, the Ewens said, supported a crucial myth in American culture, "metamorphosis through consumption."

But the consumption ethic, it can also be argued, remained relatively static for decades, drawn as much by rigid economic lines as by class distinctions. The rich had their own playgrounds, their own style of life, and while they sought the best clothes and the best food, they didn't try to surround their exquisite taste with a term like luxury. They certainly didn't think of luxury as an exploitable commodity, the way Ralph Lauren began to do in the 70's. As Slim Aarons said of the socialites he photographed in the 50's: "I didn't do fashion. I did the people in the clothes that became the fashion."

What brought the barbarians finally to the gate was branding. Things had been moving in that direction since the mid-60's, around the time Life magazine published a list of the 100 most influential New Yorkers and included the names of a few designers and Pop artists, a notion that would have been too ridiculous to contemplate a decade earlier, when such figures were considered outside the elite establishment. But the real explosion came in the 90's with the emergence of superbrands like Louis Vuitton and Gucci.

Although credit has been given to Tom Ford and Domenico De Sole, who left Gucci in April, for stimulating consumer demand at the high end — largely by limiting distribution and then feeding the frenzy for "it" handbags with waiting lists — Mr. Ford recognized a crucial change in modern tastes. Namely, all the energy, all the excitement (and a great deal of the money), was coming from the bottom — from the worlds of indie rockers, rap artists, celebrities, even p*rn stars. A luxury brand might be aspirational, but it can't afford to be perceived as elitist.

"In luxury today, it's so much more about having a bottom-up identity," said Nancy Koehn, a professor at the Harvard Business School. "The top has to marry itself with the bottom, because the elite at the top aren't that important."

The Internet is also anti-elitist, as journalists who left magazines for online publications discovered. Not only was conventional media slow, it wasn't interactive or personal enough to satisfy all the different segments of readers. For luxury retailers, the challenge is how to leverage their prestige without appearing snobbishly out of touch. Neiman's, for instance, is developing custom home pages. Tiffany's Web site shows how engagement diamonds are cut and set, believing that consumers want more for their money than the luster of a name.

Big brands undeniably offer security. "You know that Chanel is going to be around for a while," said Jane Buckingham, president of Youth Intelligence, a company that surveys trends. But safety in numbers carries its own threat.

Brian Bolke of Forty Five Ten, the Dallas boutique, suggests that specialty stores like his — and Tracey Ross in Los Angeles and Linda Dresner in New York and Birmingham, Mich. — serve as a filter.

"I'm sure that Prada has the biggest influence of any brand," Mr. Bolke said. "But if you go to a party and there are seven other women in the same Prada dress, you might as well have gone to Gap."

No two designers are more alert to the cloning factor than Miuccia Prada and Karl Lagerfeld at Chanel. That's why they keep upping the ante each season with looks that are novel or hard to copy. Compelled by an affluent shopper who gets her information about a collection hours after it is shown, who makes her purchases earlier and earlier, they have no choice. To be slow in fashion these days is to be out of the money.

 

[AlexN]

Oscar de la Renta had a $40,000 sheared mink jacket in his fall line. "We thought we'd sell a few," said the company's chief executive, Alex Bolen. "We sold 40."

 

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Originally posted by AlexN@Dec 8 2004, 02:47 PM

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My reaction exactly.