Online: Innovative retail ideas go on the net

In times of war and uncertainty, make-up is considered a female panacea: the one luxury item that stays in demand no matter what happens in the world outside.

Hence the “Lipstick Index”, a term coined following an observation made by Estée Lauder chairman Leonard Lauder post-9/11: as the market goes down, lippy sales go up. And yet, according to a Mintel report that came out in April, lipstick’s power as a pick-me-up is not holding true this time. Mintel’s survey, in the US, UK and France, found that from a list of cosmetics, lip colour was the item women would be most likely to spend less on, while more was being spent on shampoo and cleansers. Why? It seems the lipstick index has been replaced by the online index.

Consider the recent results of the UK’s largest online fashion and beauty retailer asos.com . Its pre-close trading update announced sales up 104 percent to £165m ($273m) for the 12 months to March 31, 2009. Now international brands are clamouring to access its customer base: Mango, Hackett, Gant and Mini Boden will appear on its site this summer. And from August, kid’s, men’s and women’s accessories and apparel from Gap will further augment asos.com’s 800-strong brand offering (which ranges from High Street names to boutique fare such as McQ by Alexander McQueen, Sass and Bide and PPQ).

The site’s successes have also wooed senior retail personnel away from British bricks and mortar. “People want to work somewhere where sales are increasing,” says chief executive Nick Robertson.

“With matchesfashion.com it surprised us how quickly the site grew into an ever-expanding market,” says Tom Chapman, owner of the UK high-end boutique group. He notes that the online store has swiftly become the number one womenswear outlet in the company.

“We forecast a contraction of bricks-and-mortar sales in 2009, with 110 per cent growth online,” says Mr Chapman. “This growth is coming from new markets and consumers as well as existing bricks and mortar consumers who are purchasing in increasing numbers online, possibly due to their wish not to be seen so overtly as consumers.”

Meanwhile, Yoox Group, the Italian online company founded by Federico Marchetti in 2000, finished 2008 with net sales of €101m, marking year-on-year growth of 48 per cent. In recent years the Yoox Group’s focus has shifted from being an upscale TK Maxx to becoming an internet luxury goods specialist – the group also operates e-commerce sites targeting the EU, US and Japanese markets on behalf of Italian brands including Marni.com, Emporioarmani.com, Costumenational.com and Emiliopucci.com. In February, Bally.com and Moschino.com joined its stable, and there are plans to collaborate on an additional six online stores by 2010.

Likewise, Theresa, the Munich fashion destination, which launched mytheresa.com in 2006, has also benefited from its relationships with luxury brands and become an online portal: their offering includes Prada and Tod’s as well as brands like Lanvin, Jasmine de Milo, and Givenchy and their customer reach extends to the UK, Poland, Romania as well as France, Spain and Italy. As the only independent purveyors of Roger Vivier footwear online, as well as one of the stockists of Jimmy Choo they have seen shoe sales jump 30 per cent in the first quarter of 2009. As for Jimmy Choo’s very own website, sales online have shot up 80 per cent year to date, according to chief executive Joshua Schulman.

“This crisis is doing our industry a service,” says Guy Salter, deputy chairman of the luxury organisation Walpole.

“For a long time no one was questioning the way of doing business and when trading was good it was difficult to see opportunities. Now, if you compare the costs of a store roll-out with the cost of extending what you do online, the latter is more cost-effective and one of the long-term benefits is it also brings us closer to our customers, when pre-crunch they were becoming remote.”

A recent online retail and travel report by Forrester Research estimates that about 28m consumers – that is one in two UK consumers – shop online, outspending their European and even their US counterparts.

By 2014, Forrester forecasts 37m UK online buyers will spend £56bn online – perhaps partly lured by the newest online fashion trend: invitation-only shopping, pioneered by the French site vente-privee.com.

“There is a demand for designer fashion at markdown prices,” says Mr Salter. “And when it’s presented as a private sale, it not only protects the brand, but also gives the consumer the idea that they are within an inner circle.”

In 2007 the Gilt Groupe – www.gilt.com – launched in the US while UK site Cocosa – cocosa.com – launched in 2008.

The Gilt Groupe is the brainchild of Alexis Maybank and Alexandra Wilkis Wilson, and offers 36 hour-long sales of styles from a single designer. Distinctly American in flavour, the group has previously offered brands such as Michael Kors, Oscar de la Renta, Valentino, Thakoon, Anthony Nak, Botkier and Shoshanna.

Cocosa, by contrast, is the brainchild of Bauer media, which owns British women’s magazine Grazia.

“It’s a way of leveraging our magazines on line,” explains Cocosa’s managing director Andrew Robb, who says that each 48-hour sale sells the product of a single designer and offers a carefully edited selection of past and existing seasons. “I believe the recession will be good for Cocosa, because brands will want new channels to reach the consumer.”