When Italy entered the new coronavirus closure and closed stores in March, Genoa-based jewelery Gismondi 1754 turned to WhatsApp messaging service to sell 300,000 diamond rings to wealthy Swiss customers.
At the same time, commercial assistants in the luxury clothing company Moncler were organizing delicious food delivery to customers’ homes so they could eat in style while watching a video stream of the latest product collection.
The epidemic has forced luxury goods companies to use social media, video and real-time exhibitions to lure their wealthy European customers and store them at a time when visitors, especially from China, have been absent for more than a year.
Retailers reopened in Britain and most of Italy on Monday, but remain closed in France, and access is restricted to Germany, and in Berlin, for example, a severe Covid trial is required to enter many stores.
Top executives in the industry have said that the practice of selling outside the store network, while not replacing the demand for physical stores, is here to stay.
“We are learning that we can also have a high level of services with a low level of physical contact,” Moncler’s manager Remo Ruffini told Reuters. “Remote sales is a new frontier, a middle ground between e-commerce and a traditional store.”
Analysts say the closure and “stay” means rich Europeans have the money to spend less on luxury hotels or restaurants with Microsoft stars.
Designer products are eager to capture one of those costs.
High-end labels like Hermes, which used to have nothing to sell online, have had to fully embrace e-commerce. The industry’s online revenues doubled to nearly 20% of sales last year alone, based on analysts’ estimates. Boston Consulting Group expects that percentage to rise to 25% by 2023.
Luxury labels also invest in converting store assistants into customers who indulge in their VICs – the most important clients – by sending them products home and keeping in touch regularly. Most brands now broadcast products on social media and show customers exclusive product videos.
Prior to the epidemic, Gismondi would not have sold 300,000 euros, a 10 carat diamond ring without showing it to the client in person. “I was on the phone talking to the lady who was buying it, and it turned out that this was a lifelong dream,” said Massimo Gismondi, chief executive of the jewelry group.
From then on, the exchange began with the lady via WhatsApp and video-calls to find out the proper shape of the ring to be sent to her home.
“People are looking forward to having fun, getting back to life and spending money,” Gismondi told Reuters.
French label LVMH star Louis Vuitton in addition to online sales has begun to bring its stores to the door for rich customers in the United States.
The “LV by Appointment” campaign brings the customer’s tire shop, customized with customized options – from leather goods to watches and perfumes – for those who choose the service.
LVMH, the first to report first-quarter results, has set the tone for the industry. Revenue has returned sharply, and its fashion and leather sector has increased by 52% – the speculation of analysts has doubled. Sales in Europe remained negative, but a 9% decline was significantly better from the 24% minus seen in the fourth quarter.
Luxury brands have recovered strongly in China since stores began to open there last spring. But in Europe and the United States, finding new ways to communicate with customers has helped them reduce last year’s decline in sales.
Analysts say improving sales in the two regions should help raise revenue this year. Sales in Europe and the United States accounted for 60% of total revenue by 2019, and should be below 50% by 2025, said consultant Bain.
Francois-Henri Pinault, CEO of Gucci owner Kering, said in February the group’s revenue from “remote sales” – or out-of-the-box sales – had risen sharply over the past year. The group had trained 400 sales assistants in 16 countries for this purpose, he said.
One source at the Italian luxury fashion label said that usually the product advertising department will provide a list of customers you can contact, based on what they bought last year.
The sales assistants then phoned customers, showed the newcomers through a video chat and sent them clothes or shoes to try.
“It builds strong relationships between sales people and customers,” Prada chief executive Patrizio Bertelli told Reuters.
“We’ve moved from a retailer to just show you a product from someone who does a little marketing, who knows customers, their taste and habits, reach out to them and send them things home.”
A Milan-based PR official who spends about 40,000 euros ($ 47,552.00) a year on Prada stores said that since last year Prada had been sending him videos of their clothes.
“If I like something they send it home. They know my size and if there is any doubt they send more than one size. I buy what I like and return the rest,” he said.
Last year, cashmere candy label Brunello Cucinelli has been arranging video calls with 30-40 customers at a time to keep them reliable.
“It allows us to have a lot of conversations with people, which if we had to arrange for a physical appointment, it could take us maybe 3-4 years,” the product’s chief executive, Luca Lisandroni, told Reuters. He also said the brands should not focus too much on trying to sell their goods.
“Some people like to be touched and encouraged, others don’t want to be asked too much,” he said.