Luxury-goods companies have traditionally avoided selling their wares online. How could the online process compare with the touch and feel of a boutique store, with attentive staff on hand?
Exclusivity is key to maintaining brand quality, not so? Brand owners are reluctant to see their handcrafted wares being discounted on Amazon..
Well, shoppers are happy to order online, wait for delivery, and send items back that don’t fit well or look ideal. Also, websites have improved dramatically and now offer a legitimate brand experience.
Of the luxury giants, Richemont has led the way in expanding its online presence. The world’s second-largest luxury-goods company is the maker of Cartier and Van Cleef & Arpels jewellery. It has South African roots, and executive chairman Johann Rupert clearly likes the internet. He is active on social media, with the Twitter handle @cutmaker.
In 2017, e-commerce was only 1% of the group’s total sales. In recent years it bought Net-a-Porter, then merged it with Italian online clothing retailer Yoox, and finally acquired the whole thing. It also bought Watchfinder. Online sales now make up 18% of the total.
Richemont has not done much for shareholders on the JSE for a while. Over the past five years the share price has hovered at about R100 a share. Perhaps the e-commerce push will improve sentiment? Earnings remain solid, and the group has lots of cash on hand.
• Paul Theron is the founder and CEO of Vestact Asset Management.
- From the March edition of Wanted 2019.