Will Amazon’s new luxury online store be the fashion savior – or the archenemy?

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Amazon has launched a new luxury offering with the rollout of a couture shopping experience that will feature established and emerging fashion houses and brands.

The company’s luxury stores launched on Amazon’s mobile app on Tuesday with iconic fashion house Oscar de la Renta. The designer’s boutique presents its pre-fall and fall / winter 2020 collections of ready-to-wear, handbags, jewelry, accessories and a new fragrance. Other brands will be launching in luxury stores on Amazon in the coming weeks and seasons, the company said in a statement.

“I guess almost 100 percent of our existing customers are on Amazon and a huge percentage of those are Prime members,” Alex Bolen, CEO of Oscar de la Renta, told Vogue. “For me, having more spirit sharing with existing customers in addition to attracting new customers – that’s the name of the game.”

The new store concept is only open to Prime customers invited to the United States and allows customers to view items in 360-degree detail. Luxury brands will have more independence over how they store their stores and their prices thanks to Amazon’s merchandising tools, which allow them to create and personalize their store’s content. They’ll also be able to offer their own customer services to buyers to answer specific questions about their collection and choose how they pack and ship to their customers, the company said.

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Amazon’s luxury stores come at a tumultuous time for luxury retail as the pandemic keeps high-end physical stores closed and department stores like Lord & Taylor, Neiman Marcus and discount retailer Century 21 file for bankruptcy. French luxury goods conglomerate Kering and fashion giant LVMH Moët Hennessy Louis Vuitton reported a 29% and 28% drop in revenue respectively in the first half of 2020 compared to the same period of the year last due to the coronavirus outbreak.

“The impact of the epidemic on sales and annual results cannot be precisely assessed at this stage without knowing the timetable for the return to normal of activities in the various areas where the group operates”, declared LVMH to investors in August. “After a second quarter severely affected by the crisis, we can hope that the recovery will materialize gradually in the second half.”

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According to an April report from McKinsey & Company, the downturn in economic activity due to the pandemic could have a particularly hard impact on the luxury retail sector, which relies on personalized in-store service and l tactile experience of purchasing high-end parts. The financial advisory firm estimated that around 80% of publicly traded fashion companies in Europe and North America would be in financial difficulty if they continued to remain closed for another two months. The firm also estimates that “a large number” of global fashion companies will go bankrupt in the next 12 to 18 months.

About 80% of publicly traded fashion companies in Europe and North America could be in financial difficulty if they continue to remain closed for two more months.

But Amazon’s latest plunge to attract luxury shoppers to buy couture in its market could offer a lifeline for luxury firms that have struggled to grow their e-commerce businesses, analyst Alexis DeSalva said. lead research on retail and e-commerce with the marketplace. Mintel service company.

“Before the pandemic, there was definitely an interest in luxury,” she says. “You have to take a step back because the way consumers buy is different. Barneys, Neiman Marcus, Century 21 – many luxury or traditional businesses have not made it easy for a luxury shopper, or a first-time luxury buyer, to shop online. “

For Oscar de la Renta, the opportunity to entrust the execution and delivery branch of their online business is a major attraction for the fashion house. “The return rate in our physical stores is low in single digits on a bad day and almost 30% for online sales,” Bolen told Vogue.

“It means I have to have a lot more inventory, a lot more people dealing with returns,” he said. “It’s a bit of a different activity than what we’re used to. We need to learn how we can improve ourselves, and Amazon is very interested in this issue. They have teams of people thinking about it all day. “

Amazon had previously ditched early luxury fashion breaks, including MyHabitSite, a competitor to Gilt Group offering flash sales of luxury items, while others, like StyleSnap, were launched with spit among buyers. . For years, Amazon’s reputation has been linked with the market’s struggle to fight fake luxury goods sold by third-party sellers, which has led some companies such as Nike to refuse to sell on the site. Even with the support of Vogue editor-in-chief Anna Wintour and the growth in clothing sales in her market, Amazon CEO Jeff Bezos has struggled to push the company into high-end fashion.

Jean Jacques Guiony, chief financial officer of LVMH, told investors during a 2016 earnings call that the company felt that “Amazon’s business does not correspond to LVMH, period, and that it does not correspond to our brands ”.

But Sarah Willersdorf, global head of luxury at Boston Consulting Group, said the pandemic has changed the way luxury retailers view their survival.

“This is the time when we encourage all brands in retail to test and experiment as much as they can,” she said. “Those who can save a bit of free space and invest to experiment are seeing some interesting results and that’s a big difference in luxury. This ability to test, learn and use the data, I think, is really positive. “

Doug Walsh, a novelist based in Snoqualmie, Washington, told NBC News he was surprised to receive an invitation to Amazon’s new luxury experience. He and his wife are avid hikers and travelers who don’t spend more than $ 30 on a shirt, he said. They are frequent preferred buyers, but not luxury.

“The items look great and I think it’s good that they get bigger,” he says. “Maybe I would buy a watch or something that is more in line with our lifestyle – but if it’s just high-end luxury designers, we’re not the right people for that.

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