21/02/2007

By Miles Socha
PARIS – Imagine having an audience of 860,000 people for a couture show?
You don’t have to: Giorgio Armani’s already done it, having streamed his Armani Privé show in Paris last month live on Msn.com.

Too intimidated to walk into a Place Vendôme jeweler? No worries: Log on to Secondlife.com, pretend you’re a bee and fly around 3-D computer renderings of Dior’s latest precious baubles.

Initially wary of the cyber world, European designers and luxury goods firms are suddenly buzzing about new media and communication technologies, unveiling six- figure gems online, dispatching fashion shows to cell phones and iPods, and expanding e-commerce to more product lines and regions, from the U.S. to Japan.

To be sure, many brands are still tiptoeing into the fast-moving field, investments remain small and some have yet to come to grips with the dizzying pace of change. But believers contend the high-tech world offers crucial new channels to communicate with current and future customers, enrich their brand experience – and capture impressive sales.

“For us, it’s like electricity, trains, cars, planes were for other generations: It hadn’t existed before,” said Karl Lagerfeld, who last year did a live podcast of his signature fashion show from New York. “The world has changed: For some audiences, it will soon be the only way to reach them….Fashion has to be seen.”

“It is the future and it will continue to grow,” echoed Mark Lee, chief executive officer of Gucci, which saw its online sales rocket 65 percent last year, making e-commerce one of the Italian brand’s fastest-growing channels. “I think it’s really just complementary.”

Gucci has also done a live Web cast of its cruise collection, and offered a podcast of a store opening in Tokyo, underlining the role of new technology for brand communication.

“It’s very valid,” said Sidney Toledano, president and ceo of Christian Dior, which broadcast its “Madame Butterfly”-theme couture show last month to an audience in Japan. “It’s about communicating with the customer in new ways.”

Regarding the fine jewelry preview, editors who didn’t log on to Secondlife.com were recently dispatched a DVD containing a film and downloadable images of the online “Belladone Island” — although the disc’s contents were programmed to self-destruct within 24 hours. “I love the fact that this presentation is open to anyone who wants to come and see it. There are three million people on Secondlife.com. You can fly, meet people, sunbathe on a huge rock,” Victoire de Castellane, Dior’s fine jewelry designer, enthused about her online teaser. (The real stuff will be unveiled in Paris next week.)

“It is a necessity for luxury brands to exist within a contemporary context, no matter how accessible, as long as you can deliver real quality,” added de Castellane.
Toledano noted Dior intended to ramp up its use of technologies, especially given the advent of handheld devices.

Lagerfeld said the Internet had become the first point of reference for fashion, rather than written critiques in conventional print media accompanied by few visuals. “People want to make their own opinion by seeing a lot — all, if possible — and in the minute,” he said. “We are 100 percent in tune with all the new media and ways of communication. If you aren’t, you will be dead soon…and in a way it’s not fun NOT to be involved with the use of recent, the most recent, inventions. I love all that!”

In the early days of the Internet boom, luxury brands feared online selling would undermine the exclusivity of a dedicated brand environment, promote the “gray market,” antagonize wholesale clients and generate few profits, said Pierre Mallevays, founder and managing partner of Savigny Partners, a luxury goods advisory and mergers and acquisitions firm in London. “All those fears are pretty much dissipated by now,” he said. “The Internet channel is effectively turning into the best or one of the best stores in each local market.”

What’s more, “having a Web presence and strategy has made luxury goods brands more sensitive and more open to viral marketing and actually opened a whole new way of communicating with customers and potential customers,” Mallevays said.

For example, in November, Fendi tapped into popular online social networking sites in Japan to build hype for a launch in Tokyo for its B. Mix leather goods.

Certain brands are delving deeply into technological devices. Prada recently teamed up with LG Electronics of South Korea to launch a signature phone with an advanced touch screen. The fashion house collaborated on every aspect, from software and graphic interface to the design and packaging. Prada is also venturing further onto the Internet. Besides an interactive site for its perfumes, the brand introduced a new informational site — pradatheleadingskischools.com — that is expected to start selling Prada skiwear this fall, a company spokesman said. He added the brand would sell special ready-to- wear and accessories related to its America’s Cup sailing bid at lunarossachallenge.com.

Observers agreed luxury brands had been late adopters of new media and communication technologies. Robert Triefus, Armani’s executive vice president of worldwide communications, credited informational sites like Style.com and multibrand online retailers like Net-a-porter, Neiman Marcus and Nordstrom for popularizing the Internet as a go-to resource for fashion information and shopping.

Today, “every magazine, every editor, every publisher realizes they have to have a live and interactive presence to complete the magazine.”

Ditto for fashion brands. That’s why Armani chose to broadcast his couture show online and on Cingular telephones. More than 1 .4 million people looked at slides of the January event, attended by the likes of Cate Blanchett and Katie Holmes.

“Now we all recognize that our daily habits include a significant amount of time online,” Triefus continued. Armani devotes about 3 to 5 percent of its media spending to new media, the lion’s share for search optimization and much of the balance to online advertising.

“But that is growing rapidly,” Triefus said. “In the next three years, you could see that going up to 10 to 15 percent,” especially to support brands with a big e-commerce piece.

Triefus disclosed that Emporio Armani, which has sold watches online since 2005, intended to expand its offering to include the whole lifestyle. Armani launched e- commerce for A| X Armani Exchange in 2000, and layered on Emporio Armani watches five years later, as well as its cosmetics the same year.

Armani’s online A| X store in the U.S. is its most productive unit in the world, representing between 7 and 10 percent of revenues for that brand, Triefus noted.
Alexander McQueen does not yet have his own online boutique, but has made Web- based marketing the chief vehicle for his second line, McQ, which is targeted at the 18 to 25 crowd.

He’s mulling mobile technology and podcasting, too. “We believe that it is the future of communication and may be the only way for McQ,” said McQueen ceo Jonathan Akeroyd. “We will keep developing our Web site, encouraging a community to grow and become more involved in what we do. It will become our most vital marketing tool.”

The designer recently plastered key cities with posters to drive traffic to the m-c- q.com Web site and a MySpace.com initiative in which the brand cast talent online to create the visuals.

“The advertising and Web activity create the opportunity to keep people interacting with the brand and ultimately become part of our online community,” Akeroyd said, noting the street posters had boosted online traffic tenfold.

Many European brands are ramping up online sales.

The Internet channel “is effectively turning into the best, or one of the best, stores in each local market for the luxury goods brands,” said Mallevays, adding he considered the Web “wide open” in terms of product categories.

Louis Vuitton, which already sells its products in France, the U.K. and Germany, plans to launch an online shop in Japan in April, and in the U.S. later this year. Recent bestsellers include its iconic Speedy and Alma handbags, along with small leather goods, a Vuitton spokeswoman said.

Gucci noted that online sales closely mirror what it sells in stores, notably leather goods and women’s footwear.

Toledano said Dior had already had success selling at the LVMH-owned Web site eluxury.com, and at its own site in a growing number of markets, most recently the U.K. and soon Spain and Germany.

“We’re approaching new customers,” he said, mentioning clients in secondary cities like Bordeaux in France. “I see a lot of development. I see my own daughter: She doesn’t buy from the store; she wants to buy from the Internet.”

Gucci has been selling its products, except rtw, online in the U.S. since 2002, and recently expanded to the U.K., France and Germany. Lee said he was considering expanding the service to other markets, and added, “It’s inevitable that at some point we will contemplate ready-to-wear. I don’t think there’s anything people won’t buy online. This is definitely a channel we believe in.” Gucci recently updated its Web sites to reflect its brighter, warmer packaging and updated store concept — and it quickly uploads fashion show videos and other features. “It should be a seamless brand experience,” Lee said.

Brands accustomed to exerting considerable control over their image — from the retouching and quality of print ads to their exact placement in magazines — are entering unfamiliar territory in the cyber world.

Executives agreed the new media posed numerous challenges, starting with developing creative, visual materials for unfamiliar formats like Web sites and handheld devices. “The challenge is to communicate the essence of your brand and to make the brand as exciting in the new media,” said Gucci’s Lee. “The biggest challenge in all of this is that it is so fast-moving.”

Lagerfeld noted the new media did change the need for outstanding creativity. “One has to make a show to have a good video, used for six months in the shops and on the Internet,” he said. “You cannot imitate a real diamond or a couture dress.”

Looking ahead, brand executives said they expected to be able to use technology to personalize and customize information for individual consumers, by, say, sending a packet of photos showing outfits deemed suitable based on past purchases.
“I think that’s a very feasible reality,” Triefus said.

Perhaps the biggest challenge — and opportunity — with all the advancements in communications technology lies in its often addictive nature. “It’s part of fashion or lifestyle, even if there is an overuse of cell phones and e-mails very often,” mused Lagerfeld, who is famous for his handwritten notes and faxes. “I don’t use cell phones and the like because I would spend too much time online and on the phone.”