What: Online shopping vs. in-store shopping were discussed at the 2021 Altagamma Retail Insight webinar.

Why is it important: Despite the increasing importance of online shopping, retailers still bet on physical retail thanks to a renewed customer experience, which might be difficult to sustain.

Luca Solca, senior research analyst, Global Luxury Goods at Bernstein identified potential elements of weakness for Italian luxury companies producing at reduced scale compared to international competitors, including the “enormously increasing fixed costs,” a higher dependency on the multibrand wholesale channel, which is “today in a terminal crisis,” and lagging behind in the digital transformation. Social media, influencers and multibrand digital e-commerce are further exacerbating traffic and productivity challenges.

Solca said the need to create capsules, exhibitions, pop-ups and other methods of differentiating flagships with high-touch service are expensive, resulting in a higher incidence of fixed costs, which are difficult to sustain.

While admitting the increasing importance of online shopping, Michele Norsa, executive vice chairman of Salvatore Ferragamo, was “less optimistic” about the online quota in the future, underscoring the quality of physical experience. “The retail experience is a founding value of the luxury system in addition to being a vital impulse for traveling. Would you rather eat at a starred restaurant or [the same menu] delivered at home?”

On the contrary, Chris Morton, founder and CEO of shopping search platform Lyst thinks “it’s more of a luxury experience to be able to buy remotely from your sofa with a glass of wine rather than having to run across town to a store”.

Nicola Pianon, managing director and senior partner of Boston Consulting Group, said luxury companies will have to respond to an environment in which consumers, at least for a few years, will be traveling closer to home. While paying close attention to the online channel, “brick-and-mortar stores will continue to have a key role”.

The Luxury Retail Evolution in Wake of COVID-19 Pandemic