What: The recent Altagamma & Bain report on luxury shows that physical stores are making a comeback at the expense of mutlibrand online players.

Why it is important: Department stores remains important places of interaction and discovery, especially in the luxury market, and have a card to play here.

After the pandemic, physical luxury retail stores are experiencing a resurgence, overshadowing online purchases, particularly from multi-brand e-tailers, which are now in decline. The pandemic initially boosted e-tail, favoring multi-brand platforms. However, as life returns to normal, physical mono-brand stores are thriving due to increased socialization and tourism, while digital channels are plateauing.

Luxury brands are opening fewer new stores, instead expanding and enhancing existing ones, turning them into experiential, cultural destinations. E-tail is now more a digital service supporting physical stores, with integrated online and offline customer experiences.

This renewed interest in physical stores is notably strong among younger consumers, especially Millennials, who are driving the duty-free luxury goods market through in-person shopping. Gen Z, a growing segment in the luxury market, also shows a preference for experiential, in-store shopping over online purchases.

Luxury brands are increasingly promoting their own e-shops, reducing reliance on multi-brand e-tailers and discount resale markets. This shift has impacted the profitability of e-tailers, who are also facing the burden of promotional costs previously covered by traditional retailers. Some e-tailers like MyTheresa remain successful, but others, like Farfetch, have seen significant declines.

To adapt, pure-play e-tailers need to revise their business models, focusing on cost control and flexible, innovative purchasing solutions through digital tools.

Luxury: the decline of multi-brand e-tailers