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Will Amazon’s new luxury online store become the savior of fashion – or arch-enemy?



Amazon has launched a new bid for luxury with the rollout of a couture shopping experience featuring established and new fashion houses and brands.

The company’s luxury stores were launched on Amazon’s mobile app on Tuesday with the iconic fashion house Oscar de la Renta. The designer’s store contains its collections within autumn and autumn / winter 2020 of clothing, handbags, jewelry, accessories and a new perfume. More brands will be launched within Amazon’s luxury stores in the coming weeks and seasons, the company said in a statement.

“I would guess that somewhere close to 1

00 percent of our existing customers are on Amazon, and that a large percentage of them are premier members,” Alex Bolen, CEO of Oscar de la Renta, told Vogue. “For me to get more thinking with existing customers in addition to getting new customers – that’s the name of the game.”

The new store concept is only open to invited Prime shoppers in the US and allows customers to see items in 360 degree detail. Luxury brands will have greater independence in how they stock their stores and their prices through Amazon’s merchandising tools, which allow them to create and personalize the content in their store. They will also be able to offer their own customer service to customers to answer specific questions about their collection and choose how they package and ship to their customers, the company said.

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Amazon’s luxury stores are entering a tumultuous time for luxury shopping as the pandemic keeps high-end brick 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 powerhouse LVMH Moët Hennessy Louis Vuitton reported a 29 percent and 28 percent decline in revenue, respectively, in the first half of 2020 compared to the same time last year as a result of the coronavirus outbreak.

“The impact of the epidemic on revenue and annual results cannot be accurately assessed at this stage without knowing the timetable for returning to normal business in the various areas in which the Group operates,” LVMH told investors in August. “After another quarter hit hard by the crisis, we can hope that the recovery will be gradual in the second half.”

A slower economic activity due to the pandemic could have a particularly severe impact on the luxury retail industry, which relies on in-store personal service and the tactile experience of shopping for high-end pieces, according to an April report from McKinsey & Company. The financial advisory firm estimated that about 80 percent of listed fashion companies in Europe and North America would be in financial distress if they continued to be closed for another two months. The company also estimates that “a large number” of global fashion companies will go bankrupt in the next 12 to 18 months.

About 80 percent of listed fashion companies in Europe and North America could be in financial distress if they remain closed for another two months.

But Amazon’s latest dive into pulling luxury buyers to buy couture in its marketplace could offer a lifeline to luxury companies struggling to expand their e-commerce business, said Alexis DeSalva, a senior retail and e-commerce research analyst . service company Mintel.

“Before the pandemic, there was definitely interest in luxury,” she said. “You have to take a step back because the way consumers act is different. Barneys, Neiman Marcus, Century 21 – a lot of luxury or traditional brick companies have not made it easy for a luxury retailer or someone who might want to buy luxury for the first time, to shop online. ”

For Oscar de la Renta, the ability to hand over the fulfillment and delivery arm for their online business is a major feature of the fashion house. “The return rate in our brick stores is low single digits on a bad day and almost 30 percent for online sales,” Bolen told Vogue.

“That means I have to have a lot more inventory, a lot more people that have to do with returns,” he said. “It is a little different from what we are used to. We need to learn on the appropriate page how we can get better and Amazon is very interested in this issue. They have teams of people thinking about this all day. ”

Amazon has previously discarded early breaks in luxury fashion, including MyHabitSite, a Gilt Groupe competitor with flash sales on luxury items, while others like StyleSnap were launched with a sprain among shoppers. For years, Amazon’s reputation has been tied to the marketplace’s fight to combat counterfeit luxury goods sold by third-party sellers, leading some companies like Nike to refuse to sell on the site. Even with the support of Vogue editor-in-chief Anna Wintour and growing clothing sales in its marketplace, Amazon CEO Jeff Bezos has struggled to break the company in advanced fashion.

Jean Jacques Guiony, LVMH’s CFO, told investors during a 2016 earnings call that the company believes that “the Amazon company does not fit in with LVMH, period, and that it does not fit in with our brands.”

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

“This is the moment where we encourage all brands in the retail industry to test and experiment as much as they can,” she said. “Those who can maintain a certain amount of space and investment to experiment see interesting results, and that is a big difference in luxury. This ability to test and learn and use 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 experiment. He and his wife are avid hikers and travelers who spend no more than $ 30 on a shirt, he said. They are frequent Prime customers, but not luxury.

“The goods look good and I think it’s nice they are expanding,” he said. “I might want to buy a watch or something else that was more of an appeal to suit our lifestyle – but if it ends up being just sophisticated luxury designers, we are not the right people for it.”


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