LONDON — While luxury retailers such as Mytheresa, Net-a-porter and Neiman Marcus may be focusing on a tiny percentage of elite customers who are driving more than a third of sales, Zalando is putting its money behind the aspirational luxury shopper with a new proposition.
Later this year, the fashion e-commerce giant will unveil a luxury boutique-style space, similar to a designer floor in a department store, according to Lena-Sophie Roeper, Zalando director for designer and luxury.
Roeper said the space will open in the fourth quarter of 2023 and have an “elevated, clean look and feel.” She declined to say which brands would be present.
Zalando already has a high-end offer, and carries around 300 contemporary and luxury brands. It stocks names such as Missoni, Marni, Victoria Beckham, Roksanda, Erdem and David Koma. It also launched an exclusive capsule collection with Paco Rabanne (now Rabanne) in April.
The space will raise the bar on luxury at Zalando.
“We already have a differentiated, more elevated and editorial experience on Zalando. We are now working on revamping it and aim to present the new designer experience by the end of this year.
“We see it as a luxury floor of our digital department store, an ecosystem where customers get inspired and luxury brands feel at home,” Roeper said during an interview at Copenhagen Fashion Week. Zalando is headline sponsor of the week and founder of the Visionary Award, which recognizes creativity, innovation and social impact.
Zalando made the strategic decision to reinforce its designer proposition in 2021, and believes a different opportunity has emerged.
As reported, the top 3 percent of customers have been generating up to 40 percent of sales at the big luxury retailers.
While those retailers are paying increasing attention to their high-net-worth customers in an increasingly sluggish sales environment, Zalando still believes in the spending power of the aspirational customer.
“We are in a unique position to tap the future of the luxury customer base, the aspirational contemporary customer who mixes and matches across styles, categories and price points,” she said.
Roeper added that Zalando is seeing a large number of searches for luxury brands on the site, indicating “significant” demand.
“We know for a fact that we have an aspirational luxury consumer, and we also know that 50 to 60 percent of luxury brands’ revenue is from the aspirational customer,” said Roeper, adding there is a new generation of customers that is shopping differently for luxury.
She said these new-generation customers are making “trend-driven, emotional purchases,” around one to two times per year.
This is not the first time that a large-scale e-commerce platform has pursued the aspirational luxury customer.
In 2020, Amazon unveiled Amazon Luxury Stores in the U.S. Two years later it brought the platform to Europe, but has still not been able to get marquee brands from the big luxury groups, such as LVMH Moët Hennessy Louis Vuitton or Kering, on board.
Competition in the online luxury space is also increasing. Richemont is selling a majority stake in Yoox Net-a-porter Group to Farfetch, and also teaming with the platform on digital stores and initiatives for the brands in its stable.
Zalando may be bullish about demand, but the post-pandemic environment has been proving tricky for online retailers in particular. They have seen customers opt to shop in brick-and-mortar stores and witnessed a general slowdown in spending during a cost-of-living crisis that has been sweeping through Europe.
As reported, in the second fiscal quarter, Zalando saw revenues fall 2.5 percent to 2.6 billion euros amid “subdued demand.” Net income surged 87 percent to 144.8 million euros year-over-year, as the company grew its fulfillment and logistics, and focused on cost-cutting measures.
Despite the revenue decline, Zalando co-chief executive officer Robert Gentz is optimistic about the medium- to long-term prospects of online fashion. “The share of e-commerce in fashion will continue to grow at a rapid pace. The rally will come back soon,” he told analysts earlier this month.
Zalando is Europe’s largest online fashion platform and works with thousands of international brands. It has been a longtime supporter of Copenhagen Fashion Week, which runs through Friday.
In June, Zalando and the Copenhagen showcase announced that London-based brand Paolina Russo was the winner of Zalando’s first Visionary Award. The brand, founded in 2021 by Paolina Russo and Lucile Guilmard, showed its spring 2024 collection on Wednesday. It was a beautiful lineup of colorful, textured knitwear, laser-printed denim and stretchy, tie-dyed fabrics with an athletic edge.
