Chief Commercial Director at Mytheresa
Richard has over 20 years of experience in the luxury fashion industry. He is the Current Chief Commercial Officer at Mytheresa, the leading global online multi-brand luxury retailer, where he is responsible for all buying, merchandising, and commercial aspects for the company. Richard was previously Commercial Director at Matches Fashion, a UK based multi-brand luxury retailer, and VP of Buying at Al Tayer, a leading luxury retailer in the Middle East. Richard started his career with 5 years at Hugo Boss and over 8 years as Head of Buying at Havey Nichols. Read moreView Profile Page
Can you provide some context to how the online luxury market has evolved over the last decade?
A lot has happened in the last decade. Digital is a super fast-moving space and the area which we work in, soft luxury, has probably been later to the online space than a lot of other categories. I think around the mid-noughties is when things kicked off with Natalie Massenet, well-known for having pioneered luxury retail at a time when, I think it would be fair to say, that a lot of the established bricks and mortar stores were quite skeptical about the possibility of selling luxury online. This was because of the high price point but also, how do you deal with sizing, fabrics and the specifics of ready-to-wear clothing, even if bags, shoes and accessories lend themselves more easily to not having the product right in front of you?
There was a lot of skepticism and she forged ahead and is rightly credited with a lot of the pioneering efforts, but she wasn’t alone. A lot of independent retailers at that time, and up to about ten years ago, saw the opportunity to engage and service their existing customer base better and also, of course, to preach to a much wider audience.
It’s interesting because it was the independent stores like Mytheresa in Munich, Matches Fashion in London, END Clothing in the North East of England, SSENSE in Canada that grabbed the opportunity more than the big, established department stores at an earlier stage. They also had the advantage of owning all of their own stock. They were wholesale partners to the brands. They owned all of the stock that was on their shelves and they were able to present it online. Whereas the department stores had a mixture of wholesale relationships which they could present online if they wished to, but also concession contracts where they sublet space to the brands, so their product mix would have been more patchy versus the independents.
You now have a situation where some stores that were independent ten years ago are now major players in the luxury digital space and stole a march, if you like, on the big, established luxury department stores.
Then I think, probably, the slowest players to join the online race arguably have been the brands themselves. Even to this day, there are brands at this stage, in a proven market, that have really embraced the online space, understand its potential and still there are those which are skeptical and have concerns about brand perception, how it works and how it will impact their existing bricks and mortar business.
But, of course, the brands in some respects could afford to wait and see, could afford to partner with those independent stores and more forward-thinking department stores to see how it evolved and join later, because they own their name and product and would always be able to create at the point that they wanted to experiment more with the online space.
How have you viewed the way brands’ perspective on luxury evolve over time, especially now post-COVID?
COVID has accelerated everything. This has been well reported in the press and I think it’s a well understood fact. Pre-COVID you would read that, by 2025, around 25% of luxury sales would be made online. COVID has taken it already over the 20% mark. I think we will get to that 25% mark much faster now that more customers are engaging with online because they had to. They didn’t have the bricks and mortar option and they’ve become used to it, have been introduced to it. I think COVID has really accelerated what was already happening.
From a brand point of view, again, it varies radically from brand to brand. Some have embraced digital fully and others remain hugely skeptical, as I said earlier. I think brands have got several questions to answer. First of all, how do they perfect and enhance their image online? Over the last 10 to 15 years, every store that they work with and have a wholesale relationship with have had the opportunity to put those goods online. If you were to keyword search any major luxury brand, you would find multiple pages of retailers willing to sell you those products which, of course, paints a very mixed picture in terms of the standard of presentation. It has created difficulties with pricing and in-season discounting which, of course, is not central to a luxury brand’s image, so trying to manage a brand’s image online has become an important topic.
Of course, there’s the opportunity to go further and to enhance. Fashion weeks have not had the opportunity to go ahead this year so brands have been forced to look at digital or mixed digital and physical alternatives and experimented with different ways to use digital to really elevate themselves, to create a much more modern, forward-thinking approach to their marketing.
They’re thinking about the way they can engage with the younger customer because, of course, if you’re not online there’s entire generations of native customers who would not get exposure to if you were not to present online. Skeptical brands, who’ve engaged in the space later, have experienced an ageing of their brand name because customers simply don’t see them in that space.
For a long time, there’s been a lot of conversation around the integration of online and offline, popularly called omnichannel, and that’s now I think very well understood and it’s impossible, at this point, to think about the two separately. Omnichannel really is a dated concept. It really all belongs under the banner of commerce. The modern luxury customer now – this isn’t just the case for the younger customer – researches online, make minimum purchases online often and make the effort to actually visit a bricks and mortar location. These people want more than just access to products. They want an experience. They want to engage more deeply with brands.
For the brands, because they came a little bit later, there’s a real learning curve in terms of how they drive online sales and how they allocate stock to that channel versus their bricks and mortar.
Can we lay out the different online business models we have today between the wholesale inventory-based model versus the Farfetch marketplace. How do you compare the two?
There are two main models as you say. The marketplace model, with Farfetch being the biggest operator in that area, from a luxury point of view, whereby the marketplace is a way for third-party retailers to present their stock online and to benefit from higher volume of traffic to that marketplace than they would get to their own much smaller.com, without significant expense of search engine advertising. The second option is the retailer that buys the inventory directly and presents the goods on their own site and there are pros and cons to both.
The advantage of the retail model as Mytheresa, where we buy the stock and present the goods directly, means that we ship directly to the customer. We can control the level of service, speed of service. We can control the edit of products on the site. We can have a perspective in terms of the way we edit and present to customers. Ultimately, we own the close relationship with that customer and we can service their customer so that they come back time after time. We look at it from the perspective of the lifetime value of any given customer, not one single sale.
Marketplace, by contrast, tends to be more promotionally driven. There’s less loyalty from individual customers who are often brought in through promotions and search. They can’t guarantee service levels to the same degree because the fulfilment could come from multiple places, from any of the retailers that have their products on that site. There is a customer relationship, of course, but there isn’t the same longevity or same point of view and they can’t guarantee the same level of service. It’s much more difficult to do that with a marketplace.
More conceptually, with a luxury marketplace, do you think there’s a limitation to the scale of it because, by definition, luxury wants to limit supply to drive demand. How do you look at the marketplace model conceptually?
It’s a fair comment. Luxury is not about commodity. Luxury needs scarcity. There is a lighter touch and feel to presenting luxury goods so it can’t be handled in a pure marketplace manner, like Amazon handles commodity goods in the way that they can produce their own label for products for bestselling lines or indeed stock high levels of volume on bestsellers in their network of warehouses or distribution centers.