Latecomers to e-commerce, watch and jewelry brands have enjoyed a certain measure of success through Internet channels. But are they about to get an extra lift as consumers embrace online shopping amid prolonged store closures?
When online players like Farfetch, Net-a-porter and Moda Operandi unveiled fine-jewelry hubs, replete with dedicated selling spaces and editorial imagery, in the 2010s, the category emerged as one of the fastest-growing in e-commerce — defying skeptics.
The sector continued to grow briskly even before the pandemic, with online sales of watches and jewelry up over 10 percent last year, surpassing the $7 billion mark, according to Euromonitor.
But the arrival of the coronavirus is expected to upset that upward trajectory this year, even if the lockdown period has seen a surge in online sales in some regions, allowing some e-commerce players to buck the retail apocalypse.
Jewelry sales, all channels combined, are projected to dip 22 percent in 2020, while watches could drop 25 percent, according to projections from Bain & Co.’s latest figures, drawn up in collaboration with luxury goods association Fondazione Altagamma.
Yet Moda Operandi reported a 35 percent jump in jewelry sales in early March to the end of April, according to its “The Runway Report, Fall/ Winter 2020,” which tracked changes in luxury shopping patterns after March 9, two days before the World Health Organization declared the coronavirus a global pandemic on March 11.
Could this be evidence that lockdown measures have eased consumer resistance to purchasing hard luxury products through e-commerce platforms?
Digital marketing and online commerce have become key for retailers to maintain links with consumers as retailers seek to recover sales lost in traditional, off-line channels. But shifting sales to online categories is not all smooth sailing, some analysts point out.
“Jewelry is not so easy in the end” when it comes to selling online, said Mario Ortelli, managing partner for Ortelli & Co., a strategic and mergers and acquisitions adviser for luxury goods companies.
“There are things that make jewelry a category that is a bit more tricky,” he said, noting the difficulties of ordering the right fit as well as a risk of fraud.
Someone could switch out the gem on a 50,000 euro ring, for example. “And then it’s the word of the client against the word of the jeweler when it’s returned,” he said.
Finding the right size is another challenge.
“When you buy a T-shirt at Gucci and don’t know what fit you want, you can order four sizes,” he noted.
Things get more complicated when it comes to something like a diamond bracelet from Cartier. “Ordering four sizes to return three of them is something that not many consumers will do,” he added. “But I believe there are some categories that are easier to sell online than jewelry,” he said, citing branded handbags, for instance.
Still, online channels will increase as both a selling tool and a communications one, he predicted.
“It is simply suicidal for brands not to invest in the development of their online operations,” noted Ortelli, even if purchases may take more time for jewelry.
Online players, meanwhile, say they have seen an increasing openness from consumers, evidence that resistance to high-end purchases through the Internet has eased.
“As more and more clients discover that we offer hard luxury, our sales and brand offering continue to grow,” said Elizabeth von der Goltz, global buying director of Net-a-porter. The executive asserted that customers are drawn by the ease of purchasing from home as well as the high level of service provided by the retailer.
Net-a-porter, which belongs to Compagnie Financière Richemont, was one of the first e-tailers to convince luxury consumers to buy their diamonds online, and the category is thriving, according to the executive. The parent company, like other luxury groups, had long been reluctant to embrace the digital world for fear of losing its veneer of exclusivity, as well as control over distribution. But the winds have changed since it finalized its purchase of the Yoox Net-a-porter Group and several Richemont brands have sold on Net-a-porter and its related site Mr Porter in recent years, including Cartier.
During the luxury group’s annual results presentation last month, Richemont chairman and founder Johann Rupert sounded like a fresh convert when evoking the importance of the digital realm.
“We’ve always been interested in how technology can help us. We look at online as a way of serving customer needs. We believe in new retail, meaning that the client can get what he or she wants when he or she wants it — all the time. It will migrate more and more to online,” he said, acknowledging the role of online platforms in helping mitigate the loss in sales from tourism and store closures due to the pandemic.
Indeed, COVID-19 did not slow appetite for hard luxury on Net-a-porter. Quite the opposite.
“It seems like clients are really willing to try something new with an online retailer they trust,” said von der Goltz, who noted “very robust” fine-jewelry and watch sales, especially with higher priced watches. The luxury timepieces category saw an increase in the average sale price of 32 percent while Net doubled its unit sales over the lockdown period compared to 2019. The e-tailer stocks fine jewelry from Boucheron, Buccellati and Chopard, as well as luxury timepieces from the likes of Cartier, IWC Schaffhausen, Piaget and Vacheron Constantin, among others.
The pandemic has shifted shopping priorities and bolstered the interest for timeless pieces, she added, a trend that will likely benefit hard luxury, in her view.
“With the fine-jewelry category customers have been looking for pieces they can invest in and enjoy season after season. There is a timeless aspect to fine jewelry and watches that you don’t get with fashion and accessories,” she said.
“We continue to see interest growing for both watches and jewelry; even during difficult economic times people still like to invest in classic items which carry long-term value,” concurred Maxim de Turckheim, senior category development manager watches, vintage and pre-owned, at Farfetch.
“Fine jewelry used to be very exclusive. You needed access. But Moda acts as a specialty online boutique with its luxury assortment,” said Will Kahn, market director of fine jewelry at Moda Operandi. He observed a surge in demand for “personalized and sentimental jewelry,” like Anita Ko’s zodiac pendants, Zoe Chicco’s name plate necklaces and Carolina Bucci’s letter bracelets.
“This is the comfort food of jewelry; it just makes you feel good. What I call ‘T-shirt jewelry’ has been trending [too] — like diamond line necklaces, from Jenna Blake and Maria Jose, which are easy to wear, everyday [pieces] and make you feel ‘dressed’ even when you aren’t,” he said.
“Jewelry can have many different personal meanings whether it be luck, love, karma — this is something that is very attractive in an uncertain world,” noted von der Goltz.
After securing customers’ trust in the ready-to-wear and accessories categories, online retailers are also investing in ways to draw clients to their platforms for hard luxury purchases.
Von der Goltz said Net’s aim is to “position ourselves as a trusted and curated luxury online destination for discovery, research and purchasing of fine watches,” for example. In May and June the online platform will roll out an editorial multibrand campaign centered on fine watches.
Similarly, Moda has unveiled a range of initiatives, including style advice sessions with Kahn through the platform’s private client program and digital trunk shows with premium jewelers, including Stephen Russell, a vintage jewelry dealer who runs a boutique on Madison Avenue in Manhattan. “With travel out of the question for the time being, we’re opening up the doors of jewelry workshops around the globe,” he said, outlining plans to enhance the online customer experience.
“Shopping is entertainment and we have seen great results by providing this access and engagement. These events work for jewelry especially — you get to see the jewels up close and moving, and form a bond with the artist behind it at the same time,” Kahn noted.
Farfetch takes a similar approach. In a sign of the resilience of online sales heading into the lockdown period, the gross merchandise value of goods sold on the platform rose 46 percent to $610.9 million in the first quarter ending March 31.
Styling pieces is a key part of the strategy. To support the watch and jewelry categories, Farfetch is “weaving the beautiful pieces into a more lifestyle context for our clients in order to normalize the category for them,” noted de Turckheim.
“They wouldn’t traditionally think of buying these items online but when they see a beautiful piece of editorial featuring the latest ready-to-wear trends it makes them stop and consider the purchase in a new light.”
Traditionally dependent on bricks-and-mortar retail, hard luxury has recently begun to move faster towards online platforms — which are now seen as an attractive new avenue for growth.
“One of the biggest changes I foresee is the behavioral shift to online purchasing. We expect online luxury penetration to accelerate, as physical store shoppers seek to make even more of their luxury purchases through digital channels,” said José Neves, the founder, chief executive officer and co-chair of Farfetch.
“This crisis has amplified the need for people to migrate all or most of their shopping online, no matter the category. They’ve had to adapt quickly to shopping for everything from necessities to luxuries online, and this behavioral shift will have long-term effects on every industry,” added Moda’s Kahn.
The web site launched its fine-jewelry hub in 2014 with a “no returns” policy, signaling a big bet on the category.
“We’ve always been a destination for luxury products online, so fine jewelry easily translated to this environment,” said Kahn, noting that fine jewelry has grown to be one of the platform’s leading categories
Banking on good momentum for watches and jewelry sales online, before the industry was slammed with COVID-19, Net launched an invitation-only digital space last year for its loyal customers, offering them access to exclusive high jewelry and watches. The idea was to bring the experience of private jewelry salons to the digital realm, explained von der Goltz, who described it as a private and personalized online space with “the ultimate immersive and interactive experience for traditionally off-line and highly renowned jewelry maisons.”
Moving the experience online does not necessarily mean forgoing the human touch, however.
Executives of leading jewelry houses stressed the importance of personal contact for consumers making a purchase outside of a store — through a telephone call or online.
At Boucheron, which set up its first e-commerce sites in France and Japan in May, the brand set up a service center from the Place Vendôme flagship. “It’s reassuring for people to have a telephone contact — it’s an intermediary step between the store and clicking, typing in your credit card and seeing if the product arrives,” said Boucheron ceo Hélène Poulit-Duquesne.
Asked if the crisis has encouraged reticent consumers to shop online for jewelry, she said yes. “I think it changed everyone’s way of functioning,” she said.
Jean-Marc Mansvelt, ceo of Chaumet, which recently reopened its refurbished Place Vendôme flagship, also stressed the importance for clients to be able to reach a house representative through the phone. “We have noticed that during the lockdown period – and this remains true – there are a lot of clients calling us in the stores,” he said. “We’re under the impression that the lockdown made it even more important for people not to lose human contact,” he noted.
Each market has a main store with telephone lines to ensure quality of service and provide information in local languages. “We sold and delivered a number of pieces this way,” he said, noting that the house’s Rue François Premier store in Paris has the most experience with remote sales.
In China, where e-commerce is much more developed than in other markets, Chaumet began selling a large part of its main jewelry collection — the more accessible pieces — through WeChat in April, he added. “It has been a very big success — e-commerce is more developed in China, of course,” he noted.
Luring high-net-worth Millennials without losing the human connection is key to Threads Styling, a social commerce platform, which has been using Instagram — and WhatsApp — to sell fine jewelry to its customer base, constantly widening to include older shoppers. Hard luxury is one of its fastest-growing categories, now accounting for 20 percent of its sales.
“There is a very personal conversation behind every sale, particularly for fine jewelry. We work hand in hand with all of the brand partners,” noted Sophie Quy, the platform’s commercial director. “Every conversation and purchase that every client makes is done with a huge amount of insight and knowledge on that brand and that particular piece.”
In addition to highly curated and glossy contents on Instagram — which offer styling tips and advice on how to wear Bulgari, Boucheron and Chaumet pieces — the platform debuted, particularly during periods of lockdown, Instagram Lives focused on introducing the Threads audience to the founders behind jewelry brands.
Thanks to customer trust of the Threads platform, first transactions are often high-ticket purchases, according to founder and ceo Sophie Hill. A high level of trust is key, she said, emphasizing the importance of becoming the “go-to destination.”
Threads did not detect any sign of consumers balking at high price tags, and sales of watches and jewelry held up despite the pandemic, even if interests shifted, said Hill.
“I would say that people’s buying habits have changed and they’re changing month on month, depending on the stage of the lockdown or the circumstance that they find themselves in. We’ve definitely seen an increase in jewelry that people can wear every day at home, that’s comfortable,” Hill noted.