PARIS — Chanel may not be ready to make the leap to selling online, but it intends to leverage best-in-class digital innovation to make its physical stores attractive to perma-connected Millennials.
The French luxury firm has joined forces with luxury e-commerce platform Farfetch to develop digital initiatives designed to deliver what Chanel termed an “unparalleled customer experience” both off-line and online, in-store and out-of-store.
Chanel has taken a minority stake in Farfetch to demonstrate its commitment to what both companies described as an exclusive global multiyear innovation partnership. Financial details and the size of the stake were not disclosed.
“We have decided to work on the boutique of tomorrow,” Bruno Pavlovsky, president of fashion at Chanel, told WWD in a joint interview with José Neves, founder and chief executive officer of Farfetch.
“It’s not about changing our strategy. On the contrary, it’s to be more focused on our strategy, so the boutique will stay at the heart of our activity, without a doubt. We will continue to propose the best services from the boutique to our customers,” he said.
“But we believe that with the new generation of customers coming, and with the development of digital, it was the right time for Chanel to start to think and to find the best way to anticipate and to enrich the service by using some digital tools,” Pavlovsky explained.
The deal is the first of its kind for Farfetch since it launched its Store of the Future division in 2015 and acquired London boutique Browns, turning it into a testing ground for innovations in omnichannel retail technology, or what it calls augmented retail.
In recent months, Farfetch has been making a big push in China with JD.com, which in June invested $397 million in the London-based platform. Just last week, it unveiled a partnership with Burberry aimed at strengthening the British label’s e-commerce presence worldwide.
“At Farfetch, our mission is to reinvent the luxury shopping experience both online and off-line, and we’ve invested more than anyone in this vision,” said Neves, sitting at a round table in Pavlosvky’s office here.
The platform employs around 1,000 engineers, a 10th of whom are working in the Store of the Future unit.
“I’m a huge believer in physical retail. I was a boutique owner in my previous life,” continued Neves.
“Fashion cannot be digitized. Fashion is not music, or media, or film. Because it cannot be digitized, the physical experience will always be actually the main experience,” he insisted.
“What physical stores can do, that online cannot do, is the human side of things. Only humans can tell a story, only humans can connect in a certain way, and the technology should be there to enhance the human,” Neves added.
Although they didn’t reveal specific initiatives, Pavlovsky suggested some ways in which technology could be used to better personalize the shopping experience, at a time when more and more of Chanel’s customers are traveling.
At its Rue Cambon flagship here, for instance, the brand caters to 50 nationalities, he revealed.
“We want to understand if they know Chanel, if they are already connected to Chanel, what they want to see,” said Pavlovsky. “We want to be able to be much more focused on them and be able to offer them something which fits with what they want.”
Instead of calling ahead to a store to inquire about a specific item, customers in the future may be able to download a Chanel app on their phone, allowing them to connect with the brand whenever they want, he predicted.
Likewise, rather than wait for a sales associate, or fashion adviser in Chanel parlance, to be available in a store, they could preselect items while they are browsing.
“Tomorrow, I hope we’ll be able to have some applications that will help the customer to do her own selection of products, communicate this selection to the FAs, and for the FAs to prepare the fitting room with your selection to be more efficient and to avoid to lose time at the boutique level,” said Pavlovsky.
“Our customers today, the ones who want to have personalized service in the boutiques, they know how to do that, and I think that we are doing it quite well. The challenge is the coming generation, the ones who have been connected on mobile from day one. What do we do for them?” he asked.
Neves noted that today’s customer is accustomed to facial recognition on their smartphone, personalized recommendations on Netflix and tailoring their Instagram page to present a curated image.
“When they get to a retail store, the experience is anonymous, to the most extent, unless the shop assistant knows you personally and you’re a local customer, and this happens less and less, because people travel all the time,” he noted.
“There’s a tension between what us as human beings are used to being treated like in the digital world and the physical world, and this is what we want to bridge,” he added. Farfetch plans to gather data with the permission of Chanel’s customers.
“After that consent is given, the data receptors are a bit everywhere, so in terms of which products the customer is looking at; which products the customer tried on; which sizes; the purchase history, both in that store or across the whole network, and full visibility of inventory. All of that data will flow seamlessly and we will start very, very quickly to be able to use that data to personalize the experience,” he explained.
Pavlovsky said it might be three to five years before the results are visible.
“We’ll start to work and to have some concrete pilots this year, but it will be a test-and-learn approach. We’ll probably be able to say more in two to three years because we want to take our time. We are not in a rush,” the Chanel executive said.
In the meantime, three Chanel-owned brands — cashmere house Barrie Knitwear, jeweler Goossens and milliner Maison Michel — will join the Farfetch platform this year.
Neves said unlike its operating system, which acts as a marketplace for more than 500 boutiques worldwide and also drives e-commerce sites for brands, the digital solutions Farfetch is developing for Chanel will be fully customized.
“There is no such thing as one store of the future. There will be hundreds of stores of the future, because the differentiation of each brand is precisely that: it’s how do you merchandise your store, it’s the product, it’s the storytelling,” Neves added.
He said that in the future, Farfetch would work with other brands in this field, but for the moment, it wanted to focus on its projects with Chanel and Browns.
“This is not a white-label standardized product at all. This is a strategy that we’re developing together and it will take shape as we work through the project,” Neves added. “But those principles are absolutely key: being consumer-centric, enhancing the human experience, and being as invisible and as intuitive as possible.”
Pavlosky put it more bluntly. “Chanel will not go to Farfetch looking for new customers, and Farfetch is not going to Chanel to look for new customers. I want to be very clear: this innovation partnership is about supporting Chanel for tomorrow,” he said.
Likewise, he was adamant that Chanel would not adopt e-commerce, despite a recent prediction by Bain & Co. that online sales for personal luxury goods will make up 25 percent of the market by 2025.
“Chanel is more than a click. At Chanel, you need to know our collections, you need to have some connection with the brand,” argued Pavlovsky.
“We cannot have this sophistication of product with the design, with the materials, with the know-how, and not be able to see them, to touch them, to try them, to understand them. That’s something that we want to protect,” he said.
“Part of Chanel’s difference is product, so we have to be also very respectful to this product. If you see an amazing dress in a magazine, we want you to try the dress. It’s what we consider the Chanel experience,” he explained.
“We want to make this experience as easy and as fluent and as efficient as possible, but at the end of the day, they have to keep the dream,” Pavlovsky concluded.