In an article entitled Fashionably Late? Designer Brands Are Starting To Embrace E-Commerce [subscription required], The Wall Street Journal examines the increasing importance of the Internet to high-end fashion brands. Glam is playing an integral role in helping these brands merchandise their goods.
The rush for Internet riches comes after luxury-goods companies have poured money into buying or renting some of the world's most expensive real estate for extravagantly appointed boutiques. Many, like Prada and Louis Vuitton, hired famous architects and artists. Luxury-goods brands generate the bulk of their sales through their own stores, not at wholesale.
But as luxury labels reach critical mass in important markets like Tokyo's Omotesando neighborhood and Hollywood, the profit margins for each new store could soon start to shrink, analysts say. "There could be overcapacities soon," says Merrill Lynch luxury-goods analyst Antoine Colonna.
The Internet offers a new source of sales and higher profit margins.