Altagamma Retail Insight 2021
The pandemic has given a very strong acceleration to the development of digital distribution, which in 2020 was worth around € 50 billion, with a share of total high-end sales growing from 12% in 2019 to 23% in 2020. If already before Covid -19 high-end brands were faced with a drop in traffic and productivity in their direct monobrand stores, the explosion of digital has made this problem even more pressing. The tools to counteract the decline in traffic and productivity - such as the efficiency of flagship stores, the development of capsule collections - require an increasing amount of fixed costs, which is more easily sustainable when benefiting from a scale advantage. This represents a critical issue for small and medium-sized Italian companies.
Another implication of the strong digital development is the structural consolidation of multi-brand distribution. Traffic moves across the internet at lightning speed, and can focus on who can develop an advantage in depth of assortment - creating a "winner takes all" situation. The new e-tailers and marketplaces perform better than almost all traditional department stores in their ability to generate traffic on the internet, and also compared to most of the high-end structured companies.
Furthermore, the development of e-concessions - a model in which the shipment is carried out by the brands themselves - requires the ability to leverage the global stock of the brand (and not on that dedicated to the specific retailer), favoring again the big digital players. emerging companies that have already connected a very large number of stock locations. "The acceleration of the 'digital revolution' is not 'neutral' from a strategic point of view and on the contrary puts the system of Italian fashion and luxury companies under great pressure", comments Luca Solca, Senior Research Analyst, Global Luxury Goods by Bernstein. "There are three elements of relative weakness of Italian companies: the small scale compared to international competitors, which penalizes them when digital greatly increases fixed costs; the highest dependence on the multi-brand wholesale channel, which is now in a state of terminal crisis and, finally, the greatest backwardness in terms of digital transformation".
Federica Frosini, Editor in Chief VO+