Disrupt or die? No chance: Experts say e-commerce will not collapse luxury industry

Panelists sat down to discuss the effects of digitalization on the premium goods industry at Arab Luxury World in Dubai.
Updated 23 May 2017
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Disrupt or die? No chance: Experts say e-commerce will not collapse luxury industry

DUBAI: Would you buy a luxury product worth thousands online? It is a question that panelists at the Arab Luxury World forum in Dubai sat down to discuss on Monday as the fourth iteration of the annual event kicked off.
The forum is set to run from Monday and Tuesday and features an agenda of speeches and panel discussions by more than 70 speakers under the theme “Digital Disruption and Emotional Engagement.”
In the world of luxury goods, the panelists agreed that digital shopping will not soon replace brick-and-mortar retail as many consumers still wish to get a real feel of the high-end product they are buying, however, all panelists emphasized the need for luxury brands to communicate effectively with consumers online.
In a session moderated by Anand Vengurlekar, chief communications officer at INSEAD Business School, experts from the luxury industry discussed the effect that digitization was having on the market.
However, panelist Samer Bohsali, a partner at the Strategy& consulting firm, was quick to assure the audience that digital avenues would not disrupt the luxury industry in same way Uber had for the transport industry, for example.
“The old model of digital was disrupt or die. With what Netflix has done to Blockbuster, what Uber has done to the taxi industry, you would think that the next victim is the fashion business,” he told the audience, before adding: “Digital will not disrupt luxury the same way.”
Why? Because, according to Bohsali, “the luxury industry has relied, for centuries, on the aura of exclusivity and sensory experiences that are very difficult to replicate on a mobile device.”
However, Bohsali did note that the digital sphere has made customers more aware about the products they wish to buy.
“Digital has transformed the habits of your users and your consumers, you’ve got a new generation online that can compare the price of a bag in Beijing and Paris and know they are not getting a fair deal in Beijing,” he said.
Category Director for Fashion at noon.com, a Middle East-focused online shopping portal, Jose Antonio Grajales, agreed that the digital world was transforming the luxury industry, rather than disrupting it.
“For me, the disruption is not a complete metamorphosis of the industry, it is more of an evolution of the way we consume,” he said.
According to Grajales, much of the world’s luxury sales happen in just 10 cities, something he says digital platforms can help to change.
“As sellers of luxury products, we have failed at getting that product to customers in other places… Because of e-commerce and digitalization, we are able to get those products into the hands of consumers more easily.
“Luxury is unique because you like to touch it, you like to feel it and you like to experience it but you aren’t always in a place which makes those nice things easily accessible,” he said, explaining the power of e-commerce in widening the reach of luxury brands.
“Technology should enable us to serve a customer better, wherever you are you should be able to access that luxury experience and that luxury product.”
But what advice did the panelists have for luxury brands seeking to leverage the digital world?
“Be prepared to fail,” Bohsali said.
“The fashion industry hasn’t cracked it. The classic model that has worked is a store — the in-store experience works — but the future could be a combination of using a mobile device and coming to a store.
“It’s an experiment, the industry is still experimenting.”
The panel also included Graziela Martins, vice president of the merchant business at American Express Middle East and North Africa and Emre Karaer, general manager at Volvo Cars MENA.


EU fines Nike $14 million for blocking cross-border sales of football merchandise

Updated 25 March 2019
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EU fines Nike $14 million for blocking cross-border sales of football merchandise

  • The European Commission said Nike’s illegal practices occurred between 2004 to 2017
  • Sales restrictions relate to licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation

BRUSSELS: US sportswear maker Nike was hit with a $14.14 million (€12.5 million) fine on Monday for blocking cross-border sales of football merchandise of some of Europe’s best-known clubs, the latest EU sanction against such restrictions.
The European Commission said Nike’s illegal practices occurred between 2004 to 2017 and related to licensed merchandise for FC Barcelona, Manchester United, Juventus, Inter Milan, AS Roma and the French Football Federation.
The European Union case focused on Nike’s role as a licensor for making and distributing licensed merchandise featuring a football club’s brands and not its own trademarks.
The sanction came after a two-year investigation triggered by a sector inquiry into e-commerce in the 28-country bloc. The EU wants to boost online trade and economic growth.
European Competition Commissioner Margrethe Vestager said Nike’s actions deprived football fans in other countries of the opportunity to buy their clubs’ merchandise such as mugs, bags, bed sheets, stationery and toys.
“Nike prevented many of its licensees from selling these branded products in a different country leading to less choice and higher prices for consumers,” she said in a statement.
Nike’s practices included clauses in contracts prohibiting out-of-territory sales by licensees and threats to end agreements if licensees ignored the clauses. Its fine was cut by 40 percent after it cooperated with the EU enforcer.