During a trip to Dubai, Michael Kliger, the new president of the online fashion portal offers an unexpectedly optimistic view of the future of retail
Online versus bricks-and-mortar shopping: there are no losers, says Mytheresa.com president
In a seemingly endless stream of bad news for traditional bricks-and-mortar stores, this year has seen Macy’s shut 63 of its branches in the United States, Ralph Lauren close down its Polo flagship store in New York (barely three years after opening it) and BCBG Max Azria Global Holding shed more than 100 outlets. Business Insider published an article entitled “Closing stores won’t prevent retail collapse” as far back as April, while Fox Business has dubbed 2017 as the year of “retail apocalypse”.
Even the much-hyped November shopping event Black Friday (which started in the US, but has now gone global), brought mixed news in its wake. In the US, it generated sales of $5 billion (Dh18.3bn), a huge 16.5 per cent increase, compared to last year. But this figure was smashed just a few days later on Cyber Monday, when $6.6bn was spent online in a single day, breaking all previous retail records. A recent study by consultancy firm Bain & Co states that 2017 saw a rise in online sales of luxury goods of 24 per cent, with the projection that a quarter of all sales will be carried out online by 2025. If all the grim speculation is to be believed, there is genuine concern that the end may well be nigh for bricks-and-mortar.
So when I met Michael Kliger, the new president of online fashion portal Mytheresa.com, this month, I imagined that he might indulge in a little professional gloating. In actual fact, he presented a balanced, charming and optimistic view of the future of shopping. “If bricks [and mortar stores] had 100 per cent of the business, and online takes 30 per cent of that business, it feels very harsh; it’s painful,” Kliger points out. “But, if the endgame is that luxury online takes 30 per cent of the market, bricks still have 70 per cent. And currently, we are not even at 10 per cent.”
Judging from the complaints coming from the bricks-and-mortar corner, it would be easy to conclude that online retail sprang up overnight, giving brands no time to react. The fact is, online shopping portals may be big news, but they are hardly new. The online pioneer, Net-a-Porter, has been around since 2000, and Mytheresa launched in 2006. Even Moda Operandi, a relative newcomer, went live seven years ago.
Yet, despite having 17 years to figure out a new game plan, most physical store brands have been woefully slow to adapt, seemingly hoping that this digital interloper would simply go away. Such a reticence to face a future where shops would no longer be king now seems to be coming back to haunt those who chose to hide their heads in the sand. However, Kliger – despite being so invested in online – argues there is still enough space for both models to exist side by side.
“I definitely believe that bricks-and-mortar have a significant role to play in the future. Mytheresa also has a store in Munich, and we are reinvesting in it, so we firmly believe in bricks. I believe that my pure online market is going to triple, which is fantastic, but I still believe that majority of shopping will be bricks.”
Much is made today of Generation Z versus the traditional customer, perpetuating the notion of a two-tiered base – with one shopping in stores, and the other, younger consumer only doing so online. Kliger, however, is adamant that this is not an accurate view of the market. “It’s the same consumer. The person who shops online is also going to bricks. It’s a different preference, but it’s not like we have customers who only shop online. The power sits with the customer today – she decides. We know for a fact that our best clients are probably the best clients of the other players as well. We don’t have loyalty, and I don’t attach any negative connotations to that, because the beauty of online is that it fits her schedule, which is so busy between work and family. Going into stores might be more pleasant for her, but sometimes it is impossible with her hectic lifestyle,” he explains.
So, what are the key drivers behind the stratospheric rise of online shopping? “The massive difference between online and digital 10 years ago is the smartphone,” Kliger points out. “Never has there been a device as personal. Women are willing to part with their husbands, but not with their phones. They talk to it more often, they touch it more often, and if you are important on that device – which we strive to be – then you are important in her life. Her smartphone is always with her, she can check and browse in the car, at the bus stop, or in the restaurant waiting for her food.
“Today the world is about choice. Sometimes that feels confusing, but our customer can choose to buy Valentino in Milan, with us online, or at Harrods in London. Previously, retailers could claim to have brought a brand to a customer’s attention, but now she probably knows at the same time as the retailers if something is really hot. So it’s a more equal playing field.”
This raises the question of how a brand can make any real impact, when faced with such a well-informed customer? And in an age where one can access anything with just a few clicks of a button, is there now too much choice? “Online, we can all see and have everything, but it’s so overwhelming and confusing, that in the end, perhaps, we decide not to buy anything. The main purpose of the retailer is to simplify, to curate, which is why we always like to speak of Mytheresa.com as a boutique. We like to give that boutique feeling. It’s not overwhelming, there is someone to make a pre-choice, and you trust her selection. That’s our real purpose; we decipher, simplify and segregate this overwhelming world of choice.”
As choice becomes even wider, the need for speed is imperative, but not, he argues, as important as careful curation. “One effect that technology and information has on everyone’s lifestyle is that the value of time is diminishing. Patience is a dying characteristic. Everyone wants to have everything right now. And it’s in all areas.”
UAE customers will already be familiar with online store Ounass’s boast of a two-hour delivery time, made possible by the excellent state of the roads and relatively light traffic. Other cities worldwide face far greater transportation issues, yet I wonder if customers make concessions for that when ordering online?
“When someone raises the bar, that becomes the new normal,” he explains. “Movie releases now are everywhere at the same time, where previously it was staggered. And waiting time? When she has bought something on our website, she thinks: ‘What do you mean tomorrow? I want it today.’ But there are laws of physics we are struggling with here!”
With technology moving at such a fast pace, many ideas that were once considered outlandish, are very close to becoming a reality. For example, at the Condé Nast Luxury Conference in Oman earlier this year, speakers such as future thinker Sophie Hackford, and Stefan Siegel, founder of Not Just a Label, talked about implants used for communication and shopping as a matter of when, not if.
“There are some general trends we believe in; for typing, I believe speech recognition will take over, and the technology is getting better, and I think there will be high adoption there; then it depends how the device works in relation to the clothes. Next is video, and already 60 per cent of all videos are watched on smartphones. People don’t read any more, so a 30-second video can and will do the job of a 500-word article,” Kliger says.
“I believe this is not too far away. The technology exists, but the question is always adoption. The success of the smartphone was not the technology; it was the speed of adoption.
Aside from curation, there seems to be a definite groundswell for personalisation – possibly as a backlash against the rise of mass, disposable, anonymous garments, which is fuelling a desire for pieces that are unique to each customer. Whether adorning your tote with a Fendi bag bug or an Hermès Twilly scarf, or having it hand-painted in store by Dolce & Gabbana, more and more brands are offering the chance to personalise a purchase.
“We were the first to do online personalisation with Gucci for the Ace Sneaker, and the highest share of orders came through a smartphone. So this really is the generation that embraces that mix of fashion and technology. It is still a Gucci, still a Balenciaga, but consumers like to feel that I gave it a twist. And that’s where we are investing heavily. We have also heavily invested in creating capsule collections, to help create this uniqueness.”
One criticism often levelled at online retail is that, by definition of its mass, all-inclusive appeal, it can’t ever truly be “luxury”, at least not in the traditional sense. “This is the discussion I have with brands,” Kliger admits. “They sometimes feel that accessibility is not in line with luxury. I actually tend to disagree. If you have the idea that luxury is on a pedestal and hard to get to, and people have to beg to get it … well, that’s not my definition of luxury.
“It is about highly personal emotions. No one buys luxury shoes because they need shoes. You buy them because they make you feel good about yourself. They make you fell younger, richer and more important. Luxury is the most useless and the most useful product at the same time. Useless in the sense that no one buys it to keep warm, but the most useful because it gives you emotional benefit. It underlines success in life, it fulfils a personal emotional need,” he concludes.