Armani, Cavalli Go Online to Boost Holiday Sales (Update1) – Bloomberg.com.
By Chiara Remondini and Armorel Kenna

Nov. 30 (Bloomberg) — Italian fashion houses including Giorgio Armani SpA and Valentino Fashion Group SpA, which have traditionally spurned the Internet, are testing Web stores this holiday season in a quest for new sources of revenue.

The worst recession since World War II and Italian acceptance of Internet buying — even for big-ticket items — is sparking greater use of Web shops in the luxury-goods industry. Designer Roberto Cavalli and shoemaker Salvatore Ferragamo SpA have both opened e-stores in the past five weeks.

“I expect a significant boom in online luxury sales during the Christmas period,” said Alessandro Perego, a professor in charge of research on e-commerce at Milan Politecnico’s School of Management. “In the past year the number of Web sites has increased substantially. I expect growth rates in 2010 to match or beat this year’s.”

Younger, more Internet-savvy consumers and “luxury shame” that’s causing customers to shun boutiques are contributing to a boom in online fashion sales. Web sales of Italian luxury goods are expected to soar 42 percent to 335 million euros ($500 million) this year, according to a study by Politecnico. That beats a 6 percent decline to 3.48 billion euros for the overall industry in a survey by fashion consultant Carlo Pambianco.

Feeling Guilty

“People feel guilty about going shopping,” Paola Durante, Bank of America Merrill Lynch director of investment banking and head of corporate broking for Italy, said in an interview in Milan. She said some people may feel more comfortable shopping from home or the office over the Internet.

Luxury brands have been available online in the U.S. for at least four years through department stores including The Neiman Marcus Group Inc. Nordstrom started sales of Giorgio Armani merchandise in 2006, adding to its range of designers such as Burberry Group Plc and Dolce & Gabbana SpA.

About 14 percent of Italians will do their holiday shopping online, according to Deloitte’s 2009 Christmas Survey. Greater choice, avoiding crowded stores and having little time to shop were cited as reasons to buy on the Web. Being unable to touch or directly see the items is described as the main shortfall of the net, according to the research.

Books are still the most desired Internet items on Italian wish lists, followed by clothes and shoes, Deloitte said.

“The cost of making a Web Site is not that big. That’s encouraging fashion houses,” said Stefano Sassi, chief executive officer of Milan-based Valentino, which opened its Web shop six months ago. “There’s a very interesting margin on e-commerce.”

Smart Phones

On Nov. 25, Armani introduced a mobile application for Apple Inc.’s iPhone, Research in Motion Ltd.’s BlackBerry and other so- called smart phones for shopping at its online store. Users will be able to buy goods “anywhere and anytime,” the Milan-based company said in a statement.

It also introduced a Christmas Web site where users can make a wish and share it on social networks such as Facebook Inc. and Twitter Inc.

Ferragamo, whose shoes have been worn by Marilyn Monroe and Condoleeza Rice, last month unveiled its online shop, predicting the site will be one of its “top stores” starting next year.

“Some people are far away from stores, others love to buy online even if they have an outlet in the same city,” CEO Michele Norsa said in an interview.

Gucci, part of PPR SA, whose brands also include Bottega Veneta, Yves Saint Laurent and Stella McCartney, started its Web store in 2002.

“At that time, no one believed that major luxury brands could offer luxury online,” said a Gucci Group spokeswoman who declined to be named.

Remote Customers

Gruppo Cavalli’s online shop was introduced this month in 46 countries, giving the Florence-based company access to customers in areas where it doesn’t have shops.

“The Internet has revolutionized consumer behavior, also for luxury consumers, and will help our online shop to become one of our top stores at a global level,” Cavalli CEO Gianluca Brozzetti said.

Men, in particular, are turning to the Internet to avoid crowded shops and save time when selecting gifts, Perego said.

“If women are the main clients at our outlets, a significant slice of online shopping is done by men,” said Paolo Fontanelli, CEO of leather-goods maker Furla SpA. “This is the first year for our e-commerce and it’s already generating sales comparable to an actual store.”

An Oasis

Yoox SpA, which runs its own Web site offering previous season clothing from top designers and operates sites for fashion houses including Armani, is taking advantage of the increased interest for online luxury sales. The company, whose shares are set to start trading Dec. 3, is holding the country’s biggest initial public offering in two years.

“In these tough times we didn’t feel the recession,” founder Federico Marchetti said in a Sept. 25 interview. “E- commerce is quite an oasis. We are counter balancing the fact that there are tough times.”

Still, some analysts and consultants are skeptical about whether the Internet will be a benefit to every luxury-goods company.

“The Web can help business a lot, but it also depends on the product,” said Pambianco, who has been advising fashion companies through his eponymous consulting firm since 1977. “Perfumes, eyewear, watches, bags and everything that doesn’t need fitting is going to do better than apparel.”

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net; Armorel Kenna in Milan at akenna@bloomberg.net

Last Updated: November 30, 2009 06:58 EST

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