State of Lux

THE luxury goods industry, struggling through a recession that has threatened some well-known names with extinction, is trying to use technology to its advantage.

Many in the fashion business remain wary of the Internet, partly because of continuing legal battles over online sales of counterfeit goods and concerns about diluting carefully honed brand images. Many companies also have failed to execute online storefronts successfully. But executives say that attitudes are softening as brands realize that the Web provides one of the last untapped sources of potential growth.

Federico Marchetti, the founder of Yoox, a company in Milan that runs retailing sites for luxury brands like Valentino, Emilio Pucci and Jil Sander, said many labels were skeptical not long ago.

“Now,” he said, “it is the opposite.”

The move to capitalize on the Web has become a financial imperative. Analysts at Bain & Company estimate that the sales of luxury goods will fall to 154 billion euros this year ($229 billion), from 170 billion euros in 2008. It is unlikely that online revenue — still only a tiny fraction of the total — will make up the difference soon.

One of the most successful ventures on the Web has been Net-à-Porter, a site based in London that sells high-end fashion and accessories, delivering them to homes or offices in black boxes. Though sales in the United States slowed during the depth of the recession, they have since recovered and have continued to rise at double-digit rates in other markets, the company said. It expects sales this year to top £100 million ($168 million), up from £82 million last year.

“It just made a lot of sense to allow women to shop when they wanted to shop, how they wanted to shop — at work, at home, in bedroom,” said Natalie Massenet, the company’s founder.

At a time when trundling along high-end strips like Bond Street in London or Avenue Montaigne in Paris with an armful of shopping bags seems out of touch with reality, Net-à-Porter may have benefited from the greater discretion that its service offers. Last year, to cloak purchases even more, the company added a brown-bag delivery option. This year, in another bit of good timing that Ms. Massenet attributed to luck rather than foresight, the company added a new site selling fashions from previous seasons at reduced prices.

Customer overlap between the sites is only 6 percent, Ms. Massenet said, with fashionistas frequenting the original Net-à-Porter and bargain hunters turning to the new site, outnet.com.

That ought to comfort luxury executives worried that selling online might undermine the high-end appeal of their wares — and the high prices that come with such exclusivity.

Some individual brands that previously refrained from selling online have recently embraced the Internet. Hugo Boss, the German clothier, started introducing Internet shops in Europe last year. Now it is accelerating its online efforts, planning to open similar stores in the United States early next year and in Asia the year after, said Claus-Dietrich Lahrs, the chief executive.

Mr. Lahrs said Hugo Boss expected to sell more than 50 million euros of goods online within two years, up from a little more than 10 million euros this year.

While some labels are now trying to make up for lost time, others remain cautious about the pitfalls of the Internet.

Led by the largest company in the business, LVMH Moët Hennessy Louis Vuitton, luxury brand owners have fought a series of legal battles across several continents with Internet companies like Google and eBay, contending that they aided in the online sale of counterfeit goods. Courts have issued mixed rulings, sometimes siding with the brand owners and fining the technology companies, and in other cases agreeing that sufficient steps were being taken to root out fakes.

Some executives also remain reluctant to invest heavily in digital initiatives because of costly failures in the past. Uché Okonkwo, a Paris-based consultant, said that brand owners are “many steps behind the clients, when they should be several steps ahead of them.”

One brand that has won plaudits from analysts for its efforts is Burberry. This month, it created a social networking site that allows owners of Burberry’s trench coats to exchange stories about them.

Christopher Bailey, Burberry’s chief creative officer, said high-end brands should go further in trying to give Web stores the rich texture of physical stores.

“Whether they are walking into our store on Bond Street or tapping in from India or China, it’s about making sure the consumer is getting the same experience,” he said.

From New York Times