The future of shopping: How Burberry plans to sell directly to us

Shoppers hankering after Canada Goose’s Black Label Elrose parka can snap up the new style at the e-commerce site of retailer Sporting Life. Or they can buy that same $1,300 calf-length coat through Canada Goose’s own website. A growing number of designer brands are embracing the Internet’s direct-to-consumer sales model to give themselves an edge on the competition. But as suppliers pump up their sites and accelerate the fashion cycle, they can siphon off business from stores in their wholesale network, threatening to turn the supplier-retailer relationship on its head.

“They become our competitor,” says David Russell, co-owner of Sporting Life, which operates seven physical locations in Ontario in addition to its online shop. “It’s an interesting relationship…It will take some of the business away that we would have had. We have to keep watch for the next [new] brand.”

Labels ranging from Canada Goose to Tom Ford are increasingly selling their full collections from their own websites, drawing consumers from conventional retailers and, in the process, reshaping shopping habits. Now, brands such as Burberry are taking the model one step further. This month, Burberry will start selling items from its Sept. 19 show at London Fashion Week through its own channels immediately after the presentation, rather than waiting the traditional six months between runway and retail. The fast turnaround raises questions about the future role of department stores and boutiques that carry multiple brands.

“Burberry is trying to redefine the fashion cycle,” says Peter Simons, CEO of Simons, the Quebec-based fashion retailer that is currently expanding across the country. “I could see a world one day where a lot of brands just cut off all other bricks and mortar [store] distribution.” Despite the shift, retailers such as Simons are far from counting themselves out. Some say they welcome brands’ shoppable sites, especially when they link to the retailer’s e-commerce and allow consumers to make a purchase there; others say they aren’t too worried because many of the brands are based outside of Canada and charge hefty duties and other cross-border fees for online deliveries.

But some retailers have ditched brands that undercut the merchants’ prices or are focusing more on upgrading exclusive, private label and emerging lines to offset the business lost to brands’ sites. Toronto boutique Jonathan + Olivia navigates the shifting waters “by nurturing new young runway talent” such as local designers Vejas, Beaufille and Sid Neigum, while developing its business with established lines, including Maison Margiela, Vetements and Yohji Yamamoto, says president Jackie O’Brien Jones. “I don’t feel that it’s had a huge impact on our business even though there are obvious positives and negatives,” she says.

Simons focuses attention on local designers, such as Quebecers Denis Gagnon and Philippe Dubuc, and generates more than 30 per cent of its sales from its private labels including Twik. Luxury men’s-wear specialist Harry Rosen stocks some in-house lines but still bets heavily on major brands, among them Burberry.

“I’m not super-concerned,” Larry Rosen, CEO of Harry Rosen, says of the direct-to-consumer trend. Still, his chain has shipped back goods to suppliers that have discounted their merchandise on their own websites mid-season, he says, without naming the vendors. “We’ve had problems with some brands’ in-season sales. We’ve cut them back.”

Brands generally avoid dropping their e-commerce prices below those at retailers’ sites, says Jerry Storch, CEO of Hudson’s Bay, which owns its namesake chain and the luxury-focused Saks Fifth Avenue, among others. “They don’t want to encourage discounting.” Storch says shoppers appreciate the wide array of brands carried by the department-store retailer as well as the convenience of returning goods to the physical store – and often exchanging them for something else.

Mr. Rosen agrees many consumers prefer returning online purchases to a nearby store rather than having to ship them back. Retailers often benefit when customers return goods to a physical store because they end up buying other items while they’re there. Return rates for online purchases can be almost four times higher than those of in-store buys. At Harry Rosen, the return rate of e-commerce orders is 22 per cent compared with just 6 per cent in store, Rosen says.

Because the phenomenon of brands such as Burberry running their own bricks-and-mortar stores is nothing new, “it’s only natural that they would have their own web stores and sell products to consumers,” says Storch. “This is an environment where brand building can be challenging. We don’t view that as a threat to us by any stretch of the imagination. Our customers come to us for the choice, for the brand variety of what we offer, and for the service.”

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