The Luxury and General Fashion Industries Move Online and Up the Funnel

Data from our fashion retailer partners shows how an early investment in upper funnel solutions will positively impact online sales for peak season.
Updated on September 26, 2023

Due to the Covid-19 pandemic, many companies are adapting to unprecedented changes and transitioning from offline to online commerce. Global industry trends reveal that luxury and general fashion retailers have similarly responded to market changes with a greater focus on the online ecosystem. According to our data, the 2020 holiday season significantly outperformed 2019 for most luxury fashion partners in terms of online sales, and we expect the same trend to continue and for ecommerce to stay globally strong throughout the end of this year.

In light of the expected end of support for the third-party cookie in 2023, retailers are shifting their online advertising efforts to an audience-based strategy, leveraging their deep customer knowledge to help them retain current customers and reach and acquire new customers. There is a notable shift towards campaigns to increase brand awareness and strengthen the online footprint, coupled with performance marketing.

A ratio that skews less towards retargeting and more towards upper funnel activities such as prospecting, customer acquisition, and solutions such as contextual or video will allow retailers to align their own strategies with the larger global luxury fashion industry trends and with changing industry standards. Luxury fashion retailers that are early-adopters of upper funnel solutions see the pay-off in their growing customer base and online sales.

Getting started now with new upper funnel initiatives, before expected sales peaks, can provide an edge over competition that relies solely on lower funnel campaigns. In our Peak Season Analysis on the Global Luxury and General Fashion Industry, we analyzed data from our fashion retailer partners to provide an overview of the sales evolution over the last three years and show how an early investment in upper funnel solutions will positively impact online sales before and during peak season.  See our findings below and watch the videos for commentary from our data analysts.

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Growth in online sales promises to continue

Comparing 2019 to 2020, we see a peak in the beginning of 2020 which can be attributed to the COVID crisis. The peak is especially significant in the general fashion market but also mirrored in the luxury fashion space and it can most strongly be observed in the Americas. For peak season, at first many of our partners voiced concerns about decreasing online sales towards the end of last year as new lockdowns were approaching but we actually observed an even stronger peak season than in 2019. While that increase from 2019 to 2020 is not as apparent in APAC, you can clearly see it in the Americas and in EMEA both for general as well as luxury fashion.

2021 started quite strong compared to the previous years, especially in the Americas and EMEA for luxury fashion, considering offline stores were mostly closed due to ongoing lockdowns. As we approached the middle of the year, online sales kept outperforming the previous years in the Americas, while they remained at comparable levels to the years before in APAC and EMEA.

Data from previous years and this year’s online sales evolution provides a positive outlook for this peak season, where we expect online sales across all regions to reach even higher levels than last year.

Product popularity: For 2020 in the luxury fashion space, the most sold product category in the Americas as well as EMEA has been Shoes, while in APAC users went for Shirts & Tops. And looking for trends in the luxury fashion between 2019 and 2020, we observed that Dresses as well as Coats & Jackets lost in importance while Shoes have gained on relevance across all regions.

Methodology: To be defined as a fashion partner in general, at least 70% of the products in your assortment must be categorized as fashion products. The differentiation between general and luxury fashion is based on the average order value. If the average order value of users was above 300€, clients are defined as a luxury fashion partner – otherwise they were classified into general fashion.

A diverse media mix leads to more online sales

Being an early adopter of upper funnel solutions can generate great results. We have seen very positive traction for luxury fashion clients who made a considerable investment in upper funnel new solutions right before and throughout peak season of 2020. By focusing on diversifying their media investments to include new products, like video and contextual advertising, our clients were able to see more positive results.

With that being said, we have noted some differences in adoption of upper funnel solutions across general fashion and luxury fashion as well as across different regions. For example, omnichannel has a stronger presence in the Americas, as stores seek to maximize seasonal spending and drive return shoppers. Traffic generation campaigns continue to be a priority in both the Americas and EMEA.

In the luxury sector, we have seen a higher adoption of video and contextual solutions in the Americas and EMEA, with EMEA having the most variety between upper funnel solutions.

In EMEA, clients are eagerly adopting video solutions, which will be even more influential this holiday season. According to our recent survey, 50% of global respondents said they have purchased a product or service after seeing a video ad for it.1

In the Americas, contextual advertising has seen a high adoption rate due to its ability to reach consumers online and drive incremental traffic to websites without using cookies.

In APAC, customer acquisition campaigns continue to be a key part of the media mix.

Recommendations from Criteo’s experts

Our analysis clearly shows that being an early adopter of upper funnel solutions will give retailers an edge before sales peaks like Black Friday, Single’s Day, and the Holidays. In the long term, a diversified product portfolio will allow retailers to stay relevant for their users and future-proof their media investments.

Our suggestion: expand your strategy as early as possible! Consumers are beginning their paths to purchase now to get ahead of shipping delays and inventory issues. We expect product discovery, consideration, and purchases to happen well ahead of the peak season. Starting early means starting NOW to prepare for a successful peak season and drive long term results.

Interested in upper funnel solutions like customer acquisition, contextual, or video? Contact us!

1 Source: Criteo State of Video and Connected TV Survey, Global, Q2 2021, n=9221.

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