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Chanel Strikes Farfetch Deal to Augment Boutiques(BoF)

Chanel store | Source: Shutterstock

Chanel store | Source: Shutterstock

The article first appeared on Business of Fashion.

PARIS, France — Chanel has inked a strategic partnership with fashion “unicorn” Farfetch, but the French luxury house still has no plans to sell its ready-to-wear and handbags online. The company is no stranger to digital marketing and sells its eyewear, fragrance and beauty products online, but has long resisted making core product categories available via e-commerce.

Instead, the tie-up with Farfetch will focus on deploying the company’s "operating system" for physical retail to enhance Chanel’s boutique experience. As part of the deal, Chanel is investing in Farfetch. The terms of the transaction were undisclosed.

“We are not starting to sell Chanel on the Farfetch marketplace — I want to be very clear on that,” explained Bruno Pavlovsky, Chanel’s president of fashion. “Our position on e-commerce is the same. We want to connect our customers with our product and our boutiques are the best way to do so. We are very consistent in our strategy, but we are using Farfetch’s know-how to accelerate this.”

“The mission of Farfetch is to reinvent the luxury shopping experience online as well as offline,” added Farfetch founder and CEO José Neves, describing the company’s plans to revolutionise not just e-commerce but the physical store experience with what it calls Augmented Retail. “Fashion cannot be digitised like music. The physical experience is going to continue to be where the majority of the action takes place.”

Indeed, while luxury e-commerce is growing fast, the portion of personal luxury goods purchases that happen online — now about 8 percent of total — is expected to plateau at about 20 percent by 2025, according to consultancy firm Bain. This means that, for the foreseeable future, most sales will still take place in physical stores, which have yet to really benefit from digital.

The initial fruits of the partnership will be unveiled at one of Chanel’s boutiques in France later this year, said Pavlovsky, noting that it will take “many years” to see the full results. “When you are in a long-term partnership, it won’t take place one day to another,” he explained. “We are talking about a transformation.”

“Imagine a customer can book an appointment through WeChat or Whatsapp and say they would like to come at two o'clock to see in the fitting room this silhouette or this bag or this shoe,” continued Pavlovsky. “If we want to enrich the customer experience, we have to think about a range of services like that. We need to have a relevant dialogue between the boutique and the customer.”

Farfetch’s Augmented Retail programme is still in its early stages, but last April, the company unveiled a few key applications to demonstrate its potential: a universal login that recognises a customer as she checks into a store; an RFID-enabled clothing rack that detects which products she is browsing and auto-populates her wishlist; a digital mirror that allows her to view her wishlist and summon items in different sizes and colours; a mobile payment experience similar to what exists in Apple Stores; and, of course, the underlying data layer that connects these services with each other and the Farfetch platform.

Read more on Business of Fashion.


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