Economy sways big designers to sell online

A pure white, half-inch border frames a slideshow of horizontal photographs from Balenciaga’s fall 2010 campaign on the label’s website. A menu slides out from the left side of the screen, providing links images of clothing, accessories, shoes and handbags for sale.

A few short months ago, these links to the online shopping site were not available.

Balenciaga, along with other fashion houses, is feeling the pressure of an already harsh American economy. So now, instead of clients having to trek to cities like New York, Las Vegas or Los Angeles to get their hands on designer pieces, they can have luxury items delivered to their doorsteps.

This sudden upswing in online retail springs from slower department store sales, price reductions on merchandise and even the increases in oil prices.

Department store sales have taken a hit as of late, which might have affected the overall sales of luxury goods. The industry for luxury goods experienced a decline of 8 percent last year, and department stores have only made $23.79 million worth of revenue this year.

Ten years ago, clothing store profits accounted for $168.5 billion of U.S. retail sales, while online commerce contributed only $110 billion. In 2010, online sales have settled at $102.3 million and in-store apparel sales have declined to about $82.172 million.

This downfall of in-store sales also means customers are using less gas and spending less time on the roads to travel to boutiques. Gas prices alone have fluctuated within the past six months from a national average of $2.76 per gallon in January to $2.90 per gallon in April and are currently back down to $2.78.

And this difference is apparent in the decrease in consumer spending that has happened in the past few months. According to national consumer surveys, clothing store sales declined by 1.3 percent in April, but online retail sales improved by 15.6 percent since May of last year.

Designers now turning — or soon turning — to online sales include Marc Jacobs, Donna Karan, La Perla and Hugo Boss.  These online sales could potentially help or hurt these luxury brands’ profits, but only time will tell.

In smaller towns like Bloomington, many stores don’t have e-boutiques. Only a Facebook page and MySpace profile can be found for Cactus Flower, located on Kirkwood Avenue. And one won’t find online merchandise from Cha Cha, either. Even with IU’s more than 32,000 students and plenty of Bloomington residents, most local clothing stores might not feel the need or pressure to provide online sales. They get enough traffic inside their stores.

But for larger companies, the Web does pose an opportunity to increase profits: No middleman, like a department store or specialty boutique, is involved.
If the benefits of e-commerce outweigh its disadvantages, we as consumers might see many more luxury and department store brands giving in to the appeal of online retail.

But for now, there are still many stores we must step into to hang their items in our closets.