The Digital IQ Index®: Fashion study ranks the digital competence of 64 brands across four dimensions: Site, Digital Marketing, Social Media, and Mobile. Brand efforts were measured against more than 675 data points and classified into five categories: Genius, Gifted, Average, Challenged, or Feeble.
While the arms race among fashion brands for likes, followers, pins and views escalates, a handful of fashion brands are fighting a quieter, and likely more important, battle for e-commerce market share.
Once considered an unlikely channel for meaningful sales, a robust e-commerce channel is the must-have accessory for fashion brands.
Apparel and accessories is the fastest growing online sales category, registering sales growth of 20 percent year over year. Fifty-two percent of global Internet users say they purchase fashion items online, second only to electronics. Furthermore, online buying is increasingly a full-price purchase.
Gen Y and Gen X consumers increased their online purchases of full-priced luxury goods by 31 percent and 23 percent respectively in 2011.
Ralph Lauren, #2 in this year's Digital IQ index, was one of the first luxury fashion brands to launch e-commerce back in 2000. Twelve years on, the brand registers year over year e-commerce growth rates of 23 percent -- nearly double that of any other retail channel.
Some brands are growing even faster. Digital darling, Burberry, who nabs the top spot for the second straight year, posted e-commerce sales increases of 59 percent in Europe and 30 percent in the U.S. First-time genius Tory Burch saw its e-commerce business grow 90 percent.
However, many of fashion's brands have been caught flat-footed. One in five fashion brands in this year's Index still do not sell online in the U.S. Less than half, only 48 percent, have launched e-commerce in the U.K., and only 1/3 sell online across Western Europe.
M-commerce, in-store checkout, and smartphones are also proving disruptive forces in fashion. Almost a quarter of searches for fashion brands now occur from mobile devices, and the iPad may prove transformative for fashion brands. The device registers twice the conversion rate of desktop or laptop computers and 20 times that of smartphones.
In social media, the glow of the prospect of establishing a direct relationship with the consumer has not lost its luster. It's no surprise that a creatively driven industry has embraced Pinterest and Instagram, both highly visual platforms. More fashion brands have an official presence on these emerging platforms than sell online.
In addition, industry icons Prada and Hermes find themselves in the Challenged class for the second straight year, buttressing the notion that brand equity and resources lie fallow unless there is leadership and commitment to the medium.
Finally, the industry's largest conglomerates have failed to leverage the advantages of scale. The average digital IQ for every multi-brand fashion house, with the exception of PPR, dropped significantly from our 2010 index.
This is in contrast to other sectors where firms ranging from Starwood and Estee Lauder to L'Oreal and VF Corp are leveraging back end operations and elevating key personnel to enterprise wide roles in e-commerce and digital.
In our fourth annual Digital IQ Index: Fashion, we maintain our original thesis that digital competence is linked to shareholder value in the prestige industry. This study attempts to quantify the digital competence of 64 fashion brands.
Our aim is to provide a robust tool to diagnose digital strengths and weaknesses and help brands achieve greater return on incremental investment.
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