As tourist destinations go, they don’t come more sophisticated than Piazza San Giovanni, Florence. Opposite the Baptistery of St John, which Michelangelo dubbed the Gates of Paradise, and the Cattedrale di Santa Maria del Fiore, which, in the midday sun, looks as though it were carved from ivory, another paradise beckons: a parade of luxury emporia, including two global titans of Italian fashion, Prada and Gucci.
Today, though, a neighbouring store called Luisa Via Roma – named after the street in which it is rooted – is attracting the most attention from passers-by, despite its small size and a shop front that features no clothing, just a big red button and an invitation to PUSH HERE. Every few seconds someone does, such as the American I’m watching now. As he does so, a dubstep remix of Judy Garland’s 'Somewhere Over the Rainbow' blasts out; the shop window lights up to reveal a dozen knee-high My Little Ponys that have been customised by some of the top fashion houses, including Versace, Fendi and Missoni. Laughter ensues, and the American and his friends duck through a curtain of sky-blue clouds to find out what is going on inside.
According to Luisa Via Roma’s owner, Andrea Panconesi, the window display is the most successful the company has ever done, and he speaks from experience, having transformed his grandmother’s boutique in the late Sixties, when he introduced radical designers such as Kenzo, who was then unknown in Europe, to her clients. It’s not commercial, he says. The toy horses are being sold on eBay in aid of Nepalese children. He just loves the public’s reaction. “People are surprised by our window, they are fascinated, they take pictures, it’s fantastic. Then they go in the store or maybe not; they buy or they don’t buy. I don’t care – for me that only is success.”
Over a glass of 2009 Brunello di Montalcino, chosen because of its origin not because it’s the most expensive red on the wine list – “Give business to the Italians,” he said nonchalantly when he ordered it – Panconesi is explaining the greatest challenge that a company such as his, with just one flagship store, faces in the global marketplace. “Our biggest problem is not in terms of quality, is not in terms of service, is not in terms of selection, which I’m very confident we can’t do any better than we do. It’s visibility. Today, to achieve visibility is 100 times more expensive than it was 10 years ago.”
In London for several days on business – “including meeting the ambassador of Italy, whom I’ve never met before” – Panconesi and Tiziana Tini, his attractive countries co-ordinator for Greater China, Asia and the Russia Federation, meet me a few days later in Roast, a restaurant in the eaves of Borough Market. He says it reminds him of a similar spot in Florence, as he surveys the stalls spread out beneath us. In front of him is the day’s special: a honey-glazed leg of Jimmy Butler’s free-range ham. Panconesi chose it after spotting two women being served it at an adjacent table. “I like to see,” he says. “In Japan it’s easier because everything is photographed. It comes exactly as you ordered.”
Increasingly, ordering from pictures is how we are buying everything. Britain has become not only a nation of online shoppers, but the world’s leading one in terms of average spend per capita. In 2014, we spent £100m online each week on clothes and shoes, up from £63m in 2011. This new Klondike was something that, until very recently, most luxury fashion brands refused to accept was ever going to produce gold. Panconesi, who today is wearing a dapper blue Brioni wool suit, a blue-and-white-striped shirt and black high-tops, tells me that one designer friend made the mistake of doing a TV interview in which he stated, “I’ll never sell my clothes online because my clients need to touch them, try them on.” He smiles empathetically. “That was no more than five years ago – now they are all online.”
By contrast, Panconesi was an e-commerce trailblazer, although he was already in his late forties when he launched luisaviaroma.com in 1999. It was the pre-broadband era when, he points out, “Google was in the beta stage”. Panconesi had small–scale ambitions – to begin with at least. Florence was a magnet to the rich, but his clients usually came just once a year, “often in the spring, to visit museums or their children at the international school”. The web provided a means of keeping in touch. For the first five years, he says, you needed a password to access his site, and that was only given to clients of the physical store. “Now, 95 per cent of our business is online,” he says, around half of which is menswear.
Men shop differently online to women, says Panconesi. “Men need to be more reassured about the brand than women. Women look at themselves in the mirror; if they look sexy, they buy – no matter what the brand. Men buy to ensure they make a good impression, whether in business or in social life. So they need the brand.”
Visitors to luisaviaroma.com have increased eight-fold over the past five years, and will hit 50m a year by the end of 2015, generating a projected turnover of €110m (£78m). Panconesi has managed this without selling any of his company, unlike his competitors such as the Net-a-Porter group. Valued by luxury goods conglomerate Richemont at £350m when it fully acquired the online retailer from its founder Natalie Massenet in 2010, Net-a-Porter is now being merged with the Italian online retail giant Yoox, partly, it has been speculated, as a manoeuvre to try to keep Amazon at arm’s length from the luxury retail sector. Panconesi says his own company stands on the relationships he has forged with designers – “first you support your children and then they support you” – but says it would be impossible to start an online site from scratch today, “unless you invest 100 million on the spot, right now to start with, just on marketing and communication. And you need to have a business formula that works before you start in e-commerce, otherwise you are sure to throw your money away.”
Luisaviaroma.com’s headquarters in Florence has 170 staff from 13 different countries. One of them is Sophie Abrahamsson, a 32-year-old, blonde Swede. She tells me that she left Lapland because she wanted to work at dog shows – it’s a Saturday morning and she’s looking forward to “getting back to my pugs” – before a fork in her career led her to becoming the company’s affiliates marketing manager. “I’m sort of favourite child right now,” she says, “because I’m driving so much revenue and traffic.”
Over coffee in the shaded, open-air terrace by the first-floor menswear sales area, Abrahamsson explains how she is responsible for forging partnerships with bloggers, web magazines and mainstream publishing companies, offering commissions in return for creating a direct bridge between the content on their websites and the luisaviaroma.com shopping basket. This allows consumers to immediately buy something they are reading about, and Luisa Via Roma pays commission whenever a sale results from that connection.
Luisaviaroma.com uses tracking software that is smart enough to take into consideration the vacillation of online shoppers. “We have a 45-day cookie,” says Abrahamsson. “We know that, being high-end products, it usually takes a few days after someone sees something for them to buy it.” She uses as an example a newsletter tracked through an affiliate link. “Say you have an open rate of 60 per cent. You send it to one million people; 600,000 people are going to click on that and be tracked for 45 days. Everything they buy after that you’re going to get a commission on. It’s all mathematics, right?” she says, her eyes opening wide as she reels off the numbers.
“If you have a conversion rate of one per cent, 6,000 people are going to buy something.” With commissions of 10 to 15 per cent, some bloggers can as much as €10,000 a month just from Luisa Via Roma. “And I’m not the only person doing it,” she says. There are “a lot of Sophies” at work.“You have no idea how tracked you are online.”
Abrahamsson says affiliate deals with female bloggers are key to women’s sales, but she says that male bloggers are five or six years behind in terms of online influence.
“I’m trying to find those personalities who are going to be as big as the womenswear bloggers.” She shows me an example of a blog called Isaac Likes, a New Zealand ex-pat based in New York, who disconcertingly prefaces his posts with the greeting “Hey, gidday mates”. Affiliate programmes, she says, also work on social media, for example you can shop on US Vogue’s Instagram account using the third party liketoknow.it app.
Leading into each new fashion season, Luisa Via Roma hosts a party and convention called Firenze4Ever, and as part of the event, invites bloggers such as Isaac to Florence to showcase its latest collections. The company provides photographers, hairdressers and make-up artists, and liaises with the local authorities for permission to shoot throughout the city, to facilitate editorials that could be affiliate-linked back to luisaviaroma.com. Mainstream media companies are yet to fully embrace the concept, says Abrahamsson, but magazines have huge potential.
Firenze4Ever is the most important marketing and communication project that luisaviaroma.com undertakes, and it encapsulates what sets it apart from its rivals. Panconesi says he relishes competition on a global scale – “When I was just taking care of the store I was getting bored” – but seems more concerned with the creativity of his own brand than analysing his competitors. “Of course I follow them. There are programs that tell me who is doing better than me, so I have a rough idea about how much turnover they make.”`
I ask him if he’s ever bought something using Mr Porter’s site, just for comparison’s sake. “I’ve never bought anything online,” he says.
“Andrea! You surprise me,” Tini exclaims.
“It’s not a good thing, to say, right?” he replies, laughing. “But I’m very honest. No, I don’t need anything. I’ve nothing to hide.”
It may be a generational thing. Although he jokes that he is 28, Panconesi was actually born in 1951.“My son, who is 16, would never go to a shop to buy,” he says. “He sits at home, orders his clothes from our warehouse with my credit card, and he gets it sent to the house. He doesn’t go to the store — he thinks he is losing time.”
Ulric Jerome, chief executive of matchesfashion.com, which Panconesi lists as among his main rivals, would relate to the Italian’s son.
“I’m a bit of an online shopping freak,” says the 37-year-old Frenchman. “I travel a lot, and the first thing I do when I arrive at a hotel is go on to our website and check how good we are on delivery. I don’t buy expensive things, it’s just to try things out. So I was in New York last week, I arrived at night and I bought an Acne T-shirt. It arrived the next day, so that was good.”
We’re sitting in the immaculately appointed sitting room of the company’s private-shopping and events townhouse in London’s West End. On the walls are sketches by some of the designers with whom matchesfashion.com has worked, including Marc Jacobs, Dolce & Gabbana and Paul Smith. The relationship that the company’s owners, Tom and Ruth Chapman (who opened their first store, Matches, in Wimbledon in 1997) have with such designers was key to Jerome becoming a partner two years ago, when investors who’d sunk £20m of equity into the company suggested he had lunch with them.
“The barriers to entry in luxury are extremely high online and it starts with the relationship with brands,” he says. “So when they told me that they had a very long-standing relationship with brands over the past 27 to 30 years, that’s a very good story in itself.”
The other major attraction for Jerome is just how untapped he believes the luxury-fashion market is. Where some might worry about the slim operating margins for multibrand companies when compared with those of bricks-and-mortar luxury outlets, he just sees opportunity. “The biggest challenge is to quickly grab market share before anyone else,” he says. “That’s what keeps me awake at night.”
The global luxury market in 2014 was valued at €223bn, of which 5.5 per cent is made online. “That’s super-small, right? And the luxury market grows by about four per cent a year, while online it’s growing by 25 per cent. So by 2019, ten per cent of total sales will be online. There’s no other industry in the world where there’s such an opportunity to grab market share online.
“The biggest challenge for our company is how do we make sure we have the right selection of products and the right customer service to grab that market share.”
Jerome identifies menswear as a particularly significant area for expansion. “We’ve been growing that category online by more than 100 per cent a year. Today, about 20 per cent of our business is menswear. We think that the right position would be to continue very aggressively to 30–35 per cent in the next two to three years.”
The men’s market is highly valued for several reasons. Matchesfashion.com data shows that men spend much longer than women looking at the details of a product, including its sizing, before they commit, which is one reason they are less likely to return a purchase. “We love men for that,” says Jerome, who adds that the company has found them to be more loyal customers. “Once they’ve engaged with us, the repurchase rate – how many times a customer comes back over the next 12 months – for men is higher than women. More than 50 per cent return to buy something else within that year.”
Jerome has been an internet entrepreneur since he was a teenager. In 2001, he co-founded online electronics company Pixmania, which Dixons bought a 77 per cent stake (£185 million) in five years later. Since arriving at Matches, he has completely restructured the business, from its warehouse (which he moved to Wembley) to its computer systems. To ensure hearts and minds were also focused, he gathered the staff for a seminar to provide them with a clear vision for the company for the next two years. And to tell them that from then on, Matches would be referred to as matchesfashion.com (the name appears above the door of its 11 physical stores).
Luxury fashion didn’t feature on Jerome’s CV before he moved to London, but it’s in his blood. His father was a manufacturer for Parisian haute couture, his mother worked for Vogue, and today Jerome is wearing a white pleated-bib dress shirt designed by his brother Mathieu, “who is a luxury designer, which we carry”. The way he wears it, with the top three buttons unfastened – complemented with dark Armani trousers, electric-blue Tod’s loafers and a Rolex – epitomises the company’s brand identity. Asked to define it, Jerome points to a large screen in the room on which is displayed Y3’s latest capsule collection. “That’s exactly the kind of spirit, and I think some of our competitors – I’m not going to name him, but I’m sure you know him – are more strict, more formal, and more conservative. It’s very, very... the right word is ‘undone’.”
Simon Chilvers, who left his position as The Guardian’s assistant fashion editor two years ago to become the style director of menswear at matchesfashion.com, later uses the very same word when describing what he feels has been a shift in men’s attitude to style in recent years.
“Men are much less suited and booted than they used to be,” he tells me, following his arrival back in Britain after the Milan and Paris menswear shows. “That’s been reflected by the catwalk and designers, which is why we’ve had this surge in trainers and jogging trousers, and that sort of laid-back, sporty wardrobe.
Alongside that there’s been the kind of undone, rock’n’roll, Saint Laurent vibe, which Haider Ackermann also does. I think the shows for spring next year are almost a perfect combination of the two things.”
Natalie Massenet, the founder and chairman of Net-a-Porter, recently reflected that the rise of a more creative economy could lead to menswear becoming as big as womenswear over the next decade.
“Our customers are certainly switched on to fashion,” says Chilvers, responsible for the editorial content of matchesfashion.com and its magazine. “The thirst is because of social media and because men are more aware of fashion on blogs, through street style and online. Everything has sped up in fashion, and everybody wants things as soon as they see them.”
As the old UPS ad jingle goes, when the things that you need come at just the right speed – that’s logistics. When your chain of supply runs from here to Shanghai, that too is logistics. But how does it work for men’s fashion? At 8.45am on a Friday morning, I’m about to find out.
I’m standing outside a depot on an industrial estate in south-east London. Although the buildings are unmarked, the fleet of ebony-and- ivory vans give the game away. Branded with the words Net-a-Porter or Mr Porter, these vehicles provide a same-day delivery for those living in London who pay for the company’s premier service.
Launched in 2011, Mr Porter is the menswear arm of the Net-a-Porter group, and its goods are distributed from this centre across Britain, Europe and half the world (a warehouse in New Jersey fulfils orders in the Americas). Between them, they can process 42,000 orders a day. For a sense of scale, Andrea Panconesi outsources the logistics of his Florence warehouse in order to break through the 1,500 barrier.
In the foyer, which, in keeping with the company’s colour scheme, is furnished in minimal, cool monochrome, I’m provided with safety gear, including a hard-hat baseball cap. One of the oldest clichés about fashion is that you should judge a man by his shoes. If the same were to be said of Mr Porter, then I’m happy to report that the gunmetal mesh, steel toe-capped trainers I’m required to wear are the most stylish work boots I’ve ever donned. (I’ve heard that when representatives from the Italian shoemakers Berluti visited, they found the protective gear so comfortable that they nearly left the building without retrieving their bespoke leather footwear.)
Julie Ly, the warehouse’s training co-ordinator, gives me a tour of the site. Ly, who is 30 years old, lilac-haired, has a tattoo of a heart on her wrist and is wearing green Converse (with no discernible steel toecaps), has worked at Net-a-Porter for eight years. We start at the Unit 3 loading bay, where a delivery of Etro jackets has been unloaded, and a pallet of silver Maison Martin Margiela hi-tops that are waiting for QC (quality control). Ly regularly flummoxes me with acronyms – from SKU (stock keeping unit) to RTV (return to vendor) – as she explains the complex industrial choreography that is involved in labelling, bagging, storing, retrieving and dispatching orders.
Although one of the attractions of Mr Porter’s service are its tastefully hand-packed boxes — who knew that men love spoiling themselves with gift-wrapped presents as much as women? – much of the process is automated, including a robotic loader that whizzes up and down between aisles, moving orders from pillar to post. This machine was apparently once nicknamed The Commissioner, but after three years of faultless service now goes by the rather less esteemed title of The Mini-Load System.
In a separate unit is a storage area that reminds me of IKEA. It is devoted almost entirely to shoes, and requires special-reach trucks to assail the highest racks. Footwear fetishism, Mr Porter’s managing director Ian Tansley later tells me, is no longer the preserve of the Imelda Marcoses of this world. “In terms of a proportion of our business, we’re seeing more money coming from shoes on Mr Porter than Net-a-Porter,” he reveals, when we meet at the company’s west London headquarters (ironically, given this is a retail company with no physical stores, it is based at the Westfield shopping centre).
“It’s mainly because of men’s sneakers,” he says. “Men’s sneakers are going wild.”
Tansley himself is formally dressed in Church’s shoes, a dark grey Ralph Lauren suit, a Hackett shirt and a Cartier Ballon Bleu watch. He definitely doesn’t channel an “undone” look but, he points out, Mr Porter has always emphasised style over fashion, so by definition it is slightly more conservative. Catering for finance workers is as important to him as appealing to creatives, and his own background was in the City, where he worked on trading networks for banks and money brokers in the Nineties.
It was while exploring the antipodes in 1999 that he became interested in the world of e-commerce. The dot-com bubble was just blowing up, and he decided to follow the money, joining buy.com just as the sector deflated and the cash dried up. Fortunately, John Lewis hired his team to mastermind its own online blueprint. From there, he says, it was a “natural progression” to join Net-a-Porter in 2007.
It didn’t take long before he and Natalie Massenet were discussing how to leverage the knowledge of Net-a-Porter into a menswear brand with its own distinct identity. In February 2011, the first paying customers came through Mr Porter’s virtual swing doors, entering their credit-card details from as far afield as Mongolia and Fiji. The first external purchase, Tansley recalls, was from a man in Hackney, who bought a Phillip Lim shirt. The largest order the company received that day was for £5,000 – “fairly typical for a big order,” he says – from someone in Notting Hill, who bought a load of Balmain gear, a leather jacket and boots.
Technically, it was Tansley himself who placed the first order: for a £10 pair of socks (he can’t remember the brand). First-time online purchasers often test the waters with something similarly inexpensive, such as ties or pocket squares, but more typically a casual shirt or T-shirt. Then they move on to shoes, says Tansley, “and suits further down the line”.
Given that Tom Ford has been added to the 300 or so brands on the site, that can mean a substantial outlay – up to £3,500 for a two-piece, of which they may only have seen a digital impression.
“We know we can sell that now,” says Tansley with quiet confidence, citing the success Mr Porter has had with its exclusive online relationship with Berluti.
Mr Porter has also achieved commercial success with another unique deal – creating its own heritage-style brand in a tie-in with the movie Kingsman: The Secret Service. The collaboration came about, says Tansley, when the director Matthew Vaughn approached Massenet and said, “Hey, I’m going to make this movie about stylish spies. Do you want to get involved?”
Was Vaughn already a customer?
“I think his wife [Claudia Schiffer] was a customer... on Net-a-Porter.”
Mr Porter does get its share of female shoppers, however. Tansley says that typically women account for around 20 per cent of sales for most of the year, rising to around 50 per cent at Christmas.
The average Mr Porter customer, though, is a 35-year-old man, who buys two items as he proceeds to checkout, where he spends slightly less than £500. He probably makes the order in the evening or late at night on an Apple device. “In terms of our business, no one uses Android,” says Tansley.
What’s their favourite colour? As you’re asking, it’s blue. White and black don’t sell so well, possibly because of the difficulty men have in discerning the details of the products. Although Tansley concedes that those are the most successful colours on the sister site. This may explain the colour scheme chosen for all Net-a-Porter branding. We’re sitting in the Mr Porter boardroom at an ebony table surrounded by 24 white, leather chairs; on the other side of the glass wall is a black shelving unit on which are displayed half a dozen white motorcycle helmets. From a few friends working around Massenet’s kitchen table, Net-a-Porter has grown into a company that employs around 2,500 people at bases in New York, London, Hong Kong and Shanghai. Around 1,000 of them work here, in an office that has become increasingly sprawling as every square foot of available space on the upper tier of Westfield has been chiselled out for the rapidly expanding company.
When Mr Porter’s head of PR, Paul Watson, showed me the extent of the company’s Westfield empire, he joked, “We can’t go any further without breaking through into KidZania”, so I ask Tansley if the next step is to drill downwards into the very shops their site challenges, and open their own physical store?
“Personally, I think the economics of running a store as well as a multibrand online business is tricky,” he says. Yet he believes there’s still scope for Mr Porter to be significantly bigger. The only way is up, apparently. “In all seriousness,” says Tansley. “They’re talking about building on top of the roof.”
This article originally appeared on Esquire in 2015.