• by Sarah Mahoney  @mahoney_sarah, July 10, 2013

A new report on luxury retailers from L2 Think Tank says Nordstrom, Macy’s, Saks Fifth Avenue and Marks & Spencer are consumers’ favorite digital sources for luxury, rewriting the rules for department store marketing. 

Part of the new order, writes author Scott Galloway, professor of marketing at New York University’s Stern School of Business, is the continued struggle of department stores in general. Mass brands offer better deals and steal share at the low end, and more nimble specialty brands are continually taking transactions at the high end. “The sector has lost share 9 of the last 10 years,” he writes, “and U.S. department stores’ share of retail has been halved in the last 10 years. In sum, the format is under attack.”

That makes a strong digital strategy absolutely essential. “Nordstrom, a pioneer of in-store pickup, saw same-store sales increase 8% after incorporating real-time inventory integration,” he points out. “And Macy’s now registers $3.1 billion in online sales -- 11% of its total.” Saks’ high rating stems from a site that includes “large-scale photography, product-page videos, and robust navigation, paired with substantial investments in fulfillment.” And M&S committed to plow $1.56 billion (through 2015) on e-commerce make it a global player.

But L2 also notes a sharp divide between winners and losers, with such big luxury names as Printemps (France), GUM (Russia) and Holt Renfrew (Canada) not offering any online channel. 

In looking at each brand (it included 40 in its analysis), L2 found that  search drove almost half of the traffic to store sites, with email contributing 6.3%. Social media accounts for just 2% -- and while Facebook is the primary vehicle, it does poorly in engagement. Instagram, used by 60% of the stores, “registers almost five times the engagement rate of other platforms,” the report says.

And only 58% have optimized their sites for mobile shopping. “While mobile influence on in-store sales is projected to grow from $158 billion in 2012 to $689 billion by 2016, only half of department stores provide basic store locator links through their mobile experience.”