Opens in new windowBeing a multi-brand luxury retailer online has never been harder. There are the high costs to acquire new customers, the ever-present problem of excess inventory and brands that prefer to sell on their own sites. A broader luxury slowdown has triggered a shakeout in the category, with Matches entering administration and Farfetch being acquired by Korean e-commerce giant Coupang in a fire sale.
Rather than attempting to compete on price or endless selection, survivors must prove they can offer shoppers an experience they can’t get elsewhere. Mytheresa has emerged as a leading example of how to do this successfully. The German e-tailer has generated profitable growth by focusing on driving sales from its top-spending customers. Having hit on a winning formula, Mytheresa isn’t done innovating. Even as its old rivals are diminished, there’s always new e-commerce start-ups jockeying to establish themselves. To remain competitive in the long term, online retailers have to go beyond serving a niche, even an especially lucrative one like the top one percent. They also have to balance increasing customer loyalty — which helps grow profits — with a customer acquisition strategy that lets them widen their reach without losing money. That’s why Mytheresa is acquiring one of its primary competitors, Yoox-Net-a-Porter, which carries more brands and has a larger customer base. (The deal is slated to close in 2025 pending regulatory approval.)
But for the company’s chief executive, Michael Kliger, remaining resilient in luxury e-commerce goes beyond a play for consolidation. Kliger anticipates a slow but steady recovery in 2025 and identifies ways to retain a strong position in tough times, including tapping new markets, selling more full-priced products and proving to consumers and brand partners why multi-brand retail is still valuable.
BoF: The luxury slowdown came swiftly this year and hit luxury e-commerce particularly hard, contributing to the situations at Matches and Farfetch. When you look ahead to the next several months, what do you expect for the luxury e-commerce sector?
Michael Kliger: Looking forward, I expect continued stabilisation for the sector overall.
We had a very tough time, but also that produced some healthy reactions in terms of reduction. [The industry] reduced the amount of stock in the market.
I don’t expect a V-shaped recovery, but I think stabilisation and continued progress. Nothing has changed for the rightful expectation that the share of digital luxury will continue to increase, and will definitely pass the 30 percent threshold in the next couple of years.
BoF: The downturn in China — an important market for luxury — has been tough for a number of players. How is Mytheresa navigating the situation there?
MK: My expectation for continued stabilisation is really driven by Europe and the US. China will, in my expectation, not get worse; it will stabilise, but not improve much. But that’s the time when you show that you’re committed to the market. That’s the time we do events, that’s the time when we introduce a Chinese version of our name [Mei Lin Shi], when we hire the new local president of [greater China, Dede Chan Brignoli].
BoF: Are there any markets where you see emerging growth opportunities in luxury e-commerce?
MK: If you want to look for opportunities, there’s always three elements. One is you need economic growth. Second, a significant part of our business is womenswear. You need a country, a culture, where women are participating in the workforce. Any society where people travel more, where more people join the workforce, in any of those countries we see the uptick of e-commerce, because then shopping is not so much an attractive pastime anymore. Then, the last factor is, of course, regulatory permits.
India ticks the box: middle class, affluence, huge success story … more women joining the workforce. Some African markets already tick all those three boxes. In some African markets you have excellent technological infrastructure, which sometimes people overlook.
BoF: E-commerce is often thought of as a channel for consumers to research products and shop for convenience, while stores are where they go to enjoy a truly complete luxury experience. Is it possible to provide a true luxurious shopping experience being online only, and how do you go about doing that?
MK: It is possible to create a luxurious experience online, but it’s not a copycat of what the store can do.
What we can do is understand what the customer wants from us, and the customer wants inspiration.
I have a great quote from a customer. She said, ‘I don’t have the luxury to waste time.’ Once the purchase has been decided, once the inspiration has succeeded, our luxury is it’s efficient, it’s fast. Our luxury is you don’t have to worry, you don’t have to drive to town.
You have to define luxury in the way the customer wants it.
It is possible to create a luxurious experience online, but it’s not a copycat of what the store can do. What we can do is understand what the customer wants from us.
BoF: In-person events for top customers are one of Mytheresa’s primary sales drivers. But customer acquisition is still critical for online retailers to grow their businesses in the long term. How should luxury retailers balance catering to top clients with enticing new customers across income brackets?
MK: We have a very clearly defined target of a wardrobe builder that spends a lot. To acquire more of those types of customers, we have really fine-tuned our digital marketing. The trick here is really to have powerful algorithms that give you predicted customer lifetime [value].
When we do our bigger events, we always give our clients a chance to bring a friend.
We are also hosting events with ambassadors … in their houses, we partner with them, which often involves donation to their charity of choice. Then they invite 50, 60 of their friends, and the social sphere of a very good customer is potential for new good customers. The crucial point here is we try to find the customers again and again that fit our model.
BoF: Many online shoppers find products today not by going directly to a retailer’s website but rather through social media and Google searches. When you do get a new customer who comes to the site through one of those side doors, how do you keep them coming back to your site and build their loyalty and lifetime value?
MK: We try to generate good, high-quality traffic by where we advertise [and] with what we advertise. If you advertise for a $150 sneaker, and get clicks, you get different traffic than if you advertise for an $800 sneaker. These are all the choices you have to make to [determine] what type and quality of traffic you drive to your website.
Then it all depends how the first purchase goes. We know that the satisfaction score on the first purchase was a big driver for loyalty, because if you don’t have a good satisfaction, you don’t get a chance for the second time.
Then as we enter the relationship, as we understand not only what they bought, but also what they looked at, then we can get better in providing relevant content in terms of product recommendations.
Clients which we acquired in 2015, that cohort, in terms of money, are still growing.
BoF: You’ve openly said that Mytheresa benefits from its competitors’ struggles. But there are also smaller luxury e-tailers that are doing well and aiming to reach Mytheresa’s level. How do you plan to stay ahead of the competition and maintain your dominant position in 2025? I can imagine Yoox-Net-a-Porter will help with this.
MK: There are many good e-tailers, smaller ones, who do a fantastic job in curation and positioning. We have big respect for those, and that also keeps us awake. We should be on our toes.
With the Net-a-Porter [and] Mr Porter brand, we can stay highly relevant without diluting profiles. I don’t need to dilute Mytheresa or dilute Net-a-Porter. I make them both as strong as possible.
This is a very big exercise to integrate Net-a-Porter, Mr Porter, to have Yoox, again, on a dedicated platform that really serves their needs. That’s a big project. Mytheresa has proven that we are very good at big projects. We implemented our own technology. This was not done by outside consultants.
Operational excellence makes a difference, and I have big respect for the task, but also high confidence that we can do that.
BoF: The economy has forced retailers to ramp up discounting. Even if some companies are doing fewer markdowns, it’s still more frequent than before. How can luxury e-tailers convince aspirational shoppers to buy more full-priced merchandise even in a time of economic uncertainty?
MK: We need to ensure that there’s more than just price. We cannot take the price away. We cannot say, ‘No, you have to ignore price;’ it’s impossible.
You need to overcome this by providing excellent service. Yes, you can get it there at 10 percent, but we have the full trust. If something happens, we are [here] for you. Are you sure the other shop will do that for you? Are you sure it’s the right product? You need to compensate for it.
Our strategy is not: they have minus-10, then we have also minus-10. That just doesn’t make sense economically. So what additional emotional components can we do?
BoF: Mytheresa is known for being profitable in an industry where it can be difficult to turn a profit. Also, as a luxury retailer, customers expect a high level of service, from customer interactions to shipping, which comes with costs. How do you manage costs in a way that allows luxury e-commerce to be profitable?
MK: If you want to serve that [luxury] customer, that’s not cheap. They expect a lot, and you have to give it.
Focus on full-price selling. A high share of full-price selling allows you to spend more. Focus on more valuable pieces. A beautifully packaged product costs you the same amount whether there’s a $50 product in there or a $1,000 product in there.
The third most-important item to make a profit is marketing cost. Make sure, to the best of your tools and algorithms, that you spend your marketing on valuable customers. If you spend a big amount of money but that customer is with you for the next five, six, 10 years, it was such a good deal.
BoF: For years now brands have been pulling back on their wholesale accounts to boost their direct-to-consumer channels. What value can online multi-brand retailers offer to shoppers and brands, and how can retailers retain brand partners in the long term?
MK: The question we, as a retailer, have to answer [for brands] is: why should I share my margins?
Our hard push is we need to bring additional visibility; we need to bring additional customers; [and] we need to provide relevance.
If your only answer is, ‘Well, I bring you traffic,’ then your value-add is very thin.
Brands are more picky nowadays, because they have increased their retail effort, they have improved their DTC. In many aspects, they are reaching more people than they were able to reach 10 years ago. Wholesalers, retailers have to work harder.
This interview has been edited and condensed.
This article first appeared in The State of Fashion 2025, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company.
