Developmentof luxurybrands part 2

Gilles Chavet pour EMC Campus MBA 2012 / 2013

Development of luxury brands

MARKETS


Development of luxury brands

• Crisis or not ??? (Exemple : Tiffany profits Fall 29.6%)

• Necessity to project a positive image AT ALL TIMES not to worry investors.

• And Adapt to all situations


The current crisis is changing

consumers trends :


Reduce & Reuse

• Consumers “shop their closets”, reusing purchases from past years


Reduce & Reuse


• Shoppers are trying to update their wardrobes inexpensively


Reduce & Reuse


• Shoppers are trying to update their wardrobes inexpensively

• ... refreshing their looks with few key items and accessories


Polarize

• Down-trading on fashion items, investing in evergreen items


Polarize


• Accelerating Cheap & Chic


Polarize


• Accelerating Cheap & Chic• Fast Fashion players winning the game


Valuefor

Money

• Delay high-ticket and classic/basic purchases


Valuefor

Money

• Delay high-ticket and classic/basic purchases• Booming season-end sales and discount

channels: outlets …


Valuefor

Money

• Delay high-ticket and classic/basic purchases• Booming season-end sales and discount

channels• Willing to spend only for items and brands

who pass the worth-it test


Understatement

• Austerity is fashionable even for wealthiest consumers


Understatement


• Extravagant spending considered irresponsible or disrespectful


Understatement


• Extravagant spending considered irresponsible or disrespectful

• Luxury shame, impacting negatively logo and showy products: logos are getting smaller


Despite the crisis, long-term prospects for theluxury market remain strong

• Despite current negative trends, marketfundamentals remain strong in the long-run



• Despite current negative trends, marketfundamentals remain strong in the long-run• “New luxury segments” are emerging:working women, men, new generations,emerging markets



• Despite current negative trends, marketfundamentals remain strong in the long-run• “New luxury segments” are emerging:working women, men, new generations,emerging markets• Continuing growth of aspirational consumerbase (especially in Asian and emergingmarkets)



• Despite current negative trends, marketfundamentals remain strong in the long-run• “New luxury segments” are emerging:working women, men, new generations,emerging markets• Continuing growth of aspirational consumerbase (especially in Asian and emergingmarkets)• New opportunities may come from changingvalues and consumption habits


The markets of the Luxury Industry: Mature, New, Rising

Mature ( 80%): Europe, USA, Japan New ( 14%):Middle East,Russia,South East

AsiaRising ( 6%): China, India, South America


How the luxury industry adapts to those different markets:

Each market is different and there is a necessity to adapt and diversify the way of doing things according to market specificities.


However, CRM everywhere

• Put in place a few years ago, it’s starting to pay off.




• Data collection




• Data collection• Development of after sale’s service




• Data collection• Development of after sale’s service• Luxury brands loose on average 80% of their

clients after their first buy


Distribution Europe : headquarters often settled there /Advantages

- Retail network in free standing boutiques and department stores.

- Franchise stores and identified corners- Distribution in multi brand stores


Best streets in Europe

• Bond street & Knightsbrige London• Avenue Montaigne & Fbg St honoré Paris• La croisette Cannes• Rue du Rhône Genève• Via Monte Napoleone Milano• Via Condotti Roma• …/…


Distribution USA:

• Presence in department stores : Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Barneys.

• Presence with Retail free standing stores in key streets : Madison in NYC , Rodeo Drive in Beverly Hills.

• Outlets


Bergdorf Goodman NYC


Distribution Japan :

• Presence in Major Department stores: Isetan, Takashimaya, Mitsukoshi.

• Presence with Retail free standing boutiques• Mostly Retail with dedicated structure locally


Isetan


Distribution Middle East:

• Boutique on Franchise contracts• Wholesale thru agent or distributor• Very rare to have Retail unless key man in

country


Beware : Villa Moda


Villa Moda


Princess Deena Jeddah


DNA


Distribution Russia

• Boutique on Franchise contracts• Wholesale thru agent or distributor• Very rare to have Retail


Tsum Moscou


Distribution South East Asia :


country


Focus on Luxury Business in CHINA

a singular market ?


British carmaker Bentley sells more Mulliner

728 limousines, the world’s most expensive car at US$1.2 million each, in Beijing than in any other city in the world.


Facts :

• 80% of sales of luxury goods are purchased by mens

• As of 2010, China is the world's second largest consumer market for luxury goods, next only to Japan,and having surpassed the United States in 2009.

• By 2014, China could surpass Japan by representing 26% of luxury goods sales

http://en.wikipedia.org/wiki/People's_Republic_of_China

http://en.wikipedia.org/wiki/Luxury_goods

http://en.wikipedia.org/wiki/Japan

http://en.wikipedia.org/wiki/United_States


Facts ( cont .):

• Chinese luxury goods consumers are younger than their European counterparts, belonging to the 18-50 age group, compared to Europe's consumers who are generally in the over 40 age group. For this reason, China's luxury goods market is expected to grow faster than that of Europe's. Many of the young luxury goods buyers are self-employed or professionals. According to the consulting firm McKinsey & Company, 80% of Chinese luxury goods buyers are under 45, compared with 30% of luxury goods buyers in the United States and 19% in Japan. According to a report by the World Luxury Association, Chinese consumers spend a larger proportion of their income for luxury goods compared to the world average of 4%.

http://en.wikipedia.org/wiki/Europe

http://en.wikipedia.org/wiki/McKinsey_&_Company


Facts ( cont. ):

• According to 2007 Global Luxury Survey by Time magazine, most luxury goods buyers in China buy luxury products as a status symbol. The top five luxury watch brands in the country are Rolex, Omega, Cartier, Vacheron Constantin, and Breitling.

http://en.wikipedia.org/wiki/Time_(magazine)

http://en.wikipedia.org/wiki/Status_symbol

http://en.wikipedia.org/wiki/Rolex

http://en.wikipedia.org/wiki/Omega_SA

http://en.wikipedia.org/wiki/Cartier_SA

http://en.wikipedia.org/wiki/Vacheron_Constantin



http://en.wikipedia.org/wiki/Breitling


Cosmetics, perfumes and personal care

1.Chanel2.Lancôme3.Dior

http://en.wikipedia.org/wiki/Lanc%C3%B4me

http://en.wikipedia.org/wiki/Dior


Watches

1.Rolex2.Omega3.Cartier

http://en.wikipedia.org/wiki/Rolex

http://en.wikipedia.org/wiki/Omega_SA



Suitcases and handbags

1. Louis Vuitton2. Gucci3. Chanel

http://en.wikipedia.org/wiki/Louis_Vuitton

http://en.wikipedia.org/wiki/Gucci

http://en.wikipedia.org/wiki/Chanel


Menswear

1.Giorgio Armani2.Ermenegildo Zegna3.Versace

http://en.wikipedia.org/wiki/Giorgio_Armani

http://en.wikipedia.org/wiki/Ermenegildo_Zegna



http://en.wikipedia.org/wiki/Versace


Jewelry

1.Cartier2.Tiffany and Co


http://en.wikipedia.org/wiki/Tiffany_and_Co


Shoes

1.Prada2.Chanel

http://en.wikipedia.org/wiki/Prada



Womenswear

1. Chanel2. Burberry3. GiorgioArmani


http://en.wikipedia.org/wiki/Burberry

http://en.wikipedia.org/wiki/Giorgio_Armani


How luxury brands have to adapt to Luxury market in China:

• Implement retail networks, dealing with local landlords and possible investors. Necessity to increase margin to overcome duty cost & implantation costs ( rent, fees to investors, banks …)

• Lack of workforce at the managing level: necessity of settling training programs.


Cont. :

• Necessity of not manufacturing locally• Watch and deal with counterfeits production. • Adapt communication to this particular

market : choose “icons”: Nicole Kidman, George Clooney

• Adapt to younger age group


Distribution in China :


country


Distribution : India's Luxury Market Up 20% in 2010

http://blogs-images.forbes.com/anthonydemarco/files/2011/10/India-Luxury.jpg


Distribution India :


country • Very often stores are being developped with

luxury hotel chains

http://blogs-images.forbes.com/anthonydemarco/files/2011/10/India-Luxury.jpg


Depatment store in Bombay


Distribution South America :

• Boutique on Franchise contracts• Very few wholesalers thru agent or distributor• Very rare to have Retail unless key man in

country • Exemple Daslu in Sao Paulo


Daslu


Quizz

1. Bergdorf Goodman is a store in London ?2. Luxury brands have to adapt to market’s

specificities ?3. Chinese women are bigger spenders that men?4. It’s easy to start retail operations in China ?5. On average,chinese luxury goods consumers

are younger than their European conterparts?

Developmentof luxurybrands part 2

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Transcript of Developmentof luxurybrands part 2