business of luxury carol anne henry
TRANSCRIPT
Definition of Luxury
“
Italian Vogue, 2011“
Luxury is a product, service, or experience that is a culmination of 8 specific characteristics:
RarityExcellenceExpensiveness
Timelessness HonestTailoredPleasurable
Experience
The luxury market is categorized by three segmentsPersonal ExperientialTransportation
What is luxury? Quality and not price? Yes, maybe, but it's not enough. Luxury involves a much wider concept. If you misunderstand it with richness referring to expensive items only, then you have an old idea of luxury. -Franca Sozzani
Apparel Jewelry & Watches
Accessories Cosmetics & Fragrance
Footwear Leather Goods
Automobiles Recreational Vehicles Professional Vehicles
Marine Aircraft
Hospitality (food, wine, spirits)
Home/Interiors Travel Activities &
Management Collectibles Real Estate
Charitable Involvement Personal Health
Management
2014• Global Luxury goods reach 224
billion in revenue in 2014, up by 3% from 2013
• currency fluctuations in the first quarter had an impact on spending patterns
• Luxury Cars are up 10% from 2013
• Hotels up 9% from 2013
• Yachts and jets up 9% from 2013
• Personal Luxuries up 4% from 2013
• Japan, Europe, and the Americas see positive growth while China slowed with a negative trend
Bain & Co 2014
SectorGrowth
This data shows how much growth the 2014 market saw within the luxury cars and luxury
hospitality sectors
2015 market estimates
Bain & Co 2015
European market had a good start to 2015, 3-5% expected growth in 2015
expect 1-3% growth in 2015, slower than 2014
due to the dollar decreasing touristic
spending
Japan is steadily climbing with a projected 5-7 percent growth in 2015
Mainland China projected to see 2-4% decline due to
spending restrictions and a more price-sensitive attitude
Sector
SIZEPersonal
ExperientialTransportation$700 Billion
$300 Billion
$400 Billion
Personal Luxury grew 2% from
2013-2014
Luxury hospitality experienced a 9% increase, wines and spirits showed 5% increase, find foods 2%
and furniture decreased by 1% between 2013 and 2014
Luxury cars show the largest increase of 10%,
private jets grew 9%, luxury cruises 5%, and
yachts showed the smallest growth with 2% from
2013-2014 Bain & Company 2014
New Consumer Behavior
Creates an opportunity for
luxury companies to enhance the experiential
aspects of what they offer.
Putting the Luxe Back In Luxury
“Worldwide, Luxury is shifting from “having” to “being.”-Shock of the New Chic, BCG 2014
begun to look for a more
meaningful purchases and
have lowered their opinions on luxury
products.
Focusing less on how much
they have and more about the
real value of what they
have.
Consumers have… Consumers are… What does that mean?..
Conscious Shoppers
company efforts to support charities makes
consumers feel better about buying their
products
“Affluents are putting their money where their hearts are, marking a profound shift away from “me-first” to “we-
together”.. -Putting the Luxe Back in Luxury
Putting the Luxe Back In Luxury
Affluent shopper goals have changed to encourage quality of
life rather than acquiring more stuff
affluent customers are still less likely to sacrifice convenience for price, but are now more willing to
opt for an environmentally friendly option
Luxury Sustainability • luxury
companies are integrating sustainable operations
• consumers are more aware of how they address environmental and social issues
Anaya, Suleman 2015
“It goes without saying that being seen as commonplace is poison for any luxury brand”
-Suleman Anaya, Business of Fashion
Branding Preferences
After two periods of low earnings in 2009, Louis Vuitton
decided to focus on more luxurious materials and
reduced the visibility of their monogrammed products.
consumers are moving away from visible signs of luxury shopping and are
instead more interested in uniqueness, high quality, and an understatement
less brands are putting out products with large logos, consumers are no longer
interested in an item that is branded all over.
Social Media Marketing
“Social Media has changed everything and its existence has challenged the world of luxury, which traditionally scoffed at the notion of being even remotely
accessible”-Karen Robinovits
Luxury Daily
Social Media creates opportunities for companies to market their products quickly to a consumer using various social media platforms.• for top designer brands, a successful social
media strategy includes innovative technology, collaborations, and experience across social media platforms
• Brands who collaborate with popular internet entities have successfully given new life to fashion topics
• Luxury marketers have to accept social media as a long term fixture in order to maintain long term growth
Nordstrom features their “As Seen On Pinterest” items
Two-Fold Mobile Strategy
Mobile Apps are quickly becoming a popular venue for engaging customers via Social Media. There are things apps can do that a website can not, and vice versa. A successful brand will utilize both.
• apps create a feature-rich enjoyable user experience that people like spending time on and come back to.
• websites are accessible from any device
• Mobile web reaches a larger consumer pool
• apps are more useful for brands looking to reach their target audience
Adhami, Melody 2013
Blog Marketing“The bloggers have moved from commentators to creators; gone from front row next to Anna Wintour, to backstage next to Alber
Elbaz in but one calendar year.” -Global Luxury Trends
Ross, Elspeth 2013
bloggers create a different bond with the consumer
than a journalist or marketer does
bloggers emulate styles and trends while also
making them personal and exclusive
Bloggers reach a younger demographic because of
their shared consumer values
Shea, Erin 2013
Print Advertisement“Print remains an effective medium for luxury because it’s something we can hold, touch, and remember.”- Erin Shea
• Luxury Ads that stand out are the ones that put the focus on the product and not the imagery, people, or attitude
• engaging visuals create emotions in consumers, marketers should aim at making ads that encourage emotional impulse
• Ralph Lauren Spring/Summer Print Campaign
• Marketers have not ditched print advertisement for others with low cost because they have not found a medium that matches the print experience.
“Maintaining brand desirability is particularly important at a time when growth is lower and consumers have wider choice in an increasingly crowded luxury market.”-Business of Fashion, 2015
Risk of Over Exposure
Rarity and Exclusivity are defining characteristics of Luxury. Brands that lose those aspects essential lose the essence of luxury.
There is such a thing as too much and to many…
impo
rtant
to ha
ve in
nova
tive
manag
emen
t, “Des
ign
Thinkin
g”
Rise in technology and social
media creates more unique
opportunities for brands to
separate themselves from their
competition
Marketing is a controlling factor in
consumer engagement and
competitive advantage
Use of CRM tools:
incorporate various
strategies in order to learn
more about your target
consumer and their loyalties
Setting yourself apart from the
competition
E-‐Commerce
To be successful, you must master the 3 C’s: COMMERCE, CONTENT ,COMMUNITYShock of the New Chic 2014
“For luxury brands, as for every other type of business, the digital
domain is here to stay.”
Brands need to focus on merging the concepts of
online and offline retail, with a hybrid
business organization model
Brands with an established e-
commerce site in the US and Europe
are seeing 10%-20% of retail sales come from
online.
Brands need to focus on merging the concepts of
online and offline retail, with a hybrid
business organization model
Does Technology Belong in-store?
companies that incorporate
technology in other aspects
of their experience, they should also include it in the retail
experience
Carr, Tricia 2013
“Department stores and boutiques are where luxury marketers can present collections in a physical, traditional sense, but technology should be added in some instances to
show brand innovation.”-Tricia Carr
If the technology is enhancing the customer experience, then it is adding value to the
traditional retail set up.
Sales associates can
utilize technology to
increase service and personal
recommendations
Emerging Markets
“Our prospects would look grim without China and the other fast emerging economies”- Guy Salter, China Luxury
Summit 2011
• Newly affluent customers have a big appetite for luxury products • These consumers with recently acquired wealth are concentrate in
specific regions of emerging markets and their demographic is much less diverse than that of the US
There is large opportunity for growth for companies who can successfully read the consumer of these growing markets and meet their specific needs.
China India Russia Brazil
How Emerging Markets Impact the Luxury Industry
The emergence of new markets has a direct affect on the success of individual luxury segments. This was evident in 2014 industry
growth statistics, particularly transportation luxury
Bain & Company’s 2014 Annual Global Luxury Study states:
New Business Strategies
shock of new chic, 2014
Luxury brands are moving away from
“luxury islands” and creating more
relationships within the brand and with
outside organizations.
More data is available with the use of CRM tools which creates a
stronger communication tie
between brands and retailers
adjustments to verticalization
strategies conveys a sense of exceptionally
high standards to newcomers and creates a strong
competitive advantage.
• The shift in office atmosphere and wardrobe requirements in the work place has men shopping for more casual work attire.
• Men are beginning to care more about their personal appearance and are attracted to more fashion choices
• “data from Euromonitor, which shows a 4.1 percent decrease in suit sales between 1999 and 2000, and a further decline of 21.2 percent between 2000 and 2001.”
• millennial are also credited for created an increased interest in being fashionable
“Menaissance"
• department stores are expanding their mens departments
• working on customer service initiatives to encourage men to shop more
Men today shop for the casual alternative to the suit…
retailers are having to adapt to the growing demand of menswear…
“Even in large Western fashion markets, such as the US, the UK and Germany, the sales of menswear has been growing at a faster pace than womenswear for the past few years.”
TOURISMTourism is a great source of income for many luxury companies, especially transportation and experiential luxuries. However, consumers making luxury purchases while traveling can affect the growth of their own market.
• certain nationalities are more likely to spend while traveling
• Chinese tourists spend three times more money abroad than they would at home
• focusing on certain luxury cities requires more specific marketing to account for cultural/personal tendencies
Think Advisor
The Talent GapSocial Media and digital media on
the rise as a strategy for finding top employees
BCG Minding the Talent Gap, 2014
Many Luxury companies are struggling with finding talent. With the growth of technologies, there is a strong need for employees who can
successfully combine creative and organizational strategies.
BCG research shows that
companies with superior hiring
and better retention rates
show more economic benefits
Four Key Areas of Concern:
Recruiting
Strong LeadershipEmployer Brand
Digital Technology
Currency/Market Changes
many customers buy luxury as long term investments, drops in price stability cause them to question the value and exclusivity
Paton, Elizabeth 2015
“We need price equilibrium around the world,” Jean-Claude Biver, president of LVMH’s watch and
jewelry division
Currency changes cause inflation in manufacturing costs and inconsistent pricing in different sales regions
The difference in luxury bags/watches/jewelry between Europe
and China is the largest it has been in 3 years according to Sanford Bernstein Research
Company
The instability of the Euro affects a majority of luxury companies
Of f-Channel Luxury
Balancing act between good
exposure and over-exposure
Luxury Daily
discount and outlet stores help brands reach a
wider variety of consumers but hurt the company’s luxury image
if done strategically, outlets can be beneficial to luxury department stores,
but at what cost to the brands they carry?
Must maintain brand status and prevent
outlets from distracting from core
products
strategic way to engage an aspirational consumer
Luxury brands opening outlet and factory stores
Graduate student pursuing a dual Masters in Global Luxury Management. Experience in customer service, sales, education, and team building. Detail oriented and well organized, punctual, and
responsible. Known for ability to maintain and strengthen communication within company departments and creating strategies to encourage customer satisfaction and generate sales. Focused on using educational experience to develop the tools necessary for a career in Management. Seeking
a position in Marketing/Public Relations within a global luxury company.
Carol Anne Henry
In my undergraduate studies, as well as my first year in the “real world”, I was a teacher. Being in the Global Luxury Program seems a far stretch, but there are many things I learned and was required to do as a teacher that are very
relevant to the business world. Managing the schedules of 24 students, daily. Incorporating your daily schedule into a larger, year-long curriculum schedule. Planning enough course work for 24 students, for every day. Making the
required course work seem entertaining to 8 year-olds (a challenge). Collecting data from their studies and using that data to make positive changes. But most of all, making sure that your class is a cohesive team and that one member is never left behind. Being a teacher has allowed to develop
great communications skills. It helped me acquire organization and time management skills. Most importantly, it allowed me the opportunity to experience what it is like to
work with many different types of people.Why Luxury?I chose to pursue luxury because of all that luxury encompasses. To me, a luxury product is a piece of art. It is the idea that at some point, that item was someone’s dream. Knowing that the pair of jeans you are wearing took 36 hours to create, from choosing the fabric to stitching the pattern by hand. With luxury, the idea is quality from the time of conception until the moment the consumer puts it away at home. A general, mass produced item lacks that element of inspiration. The jeans I buy from an average retailer only reminds me of the machine that took 36 seconds to create them. I choose luxury because I choose to encourage and hopefully influence an industry that brings art into all facets of production.
From Lunchboxes to Luxury
Works Cited
Abtan, Olivier, Antonio Achille, Jean-Marc Bellaiche, Youllee Kim, Vincent Lui, Amitabh Mall, Antonella Mei-Pochtler, and Sarah Willersdorf. <i>Shock of the New Chic</i>. Rep. N.p.: Boston Consulting Group, 2014. Print.
Adhami, Melody. "Why Luxury Brands Need Two-Fold Mobile Strategy." <i>Luxury Daily Classic Guide to Luxury Marketing</i> (2013): 11-12. Web.
Anaya, Suleman. "Has Logo Fatigue Reached a Tipping Point?" The Business of Fashion. N.p., 11 Mar. 2013. Web. 01 Sept. 2015.
"Bain & Company's 2014 Annual Global Luxury Study Proclaims the Rise of the Consumer as Luxury Markets Settle in for Lower, but More Sustainable Long-term Growth." - Bain & Company. Bain and Company, 14 Oct. 2014. Web. 01 Sept. 2015.
Carr, Tricia. "Does Technology Belong In Store?" <i>Luxury Daily Classic Guide to Luxury Marketing</i> (2013): 4-5. Print.
"Global Luxury Goods Market Expected to Sustain Steady Momentum with 2-4 Percent Real Growth in 2015." Spring 2015 Worldwide Luxury Goods Update. Bain and Company, 21 May 2015. Web. 03 Sept. 2015.
Paton, Elizabeth. "Currency Swings Create Inequalities for Buyers in the Luxury Market - FT.com." Financial Times. N.p., 8 June 2015. Web. 01 Sept. 2015.
Ross, Elspeth. "Why Smart Luxury Brands Embrace Bloggers." <i>Luxury Daily Classic Guide to Luxury Marketing</i> (2013): 26-27. Print.
"7 Pressures and Effects on Global Luxury Market." 7 Pressures and Effects on Global Luxury Market. N.p., 16 Apr. 2015. Web. 01 Sept. 2015.
Shea, Erin. "Luxury Brands Must Maintain Status When Opening Outlet Stores." Luxury Daily RSS. N.p., 18 July 2013. Web. 03 Sept. 2015.
Shea, Erin. "Print Advertisement Should Position Product as Hero." <i>Luxury Daily Classic Guide to Luxury Marketing</i> (2013): 6-7. Print.
Sozzani, Franca. "What Is the Meaning of Luxury?" - Vogue.it. Italian Vogue, 5 Mar. 2011. Web. 01 Sept. 2015.
Sulca, Luca. "Top 10 Risks for the Luxury Industry." The Business of Fashion. Business of Fashion, 09 Feb. 2015. Web. 01 Sept. 2015.
Willersdorf, Sarah, Olivier Abtan, and Thomas Gaissmaier. <i>Minding the Talent Gap</i>. Rep. N.p.: Boston Consulting Group, 2014. Print.