Business of Luxury Carol Anne Henry
- 1. The Business of Carol Anne Henry Global Luxury Management 2015 Luxury
- 2. Definition of Luxury “ Italian Vogue, 2011 “ Luxury is a product, service, or experience that is a culmination of 8 specific characteristics: RarityExcellence Expensiveness Timelessness Honest TailoredPleasurable Experience The luxury market is categorized by three segments Personal 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
- 3. 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 Sector Growth This data shows how much growth the 2014 market saw within the luxury cars and luxury hospitality sectors
- 4. 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
- 5. Sector SIZE Personal Experiential Transportation $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
- 6. Key Trends for the Future of the Global Luxury Market
- 7. 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?..
- 8. 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
- 9. Luxury Sustainability • luxury companies are integrating sustainable operations • consumers are more aware of how they address environmen tal and social issues
- 10. 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.
- 11. 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
- 12. 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
- 13. 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
- 14. 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.
- 15. “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 RiskofOverExposure Rarity and Exclusivity are defining characteristics of Luxury. Brands that lose those aspects essential lose the essence of luxury. Thereissuchathingastoomuchandtomany…
- 16. im portantto have innovative m anagem ent,“D esign Thinking” 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 ofCRM tools: incorporate various strategies in orderto learn m ore aboutyourtarget consum erand theirloyalties Setting yourself apart from the competition
- 17. E-‐Commerce To be successful, you must master the 3 C’s: COMMERCE, CONTENT ,COMMUNITY Shock 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
- 18. 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
- 19. 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
- 20. 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:
- 21. 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.
- 22. • 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.”
- 23. TOURISM Tourism 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
- 24. 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 Leadership Employer Brand Digital Technology
- 25. 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
- 26. Off-ChannelLuxury 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 Luxurybrandsopeningoutletandfactorystores
- 27. 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. CarolAnneHenry
- 28. 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
- 29. Dream JobDigital Marketing Dream Companies Public Relations Interested in: Personal Luxury Sector
- 30. 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.