07 - Luxury Distribution & Retailing

Question 1

primary purpose of distribution

Answer 1

not to distribute but to make the brand universe tangible + create luxury experience

Question 2

distribution channels: physical retail

Answer 2

descending level of control
- monobrand owned stores
- monobrand franchised stores
- multibrand exclusive distribution (department stores)
- multibrand selective distribution (specialty stores)
- outlets

Question 3

distribution channels: online retail

Answer 3

descending level of control
- brand e-commerce websites
- social media
- multibrand e-retailers (ex: Net-a-Porter)
- department store e-commerce (ex: Harrods)
- marketplaces (ex: Farfetch)
- multibrand flash sales/ off-price e-retailers

Question 4

monobrand owned stores

Answer 4

luxury cathedrals in desirable areas (ex: Avenue Montagne)

store location + proximity w/ other retailers = main driver of awareness + dream factor

Question 5

monobrand franchised stores

Answer 5

mainly used by luxury companies expanding operations to Asia

-> led to inconsistencies, not as used anymore

Question 6

multibrand exclusive vs selective distribution

Answer 6

exclusive: products are sold through exclusivity agreements in accordance with brand’s requirements
- more control

selective: products sold at wholesale to dealers + retailers
- less control + fragile (retailer decides discount rate, sales force…etc)

Question 7

outlets

Answer 7

remain key to engaging w/ value driven consumers

works when:
- there is discount culture (ex: China)
- brands wish to acquire customers (1st touchpoint)

Question 8

brand e-commerce websites

Answer 8

increasingly important (40% of online sales)

• some are powered by external players (ex: Farfetch)

Question 9

social media

Answer 9

powerful channel in China (ex: WeChat + Instagram)

Question 10

multibrand e-retailers

Answer 10

high competition = differentiation is key
- competition for brands (LVMH refuses, except in China)
- competition for exclusive offers

fail: Amazon Luxury Stores
- initially only accessible to best members, now open to all

Question 11

multibrand flash sales / off-price e-retailers

Answer 11

a. off-season - YOOX + The Outnet

b. flash sales discount retailers - Veepee

Question 12

new retail world

Answer 12

• offline distribution control
• retail apocalypse (department stores struggling)
• pandemic (exacerbated retail apocalypse)
• post-pandemic ‘back-to-stores’ attitude
• omnichannel is at a point of no return
• new online business models (rental + 2nd hand)

Question 13

post-pandemic ‘back-to-stores’ attitude

Answer 13

boom in monobrand channels
department stores recovering
reinvented specialty stores

Question 14

new physical store model

Answer 14

physical locations are used a consumer acquisition tool + advertising billboard
- experience driven
- instagramable
- consumer driven
- omnichannel