II. Luxury Strategy, Industry & Subsectors Flashcards
1
Q
Challenges associated with growh
A
- Growth needs cash & know-how
- Family independent companies are rare
- Curiosity = Italian icon brands have been bought by French groups
2
Q
2 parameters of wall street interest in luxury groups
A
- Luxurious margins
- Growth
3
Q
Sources of growth
A
- Horizontal international expansion = Global market
- Vertical Expansion = Second and third lines
- Diversification = From cars to jewelry
- Rarity Management
4
Q
Personal Luxury Goods Market
A
- 3 Main groups = LVMH/ Kering/ Richemont
- Family owned businesses = E.G. Prada/ Hermes/ Chanel
- LVMH = Merge from LV and Moet/ 60 brands/ Diversity from fashion to spirits
- Kering = 15 brands/ Luxury fashion
- Richemont = 20 brands/ Some diversity like watches and writing besides fashion
5
Q
Luxury Market
A
- Estimated €1.3 trillion in 2019
- Shrank by 20% in 2020 due to C-19
- Now back to €1 trillion like it was in 2015
- Cars down by 10%/ Experiences down by 56% (E.G. Hospitality)/ Experience-based goods down by 10% (E.G. Yachts)/ Personal luxury goods down by 23%
- China only region which was growing (45%)/ Chinas consumption has increased over all categories/ Europe down by 36%/ America down by 27%
- Online retail has doubled its sales
- Secondhand market rose by 9%
6
Q
Service/ Experiental luxury
A
- Hospitality = Hotels/ Restaurants/ Travels/ Spas
- Private Banking
- Consumers lifestyle may change from owning to experiencing luxury and vice versa
7
Q
Fundamentals of the luxury business model
A
- Full control of value chain from production to customer
- Full control of distribution
- Excellence in product & service
- Passion for materials/ details/ products
- Deployment of human labor
- Avoid licenses
- One-to-one relationships with clients
- Heritage/ ID = E.G. Dolce vita, French Savoir Vivre, Chinese ancestry
- Never delocalized in terms of country & symbolic value
- Systematically increase in price
8
Q
State of the art business models
A
- Highly integrated companies
- Permanent focus on product
- Always nurturing the customers dream
- All around competencies in production, creation, communication, distribution
- E.G. Ferrari/ Cartier/ Hermes
