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Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine,...

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Overview of the Urban Luxury Retail Marketplace
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Page 1: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Overview of the Urban Luxury Retail Marketplace

Page 2: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Luxury Retail Remains

in a Growth Mode Of the top 100 brands in the world in terms of financial performance, earnings & influence of consumer

choice, 7 of them are luxury fashion & accessory brands.

Louis Vuitton: value $24.89 billion, up 6 percent

Gucci: value $10.5 billion, up 7 percent

Hermès: value $7.6 billion, up 23 percent

Cartier: value $6.9 billion, up 26 percent

Tiffany & Co.: value $5.44 billion, up 5 percent

Burberry: value $5.9 billion, up 20 percent

Prada: value $5.57 billion, up 30 percent

Source: Interbrand’s Annual Best Global Brands, 2013

,

Page 3: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Luxury Market Forecast

Bain & Company:

The luxury goods market is expected to grow 4 to 5 percent globally in 2013 and

5 to 6 percent on a yearly average through 2015

This represents a slowdown compared with the past three years, when luxury goods showed annual double-digit growth.

Categories:

Perfumes & Cosmetics: 5 percent growth

Leather Goods & Accessories: 7 percent growth

Jewelry & Watches: 7 percent growth

Apparel: 6 percent growth

US luxury growth projected at 7 percent

Asia luxury growth projected at 10 percent.

Source: WWD, May 16, 2013, “Luxury Enters Single-Digit Era”

Page 4: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Who are the luxury clients Luxury Consumers in the US, Western Europe, Brazil, China, Japan & Russia

Aspirational

Mass Market

Rising

Middle

Class New Money Old Money

Beyond

Money

Household Income: Mature Markets > $85,000 > $170,000 > $1,000,000 > $1,000,000

Household Income: Emerging Markets > $29,000 > $55,000

Number of households in this category 115 million 25 million 6 million 1 million 0.5 million

Cosmetics & Fragrances 60% 30% 25% 20% 10%

Leather Goods & Accessories 20% 25% 20% 10% 5%

Fashion & Clothing 10% 30% 30% 30% 15%

Furniture & Decorations 5% 10% 10% 20% 35%

Watches & Jewelry 5% 5% 15% 20% 35%

Percent of Total Luxury Spending 30% 24% 36% 7% < 5%

Sources:

Boston Consulting Group: The New World of Luxury , 2010

Robert Frank, The Wall Street Journal : "The Five Species of Luxury Consumer," December 2010

Page 5: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

How luxury clients define “luxury”

In survey of luxury shoppers with HHI > $150,000:

The differentiator between luxury & mainstream goods is:

Quality: 60 percent

Price: 55 percent

Craftsmanship: 48 percent

Prestige: 47 percent

Design: 38 percent

Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.

Source: Luxury Institute, 2013

Page 6: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Many luxury brands have different levels or collections….

“We offer two primary collections: the Michael Kors luxury collection and the MICHAEL Michael Kors accessible luxury collection.”

“The Michael Kors collection establishes the aesthetic authority of our entire brand and is carried in many of our retail stores as well as in the finest luxury department stores in the world, including, among others, Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Holt Renfrew, Harrods, Harvey Nichols and Printemps.”

“In the Michael Kors collection we offer accessories, including handbags and small leather goods, many of which are made from high quality leathers and other exotic skins, footwear and apparel, including ready-to-wear womenswear and menswear.”

“Generally, our handbags and small leather goods retail from $500 to $6,000, our footwear retails from $300 to $1,200 and our women’s apparel retails from $400 to $4,000.”

Source: 2013 Michael Kors Annual Report

Page 7: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Many luxury brands have different levels or collections…..

“In 2004, we saw an opportunity to capitalize on the brand strength of the Michael Kors collection and address the significant demand opportunity in accessible luxury goods, and we introduced the MICHAEL Michael Kors collection, which has a strong focus on accessories, in addition to offering footwear and apparel. The MICHAEL Michael Kors collection is carried in all of our lifestyle stores as well as leading department stores throughout the world.” “Generally, our handbags retail from $200 to $800, our small leather goods retail from $45 to $200, our footwear retails from $70 to $500 and our women’s apparel retails from $50 to $500.” Source: 2013 Michael Kors Annual Report

Page 8: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Many luxury brands have multiple retail store platforms

“Within our retail segment we have three primary retail store formats: collection stores, lifestyle stores and outlet stores. Our collection stores are located in some of the world’s most prestigious shopping areas, such as Madison Avenue in New York and Rodeo Drive in California, and are generally 3,200 square feet in size.”

Source: 2013 Michael Kors Annual Report

Page 9: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Many luxury brands have multiple retail store platforms

Our lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and are generally 2,200 square feet in size.

Source: 2013 Michael Kors Annual Report

Page 10: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Many luxury brands have multiple retail store platforms

“We also extend our reach to additional consumer groups through our outlet stores, which are generally 2,800 square feet in size. In addition to these three retail store formats, we operate concessions in a select number of department stores in North America and internationally.”

Page 11: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Michael Kors:

Arriving soon to your Downtown?

“We believe that there is significant opportunity to continue expanding our retail store base in North America and to increase our North American retail store base to approximately 400 locations in the long term. We will look to open new stores predominately in high traffic areas of street and mall locations in high-income demographic areas and will adhere to our already successful retail store formats, which we believe reinforce our brand image and generate strong sales per square foot.”

Source: 2013 Michael Kors Annual Report

Page 12: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Motivation for location

Demonstrating that the brand is a force in

the global luxury marketplace:

“Our flagship in London is on Regent

Street [with] very high visibility, and we

wanted to have the same thing in New

York,” said Amy Nelson-Bennett, chief

executive officer [of Molton Brown]. “When

we opened that one in the U.K. about 10

years ago, it transformed the brand in

terms of a visibility statement. [It showed]

we were a serious luxury brand. Our

feeling is it’s going to do the same in New

York.”

WWD, Oct 2013

Page 13: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Motivation for location Choosing a place that is known to have buzz:

“Columbus Circle is one of the key global flagship locations that have been

strategically positioned around the world,” Mark Brashear said, CEO of Hugo

Boss. WWD, Sept 2013

Page 14: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Motivation for location The most important thing,

though, is that the location

maintains a high concentration

of high end customers:

“We don’t mind being pioneers

in new and unchartered areas.

Wall Street is a perfect

example. We’ve been there

since 2007, and it’s one of our

most successful boutiques.” --

Hermès CEO Robert Chavez.

WWD, August 2013

Page 15: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Motivation for location “The store on Fifth

Avenue next year will

be more international,”

said Stefano Sassi,

referring to Valentino’s

forthcoming plans to

redesign its Fifth

Avenue flagship as a

‘power statement.’

“But [Madison] is much

more devoted to the

local customer,

although Chinese or

Japanese or Brazilians

are coming to our store

there more than ever.”

WWD, August 2013

Page 16: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Recruitment: Identify Connections Among Brands Jones Group

Brian Atwood, Stuart Weitzman

Kering

Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Brioni,

Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux

Labelux

Bally, Belstaff, Jimmy Choo

LVMH

Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer

PVH

Calvin Klein, Tommy Hilfiger

Richemont

Cartier, Chloe, Montblanc, Piaget, Vacheron Constantin, Van Cleef & Arpels

Independents

Chanel, Coach, Michael Kors, Prada, Ralph Lauren, Giorgio Armani, Tiffany.

Page 17: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

How do you reach these brands?

Page 18: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Encourage Pop-Ups Hermès Opens Silk Bar Pop-up in New York [Shops at Columbus Circle]

“This is not like walking into our Madison Avenue store,” [Hermès CEO Robert] Chavez said of the installation, which is intended to give consumers a “sense of urgency” to visit the shop this month. He also said the highly trafficked location will help attract new as well as existing clients who might discover the silk collection in a different way.”

WWD, October 1, 2013

MarieClaire.com, October 1, 2013

Page 19: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Growth of single ownership outdoor urban luxury centers

Page 20: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Growth of single ownership outdoor urban luxury centers

Page 21: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

If you plan on organizing an event in the luxury

marketplace, be sure to pre-answer the most common

question asked by retailers: Who else is participating?

Page 22: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Great source for free intel: LuxuryDaily.com

Page 23: Overview of the Urban Luxury Retail Marketplace · LVMH Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer PVH Calvin Klein, Tommy Hilfiger Richemont Cartier,

Looking forward to seeing you on

Madison Avenue!


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