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ALTAGAMMA 2008WORLDWIDE MARKETS MONITOR
Claudia D’Arpizio
Milano, 21 ottobre 2008
2
Today we are going to present three different luxury market segments
High – End Furniture
Luxury Yachts Personal Luxury Goods
3
Foreword on methodology and sources
Methodology
Sources• Annual reports, analyst
reports, press releases
• 2008: quarterly results of listed luxury companies
• Interviews
• Bottom-up brand based market evaluation
• Build up of retail turnover by brand
• More than 220 brands analyzed in details
• Price segment based market evaluation
• Bottom-up control panel comprised of about 50 international players
• Company annual reports, market reports, press releases
• 2008: press release, interviews
• Price segment based market evaluation
• Bottom-up control panel comprised of about 40 players
Confidence on 2008 data
• Company annual reports, market reports, press releases
• 2008: press release, interviews
4
High End Furniture Market: structural long term growth with a likely stop in 2009
High – End Furniture
Luxury Yachts Personal Luxury Goods
5
0
5
10
15
€20B
2001
11,7
2002
12,0
2003
12,4
2004
12,9
2005
13,9
2006
15,7
2007
17,3
2008E
18,7
High End Furniture Market, B€
2007 and 2008: other two years of solid growth for high end furniture market
+10%
+13%
+2% +3% +4% +8%
CAGR 01-043%
CAGR 04-0610%
+8%
CAGR:7%
6
High end segment is gaining market share: “brandization” is ongoing
+2,9%
YoY Growth ‘06-’07
YoY Growth ’07 -’08 E
+2,6%
+2,5% +2,1%
+9,8% +8,0%
High-End segment
0
20
40
60
80
100%
2006
293,0
15,7
308,7
2007
300,3
17,3
317,5
2008E
307,1
18,7
325,8
5,1% 5,4% 5,7%% High End
Segment
Total Furniture Market (B€)
7
0
5
10
15
€20B
Europe
40%
6,9
Americas
33%
5,8
Asia-Pacific
20%
3,4
RoW
7%
Total
17,3
3% 3% 10% 13% 5%YoY '06-'07
Growth
6% 6% 9% 7% 7%CAGR
'01-'07
3% 3% 10% 13% 5%YoY '06-'07
Growth
6% 6% 9% 7% 7%CAGR
'01-'07
High End Furniture Market - 2007
1,2
Europe is the largest market followed by USA, Asia-Pacific and Middle East are catching up
Mainly Middle East
8
0
2
4
6
8
10%
0 2 4 6 8 10 12 14 16%
€2B€2B
YoY '06-'07 Growth
CAGR '01-'06
Living & Bedroom
Bathroom
Lighting
KitchenOutdoor
Market growth by product segment, 2007
Living & Bedroom covers 50% of the market, but smaller segments are growing faster
8,7 B€ 2,5 B€
2,3 B€
1,8 B€
2,0 B€
9
Design, design, design... for amateurs and aspirational consumers (finally!)
2005
7,0
2006
8,1
2007
8,7
LIVING & BEDROOM (B€)CAGR 05-07: 11%
06-07 growth+7%
• Very fragmented segment (~70 players) • Main markets are still Europe and USA (~70% of
total), with USA slackening and Russia fast growing
• Upholster production more and more shifting to Asia Pacific
• Client purchasing lead by interest in Design and Brand; fast growing emerging segment of aspirational consumers to mirror the apparel customer segmentation
• Real estate trend still drives the growth path, but personal based consumption plays an important role
10
2005
2,0
2006
2,2
2007
2,5
Increasing importance of bathrooms, technology enriches the proposition
• Few players really dedicated to luxury bathrooms: niche players in USA and category leaders in Italy
• Growing importance of design with consequent increase of prices
• Technology in the bathroom (waterproof TVs, mirror internet enabled, ...) together with luxury furniture with an high level of customization (contract segment)
• “Designing for life” (dedicated spaces, sauna, jacuzzi, ...)
• Water efficiency is an hot issue following the increasing worldwide attention to ecology and climate changes
• Correlated with kitchen and real estate trends (contract segment)
BATHROOM (B€)*CAGR 05-07: 11% 06-07
growth+12%
*High end production of big industrial players is included in the analysis
11
Larger, eco and high-tech kitchens
2005
1,6
2006
1,8
2007
2,0
• Very concentrated segment with Italian companies gaining market share and challenging German leaders
• Central role of ecology and technology (propelled by domotics):
–Increasing use of eco-compatible materials
–Saving energy efficiency and appliances remote control
–Multifunctional solutions: lighting-cowl filtering the air, air conditioner cowl, ...
• International trends:
–Night kitchen as formal receiving room: use of semi-precious materials
–Cooking show-restaurant: kitchen, open to the living room, where the chef is the main actor
KITCHEN (B€)CAGR 05-07: 12%
06-07 growth+12%
12
Outdoor living is becoming more and more sophisticated
2005
1,4
2006
1,6
2007
1,8
• Fragmented market going through a consolidation phase.
• No real international leaders
• Main market USA followed by Europe
• From Outdoor to Over-door... inside-out living spaces that seem like the interior with massive fireplaces, heated flooring, custom kitchens and artwork
• Growing use of vibrant color and plush details
• Testing of new expensive materials borrowed by automotive or aeronautics (ex. carbon)
OUTDOOR (B€)CAGR 05-07: 14% 06-07
growth+13%
13
2005
1,8
2006
2,0
2007
2,3
Beyond lighting: objects for well-being
LIGHTING (B€)CAGR 05-07: 12%
06-07 growth+13%
• Fragmented market: around 25-30 players mainly European...
• ...but in a phase of concentration
• High importance of the brand and continuous innovation of design
• Architects more and more influencers in purchasing process
• Energy saving trend (ex. increasing use of LED)
• Lights become real sculptures/ furniture complements that add art to houses
• Fashion brands entering the segment
14
2009: a difficult year with several question marks ....
0
5
10
15
€20B
2007
17,3
2008E
18,7
2009Fbase
scenario
17-1818-19
High End furniture market growth forecast (2009)
2009Foptimisticscenario
• Consumer consumption slowing down
• Stagnant Real Estate market
• Economical crisis of major markets
Political factors can limit 2009 slow down
What will happen in 2009?
0%
-3%
=
-8%
-5%
• Financial market stabilization
• Eco incentives and regulation
15
...while long term potential is assured by structural drivers
• Mature markets: beyond the consolidation
-“Brandization” at full potential
-Ecological/sustainable driven tendencies to stimulate the market and revitalize “personal” consumption
-Urban areas re-qualification: chance to export Design and Well being/living to the community/urban social scale
• Emerging markets: from a centralized approach to a consumer centric habit
-Real estate continuing to fuel the growth and generate innovative solutions
-Retailing plays a key role for “educating” consumers and normalize the trend
16
Luxury Yachts: a resilient market to economical cycles
High – End Furniture
Luxury Yachts Personal Luxury Goods
17
Luxury Yachts market more than doubled in the last 8 years, important growth in 2008
0
2
4
6
8
10
€12B
2000
4,2
2001
5,2
2002
6,2
2003
6,3
2004
7,0
2005
7,8
2006
8,8
2007
9,5
2008E
10,3
Luxury Yachts Market (€B, 2000-2008E)
24% 19% 2% 11% 11% 13%
8%
9%
CAGR:12%
18
0
2
4
6
8
10
€12B
2008
3,4
1,2
1,5
4,2
10,3
Luxury Yachts market can be segmented by price range
Segments Description
• Over 15M€
• 7M€ - 15M€
• 3,5M€ - 7M€
• 750k€ - 3,5M€
(33%)
(12%)
(14%)
(41%)
19
0
5
10
15
20%
0 5 10 15 20%
08E-07 Growth
CAGR 0
0-0
7
EntryFrom 750k€
to 3,5M€
Super LuxuryOver 15M€
From 3,5M€ to 7M€
From 7M€ to 15M€
Super luxury segment (price over 15M€) over performing
Luxury yachts market growth by price segment
20
0
5
10
€15B
2007
1,3
4,1
3,0
1,1
9,5
2010
1,9
4,6
4,9
1,7
13,0
CAGR07-10
€ 750k- € 3,5M
€ 3,5M - € 7M
€ 7M - € 15M
over € 15M
+18%
+15%
+13%
+4%
Luxury Yachts Market by average price, B€
Significant long term potential of yachts market mainly driven by HNWI growth
Drivers
• Growth of HNWI
- top income individual
- turnover among HNWI
- emerging markets
• GDP and market trends
- low price segment more exposed to economic cycles
• Growth of new large boat berth availability
- new recreational infrastructures (Luxury Resort)
• Development of new luxury charters and services
• Local taxation, regulations and financial instruments availability for yachts buying/ leasing
21
0
20
40
60
80
100%
EU USA RoW Total
€ 750k- € 3,5M
€ 3,5M - € 7M
€ 7M - € 15M
over € 15M
Future growth will be fuelled by emerging markets and super-luxury segment!
0
20
40
60
80
100%
EU
0,6
2,3
1,3
0,5
4,8
USA
0,4
1,0
1,0
0,4
2,8
RoW
0,3
0,7
0,7
0,3
1,9
Total
1,3
4,1
3,0
1,1
9,5
Luxury Yacht Market 2007 (B€) Luxury Yacht Market 2010 (B€)
+3%+2% +13%
+4%
+13%
+15%
+18%
+24%+13%
+19%
+12%
+12%+8%
+10%
+25%
+26%
+12%+21%+8%+10%
22
Personal Luxury Goods: 2007 very good, 2008 safe, 2009..probably the worst year in a long row
High – End Furniture
Luxury Yachts Personal Luxury Goods
23
0
40
80
120
160
€200B
1995
76
1996
84
1997
93
1998
98
1999
111
2000
130
2001
134
2002
134
2003
128
2004
134
2005
146
2006
159
2007
170
2008E
175
Worldwide Luxury Goods Market trend (1995-2008 E)
CAGR 95-0014%
CAGR 00-040,8%
11% 10% 5% 14% 17% 3% 0% -5%
+6,5%
CAGR:7%
5% 9%
On a nutshell: 2007 good, 2008 safe!
+3%
CAGR 04-08 E7%
24
High level of exogenous turbulence asks for a detailed analysis
2006
159
1Q
+3,0
2Q
+3,5
3Q
+2,9
4Q
+1,4
2007
170
1Q
+3,2
2Q
+ 1
3Q
+1,4
4Q
-0,4
2008E
175
-1%8,6% 9,5% 7,7% 2,7% 8,7% 2,6% 3,5% -1%8,6% 9,5% 7,7% 2,7% 8,7% 2,6% 3,5%QoQ
growth
QoQ
growth
+6,5% +3%
US Sub Prime Credit Crunch
Stock markets crash
US$1,37
US$ Peak1,59
US$1,47
US$ 1,25
25
How exogenous events influenced the luxury goods market
Facts Impacts on Luxury Goods
• Strong €
• Hectic exchange rates fluctuations
• Sub-prime credit crunch
-Decrease in consumer confidence
-Erosion of discretionary spending of low-middle classes in US
-Rebound on consumer confidence in Europe and Japan
• Instability of worldwide economy
-BRICs growing
-Western economies stagnating
-Financial crisis
-Stock markets crash
- Financial crisis impact on real economy (Recession?)
1. Real market growth affected by exchange rates
2. Tag–price increase which did not turn into higher average prices
3. Entry-to-luxury brands less resilient to exogenous turbulence
4. Retail (mainly new stores) growingmore than wholesale (risk adverse)
5. Boom of on-line shopping: different consumers and lower psychological barriers
6. Emerging markets providing a buffer of growth to luxury players
7. Strong slow-down expected for last quarter of 2008
26
2006
159
9,8
-3,4
2H K
8,7
-4,5
2007
170
1H K
8,7
-4,5
2H K
1,3
-0,3
2008E
175
1H K
Currency effect
Currency effect
Currency effect
Currency effect
1. Real market growth affected by exchange rates
+6,5% -2,5% +5,5% -3% +5% -3% +1% -0%
+12%
1,31 1,37 1,56 1,351,25 1,35 1,37 1,45 1,50 1,50
Average exchange rates €/$
1,47
+6%
+6,5% +3%
At constant exch. rate
At current exch. rate
estimate
27
2006
159
∆ Volumes
11
∆ Prices
8
2007 K
178
∆ Exchangerate
-8
2007
170
• Mature markets: focus on entryitems of aspirational brands(in particular Japan)
• Emerging markets: “massive“compulsive shopping of luxury goods
2. Tag–price increase which did not turn into higher average prices
60%
40%
+12% +6,5%
• Increase in tag prices in $ and Yen• Emerging markets: super - luxury segment• Mature markets: absolute luxury more
resilient to exogenous turbulence
28
0
2
4
6
8
10%
0 5 10 15%
07-06 Growth
CAGR 9
6-0
6
Aspirational
Accessible
Absolute
The 3 “A” of Luxury
3. Entry-to-luxury brands less resilient to exogenous turbulence
Absolute
Aspirational
Accessible
Trend by segment 2007
•Exchange rate effect•Sub-prime crisis affecting mid-low end luxury consumers
•Resilient segment even in stagnating markets
•Hard Luxury and High-End RtW
•Emerging markets
•Market giants keep their growth pace•“Star” brands in the fashion segment•Aspirational consumer base not stable
29
2006
100
Like for likegrowth
4
Perimetergrowth
5
2007
109
2007 vs 2006 Retail growth analysis(Index:2006=100)
45%55%
4. Retail (mainly new stores) growing more than wholesale (risk adverse)
2006
20%
80%
159 38
2007
21%
79%
170
Retail Wholesale
+9% +5,5%
• New openings:- China- Second tier locations Europe and USA
• Like for like:•Last years opening brought at full speed
2007 vs 2006 Growth by channel (B€)
30
5. Boom of on-line shopping: different consumers and lower psychological barriers
“Can I call you back? I’m shopping”
0
1
2
€3B
2006
1,5
2007by area
China 5%
Europe
20%
USA
65%
2,5
2007by channel
Retail40%
Wholesale
60%
2,5
Japan 10%
Luxury Goods On-line shopping by area and by channel, B€
06-07 growth+40%
31
6. Emerging markets providing a buffer of growth to luxury players
145 M people
138.000
3,6 €B
2,1%
20% for the next
5 years
Population
HNWI (‘07)
Luxury goodsmarket (‘07)% tot market
Expected growth
1.3 B people
415.000
4,5 €B
2,7%
30% for the next
5 years
1.1 B people
123.000
0,6 €B
0,4%
25% for the next
5 years
190 M people
143.000
1,3 €B
0,8%
35% for the next
5 years
RUSSIA CHINA INDIA BRAZIL
32
7. Strong slow-down expected for last quarter of 2008
1Q
8,7%
2Q
2,6%
3Q
3,5%
4Q
-1%
-0,2%1,8% 0,6% 0,8% -0,2%1,8% 0,6% 0,8%
Luxury Goods Market growth by quarter (2008, QoQ growth)
Build-up of2008 growthBuild-up of2008 growth
Based on listed companies results
Bain estimates
Total year+3%
“Listen, everybody feels a little depressed around this time of
year!”
33
Asia Pacific keeps growing, US and Europe solid in real terms, Japan hardly suffering
2007
4%
11%
13%
34%
38%
€170B
2008E
5%
12%
12%
33%
38%
€175B
Worldwide Luxury Goods Market by Area
Americas
Europe
Japan
Asia-Pacific
Rest of World
+4%
YoY ‘07 vs ‘06
+10%
-2%
+14%
+0%
+5%
-7%
+15%
+10% +9%
YoY ‘08E vs ‘07
34
2006
58
2007
64
2008 E
67
11% 6%Growth @
K exch.rate
EUROPEAN MARKET
CAGR 98-08E +6%
CAGR 06-08E7,5%
+10%
+5%
• In 2007:
- Record year for growth in absolute terms
- Strong impact of emerging markets (local consumption + tourist flows)
- Jewellery (+14,5%) and Shoes (+15%) driving growth
• In 2008:
- Strong € killed tourist flows from USA and Japan
- Local consumption of mature markets slowing down, growth mainly driven by Eastern Europe
Europe remains the first market and drives growth thanks to Eastern Countries
35
2006
55
2007
58
2008 E
58
14% 7%Growth @
K exch.rate
CAGR 06-08E2%
+4%
+0%
AMERICAN MARKET
CAGR 98-08E +5%
Americas is entering into tougher periods
• In 2007:
- Record year for growth in real terms
- Sub-prime credit crunch affecting accessible segment (+2%)
- Leather (+10,5%) and Hard luxury (+9%) driving growth, while apparel suffering (+2%)
- Brazil blossoming market (1,35 €B, +35%)
• In 2008:
- First year of stagnation after post-Sept 11 crisis
- Strong impact of super €: big impact of tourism from € area but strong reduction of local consumption
36
2006
22
2007
22
2008 E
21
8% -7,5%Growth @
K exch.rate
CAGR 06-08E-4%
-2%-7%
JAPANESE MARKET
CAGR 98-08E +5%
Japan: the only market in “luxury recession”
• In 2007:
- Second year of stop affected by weak Yen and decreasing consumer confidence
- Fragrances (+2,5%) and Shoes (+2%) the positively growing categories: lowering of average ticket for luxury goods
- Absolute luxury brands are more resilient to market crisis
• In 2008:
- Real recession: private consumption crisis is deepening due to echoes of international financial and economical crisis
• Question mark on new generations attitude towards fashion and luxury
37
2006
17
2007
19
2008 E
22
15% 15,5%Growth @
K exch.rate
CAGR 06-08E14%
+14%+15%
ASIA PACIFIC MARKET
CAGR 98-08E +9,5%
Asia Pacific Luxury market fuelled worldwide luxury goods growth
• In 2007 and 2008:
- Solid growth confirms past trends and consolidates market dynamics also thanks to China explosion
- Perimeter driven growth: about 450-500 new stores openings in 2007-2008
- All categories experience hectic growth: Apparel (+16%), Hard Luxury (+15%), but Leather and Accessories (+20%) driving growth
- Accessible segment winning: “luxury-knockers”enlarging luxury brands consumer base
- Local consumption not yet at full potential: much room for further growth for luxury players
38
The “emerging” China is already the first market in Asia Pacific, followed by Korea and Hong Kong
5,9
Asia Pacific Luxury Market by country (2008, B€)
South Korea
4,9
China
Taiwan2,7
Singapore
2,2
Thailand
0,9
Macau0,6
Hong Kong
3,60,8
India
39
Excellent performance for hard luxury and accessories
2007
4%
20%
21%
23%
29%
€170B
2008E
4%
21%
22%
23%
28%
€175B
Worldwide Luxury Market by Category
+4%
+6%
+11%
+10%
+3%
+0%
+5%
+7%
- 3% -2%
Accessories
Hard Luxury
Apparel
Perfume and Cosmetics
Art de la table
YoY ‘07 vs ‘06 YoY ‘08E vs ‘07
40
2006
22
2007
23,5
2008 E
23,6
11%Growth @
K exch.rate
CAGR 06-083%
+6%+0,5%
WOMENSWEAR
CAGR 98-08E +4,5%
Europe is “the market” for womenswear even if increasingly competitive
• In 2007:
- Growing in line with overall market
- Europe makes the bulk of the growth (+1€B) while Asia (+17,6%) and Rest of the World (+14,9%) are the fast growing
- Aspirational and absolute brands are best in class(+9,9% and +8,5%)
- First lines over performing (+ 8%): fast fashion players stealing share to second and third lines
• In 2008:
- Strong stop: other luxury categories stealing share of discretionary wallet
41
2006
22
2007
23,5
2008 E
23,5
12%Growth @
K exch.rate
CAGR 06-083%
+6%+0%
MENSWEAR
CAGR 98-08E +6%
Menswear is starting to slow down its growth pace
• In 2007:
- Growth slow down with respect to previous years (+6% vs. +9% 05-06 growth)
- Strong growth concentration by area: over-performance in Europe (+14%) and Asia (+19%), stop in Japan (-4%) and first signals of stagnation in USA (+1%)
- Aspirational brands are winning (+13%)
- First and second lines over-performing (+ 9%), sports lines suffering (0%) mainly for exchange rate effect
• In 2008:
- First year of stop after a long growing period, also due to currencies fluctuations
42
2006
17
2007
19
2008 E
20
16%Growth @
K exch.rate
CAGR 06-087%
+10,5% +4%
LEATHER GOODS
CAGR 98-08E +10%
Cheaper is chic in Japan while Europe and USA ask for more precious leather products
• In 2007:
- Double digit growth in all areas but Japan (+1%)
- In Japan: stagnating volumes but decreasing average prices (accessible players + entry items of aspirational brands)
- In Europe and USA absolute brands are winning
- Booming category in emerging markets: Asia (+21%) and Russia (+20%)
- All segments are growing well, but Absolute leather brands are gaining share (+12%)
• In 2008:
- Leather keeps growing, even if at a lower pace: accessorization process seem to be resilient to turbulent times!
43
2006
7
2007
7,6
2008 E
8,2
17%Growth @
K exch.rate
CAGR 06-0810%
+12% +8%
SHOES
CAGR 98-08E +7%
Shoes, shoes, shoes! Record category for the luxury market
• In 2007:
- First category for growth: all areas have positive growth
- Both men and women shoes keep their growth pace (+12% for both)
- Shoes are becoming the most important accessory in a woman look: “we do not compromise on shoes”
- Absolute brands driving growth (+17%): no impact of cheap and chic trend
- Fashion forward brands gaining share
• In 2008:
- Still the king category for growth: shoes are becoming the standalone accessory that differentiates fashion conscious women
44
2006
22
2007
24,4
2008 E
26,6
15%Growth @
K exch.rate
CAGR 06-0810%
+11%+9%
WATCHES
CAGR 98-08E +8%
Watches ...still an evergreen category in luxury. Impact of the financial crisis in 2009?
• In 2007:
- Very solid growth among countries and segments: Asia (+18%) and Absolute segment (+10%) stand out
- Category fuelled by emerging markets (both local and tourist purchases): usually watches are the first category to start luxury consumption
• In 2008:
- Watches keep their growth pace
- Forecast of slight slow-down in last 2008 quarter, but highest end segment does not seem to be affected at all
• In 2009: ??
45
Jewelry hit the brakes in 2008 after a strong 2007
2006
7
2007
7,8
2008 E
8
16%Growth @
K exch.rate
CAGR 06-08: 6%
+9% +2,5%
JEWELRY
CAGR 98-08E +7,5%
• In 2007:
- Growth spread among segments and areas.. but Japan (+2%)
- Europe and Asia over-performing (+12% and +15%)
- Absolute and “pure” jewelers are king in the competitive arena (+12%)
• In 2008:
- First signals of slow-down after a “golden”growth period in USA and Europe
- Weakening Christmas holidays expectations
46
2006
17
2007
18
2008 E
18,4
10%Growth @
K exch.rate
CAGR 06-084%
+5% +2,6%
PERFUMES
CAGR 98-08E +5%
2006
21
2007
21,8
2008 E
22,4
10%Growth @
K exch.rate
CAGR 06-083%
+3%+3%
COSMETICS
CAGR 98-08E +7%
Fragrances more dynamic in 2007, cosmetics less impacted by weak 2008 Christmas
• Steady growth rates fuelled by good product launches:
- High competition
- Powerful Advertising
• Category not affected by Japan and US crisis (+3% both countries)
• In 2008 it is expected to slow down mostly due to a weak Christmas holiday period
• In 2007, category affected by different geographic dynamics than rest of luxury market:
- Stagnation in Asia and Japan
- US (+4%) over performing, Europe (+2%)
• In 2008 it is expected to keep its growth path with skin care gaining share over make up
47
2009: probably the worst year for luxury goods consumption in a row
2007
170
2008E
175
2009F
@ constant
exch. rates
163-170
172-178
Luxury goods market growth forecast (2009), B€
2009F
@ current
exch. rates
-7%-3%
-2%+2%
• Europe decreasing significantly
• US and Japan still far from recovery
• Emerging markets keep growing
• USD and Yen recovering on €
For the first time in history currencies fluctuations may have a positive impact on luxury goods market growth
What will happen in 2009?
48
Anyway, in perspective, luxury goods market shows strong basics for long term potential!
Long term drivers for luxury
• Increasing personal wealth in all markets, growing HNWI
• Sustained growth expectations in long term global GDP and emerging markets
• Strongly increasing tourist flows
• Growing spend by working women
• Increasing number of men choosing global luxury brands
• Continuing democratization, strongly growing aspirational consumer base
- saving less
- substituting traditional categories within luxury
• New opportunities may come from changing values and consumption habits
Enlarging customer base!
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How to manage in turbulent times: 3 imperatives to prepare for the next phase
1. Stay tuned on your consumers
2. Push for organic growth
3. Inject cost culture
20092006200520042003
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1. Stay tuned on your consumers
What to do
What to avoid
• Know your consumers at best• Re-think the shopping experience• Leverage on loyal customers and brand
communities• Localize marketing activities• Re-allocate marketing budgets to below
the line activities• Understand what’s in for quality
• Fully delegate clients’ relationship to salespeople
• Deploy a global product and marketing approach
• Keep useless complexity in product features
“Another catalog”
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2. Push for organic growth
“The guy that knows about the books isn’t here today. I’d be more than happy to suggest a
bookmark.”
What to do
What to avoid
• Slow-down retail expansion• Strengthen entry price offer,
selectively increase other prices• Focus on excellence initiatives:
CRM, Training, Assortment Mgt• Invest in retaining / hiring talent• Keep gaining market share
• Increase prices across the entire offer
• Focus on strategic initiative: Repositioning, acquisitions, etc.
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3. Inject cost culture
“Of course that’s only an estimate. The actual cost will be somewhat more.”
What to do
What to avoid
• Hunt for profits: G&A, suppliers, working capital...
• Bring IT to full potential• Streamline processes and
organization
• Cutting strategic costs: marketing, retail, creativity,...
• Block investments• Aggressively cut personnel• Under-spend competitors
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To conclude...
Personal Luxury Goods
• Very promising industry with strong long term potential
• Market is the sum of interesting but different segments/niches
• Need to carefully manage 2009 slow-down to prepare for the next step
