Luxury fashion consultant Alessandro Maria Ferreri provides CPP-LUXURY.COM with his expert insights on the selection of the most important news of the month.
When a brand approaches the Travel retail channel has to have specific competencies and managers as while developing online business: travel retail is in fact not a “simple” retail nor is just another market opportunity: it is a very serious business with complex tecnicalities. This is the reason why even a giant like Vuitton has been so slow in developing this channel.
I know the travel retail business since 15 years and I have to admit that in the period in which I opened more than 80 Etro stand alone stores in the airports, only a very few brands like Zegna, Ferragamo or Bally had already the smart vision to invest in this business. For those who remember airports 10/20 years ago, shops around the departure gates had two main purposes: a last possibility to spend those few coins of a currency that was not exchangeable back to dollars or a way to buy with lower taxes those products like tobaccos and liquors which are usually more expensive in the domestic markets. Soon, luxury brands started to understand the hidden psychology of the airports and the way to handle a boring moment for a passenger waiting to board a flight, moment which has become longer and longer in the recent years due to security controls and connecting times between two flights. So: how to spend this useless time, in which we are in actual facts kidnapped in a restricted area? Let’s do shopping!
The relative implementation was unfortunately far from being easy. Those who knows well the problems of selling a product in an airport as I do, surely agree that travel retail is, often, more a marketing possibility than a real way of generate profits. First we had to put in place the foundations of this business model: many airports were not organized to have a shopping area and an eventual retail development could only be possible after a complete reconfiguration of the whole departures zone; several airport authorities were not allowing a brand to manage directly the business so local operators were needed as middlemen; operators like Heinemann, Nuance, Aelia, Dfs or Dufry (all very well skilled in buying tobacco, chocolates, spirits and fragrances) did not have yet at that time a “luxury section” nor managers skilled for fashion products and had quickly to develop such business units to answer the high demand; logistic was a huge obstacle for a business in an airport, as not only products had to be X-ray scanned before entering the security restricted areas but also prices and currencies were involved in this process (at that time “duty free” products had to carry a price tag in US dollars, while duty paid products carried the local currency); another big issue was related to the price itself: a “duty free” area makes you think that you are actually saving money, which in most cases is absolutely not true as you pay the same downtown price and only in some limited cases you get a partial refund of the VAT.
Also the selection of the merchandise itself became soon an issue: a traveler does not want to buy bulky things and he is not ready to invest in goods that need alterations or need to be tried on before the purchase; travelers are not ready to spend a huge amount of money (above all when leaving a country after an holiday, where they probably have already spent a fortune): so the merchandising has to be made by quick, cute, well priced but enough appealing goods to attract customer’s attention while waiting for boarding. Travel retail slowly also became (above all within asian airlines) an “on board” business: a limited selection of luxury goods was available on the plane, to be chosen through an in flight catalogue, mainly for those business men who, on the way home, had forgotten a present for the kids or for the wife.
Despite all these problems, travel retail has become in the past ten years a very huge business for any kind of company: from Apple to McDonald, from Chanel to Lego, from Cartier to Victoria Secret, airport shopping became an addition to downtown business to catch the last bills in the travelers pockets.
During the annual
Duty Free Fair in Cannes, I often hear the operators saying that this is a bubble that will soon burst: margins are shrinking as airport spaces are limited and are given through official tender; operators are often still necessary, absorbing a % of the sales; retail prices have to be perceived as much as possible close to real “duty free prices” otherwise customers have no interest to buy in the airport; not all the brands are equally performing due to goods selection and price point; retail stores downtown already suffer and travelers instead of buying at the airport, use the waiting time at the gate to browse on the web thanx to the airport free wifi.
All of this said, Vuitton goes on, seriously believing in this channel by opening in Singapore Changi airport: probably a new era of travel retail is about to start.
Another sleeping beauty: PUCCI
Pucci is my favorite brand! By far! As a top manager, as a luxury expert but also as a fashion consumer, I see in
Pucci all the talents to be one of most chic, elegant, timeless fashion houses on the planet. Not to mention a lot of characteristics that would thrill any marketing guru. Think carefully to it and lets start from its name: Pucci was already a short and easy name from a consumer perception point of view, when Dior still had “Christian”, Prada had “Fratelli”, Versace had “Gianni” (all these brands became then soon as short as possible in order to be easy to remember) not to mention that, as a sound, is just one (out of five) letter away from Gucci, which is probably in this moment as powerful as Mc Donalds in terms of a name.
La Perla and the new owner
Despite the market for personal luxury goods reached, by the end of 2017, a record high of €262 billion, boosted by a revival of purchasing by Chinese customers both at home and abroad, still this incredible performance is not equally divided among all luxury categories and surely the niche of lingerie and in general of “lounge wear” is just a minimum part of it.
Still we recently assisted to the process of acquisition of La Perla Group by the Chinese giant luxury conglomerate Fosun, who owns already several brands including the italian Caruso and Club Med. It has not been an easy process: at beginning of 2017 La Perla was first meant to become Indian (through the possible acquisition by Mrs Megha Mittal, queen of the Indian steel industry and owner of Escada) and then, hopefully remain “italian” by becoming part of the Calzedonia Group.
But it was just at the end of the year that Mr Silvio Scaglia (owner of the holding Pacific Global Management and founder of the telecommunication group Fastweb), who had bought the company 4 years ago at an auction for 69mln€, decided to sell La Perla to Fosun.
La Perla annual turnover is estimated to be around 160mln€ , far from the needed breakeven point of 200mln and has 625 employees just in italy, out of 1600 employees in total. The reason why La Perla has been sold, is now quite clear, while it is not clear the interest of Fosun.
In 2016 the creative direction had been surprisingly given by Mr Scaglia to Julia Haart, whose career curiously had spanned from school teacher to designing shoes, and the new product strategy was apparently to direct the lingerie house beyond underwear and beachwear into a full fashion brand with tailoring, accessories and hosiery as well. Unfortunately this strategy did not appear to be a winning one and Mr Scaglia, still fully believing in Mrs Haart’s creativity, in December started the process to sell the company and, upon his official statement, as well started the process of divorce from his wife.
Leaving on the side any speculation behind the scenes, it is clear that a lingerie business is nowadays a very hot potato to handle. Either you are a giant of this field like the Japanese Wacoal (whose engineers are daily involved in creating the top performing bras of the planet) or like Wolford or Agent Provocateur, either you remain a small yet chic business like Bordelle or Carine Gilson. Still, none of these brands ever thought to stretch their product proposal into red carpet dresses, leather jackets, or shoes. All of them remained faithful to their core and origins, as customers need to fully trust a brand, above all when the said product is becoming so intimate. Probably, this is the way La Perla should follow, as its awareness and credibility relies worldwide on sexy yet no vulgar seduction pieces, that a woman buys for herself first and then to enhance her natural beauty in front of her partner.
For sure the new owner of La Perla can be strategic in shaping the product for a new demanding chinese consumer. As Chinese women shed the stereotype of being conservative and reserved, the demand for lingerie has skyrocketed in recent years.
Upon recent studies, the country’s underwear market grew from $15.5 billion in 2010 to $25.5 billion in 2015, while sales of lingerie nearly doubled from $9 billion to $17.9 billion.
Despite this, the chinese market is in the midst of consolidation. On one hand, growing demand for lingerie, especially in the high-end market, has been drawing big international brands to the mainland. On the other hand, the lower-end market has been saturated with domestic products and brands, few of which stand out. The resulting fierce competition has left domestic lingerie companies with falling profits, leaving market space for international high end offer. We look forward to seeing if Fosun, focusing on the still high brand credibility and the free market shares of the lingerie business, will be able to bring back this beautiful house to profit.
PUCCI Spring Summer 2018 Collection
The post Luxury business digest with expert analysis by Alessandro Maria Ferreri (January 2018) appeared first on CPP-LUXURY.
from CPP-LUXURY http://www.cpp-luxury.com/luxury-business-digest-with-expert-analysis-by-alessandro-maria-ferreri-january-2018/?utm_source=rss&utm_medium=rss&utm_campaign=luxury-business-digest-with-expert-analysis-by-alessandro-maria-ferreri-january-2018
via
Your #1 Source to Finding Luxury & Designer Goods, Handbags & Clothes at or Below Wholesale: Click Here
No comments:
Post a Comment