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Louis Vuitton! Tod's! Gucci! Richemont! Yves Saint Laurent! Salvatore Ferragamo! Hermes! Christian Dior Couture! Prada! Bottega Veneta!
6! 7.6! 8.2! 9! 13! 16! 16.4! 17! 29! 33! Revenue Growth at Constant Exchange Rates (%)!
Data compiled from annual reports, Bain & Co., BNP Paribas and Bloomberg, 2012!
T H E CHANGING L U X U R Y L A N D S C A P E!
Japan!
India, Brazil!
HSBC & The Cult of the Luxury Brand, 2012!
HSBC estimates that over 25% of global luxury goods sales are made by the Chinese in 2012, meaning that China essentially holds great power to make or break a brands profits!
Luxury Goods 2013 Competitive Analysis
Dior, Chanel
>5,000!
Superpremium!
Premium Core!
>1,000!
Designer Apparel !Louis Vuitton, Gucci, Tods, Prada, Burberry! & Accessories!
SUBSTITUTION!
Accessible Core!
>300!
Designer Eyewear!
>100!
Designer Cosmetics & Fragrances!
) )
Coach, Polo Ralph Lauren, Tory Burch, Tommy Hilfiger, Agnes B, Longchamp!
Affordable Luxury!
Armani Exchange, Abercrombie & Fitch, Jack Wills, Topshop, Wildfox Couture!
Everyday Luxury!
Rarity!
Ubiquity!
C R E A! T I N G! A R T! FROM! COMM E R C E!
Background!
! Founded in Italy, 1913! ! Currently headed by Patrizio Bertelli and Miuccia Prada! ! Targets an international customer base that is modern, sophisticated, attuned to stylistic innovations, and expects craftsmanship of the highest quality!
Background!
! Core business: Bags, 57% of total revenue! ! Produces 8 collections each year! ! Positioned at slightly higher price points than LV, Gucci, Burberry!
Resources - Tangible!
Financial Resources!
!Listed in HK and raised $2.14 billion in its IPO! !Market Capitalization:! HKD 185,642.69 M at 28/4/13!
Resources - Tangible!
Physical Resources!
!Distribution network of 283 directly-operated Prada stores! !4 Epicenter agship stores! !10 factories in Italy and a network of 480 external manufacturers, 20% of them abroad!
Luxury Goods 2013 Competitive Analysis
Resources - Tangible!
Technological Resources!
!Patented fabric Pocone - a waterproof type of nylon with a ne twisted weave that appeared as light as a silk!
Resources - Tangible!
Technological Resources!
!Safano leather with a patented diagonal cross-hatch pattern!
Resources - Intangible!
Human Resources!
!Highly specialized and dedicated production employees most have worked over 20 years for Prada! !Business acumen and risktaking disposition of Patrizio Bertelli, CEO! !
Luxury Goods 2013 Competitive Analysis
Resources - Intangible!
Reputational Resources!
!6th most valuable luxury brand in 2012, with brand value of $5,788 M (Millward Brown Optimor)! !Reputation for !
! Sophisticated and subtly appealing apparel! ! High quality and durable leather goods!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Fabric innovation!
! Close partnership with Italian fabric mills to create unconventional fabrics every season! ! Unorthodox use of traditional fabrics!
Kid Mohair ! in 02 S/S Menswear!
I was forbidden to use it, ! and of course,! it became a best seller for us. ! Miuccia Prada! !
Capabilities!
Avant-garde design philosophy of Miuccia Prada!
! Non-conformity to trends! ! Subtle branding! ! Dedication to create something completely new every season !
! If you want to make something new, you need to make your mind blank and just look with your eyes, just judge with your eyes. Miuccia Prada!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Global sourcing of skilled artisans!
! Miuccia Prada went in search of the most specialized craftsmen all over the world!
! Incredible skill of the artisans were uncovered to the world through Pradas design and direction in 2010s Made in collection!
Luxury Goods 2013 Competitive Analysis
! eg. Alpaca wool knitters from Peru, leather weavers from India, traditional kilt makers in Scotland!
Capabilities!
Effective management of diverse product portfolio!
!Products with a range of price points from high to low! !PR and distribution for each product line tailors to each target segment!
Capabilities!
Intimate connection with the art world!
! Fondazione Prada is a non-prot organization that sponsors art projects for public display!
! Miuccia Prada and Patrizio Bertelli are both lovers of contemporary art! ! Highly reputed for choosing artists before they are successful!
Capabilities!
Quirky, edgy advertising with all-star directors and cast!
! Short lms and videos are often light-hearted and infused with humor!
Production!
Customer Service!
Company Infrastructure!
Technology!
Materials Management!
Human Resources!
Support Activities!
OUTPUT!
INPUT!
Fabric Innovation!
Pradas contemporary designs allow customers to express their intelligence, individuality and sophisticated taste by challenging common ideals of beauty.!
Prada outsources 20% of production overseas with strict quality controls, delivering superior products to customers in a shorter time and with lower costs.!
Cinema and art projects enriches Pradas brand identity with experimental creativity. Art installations and the 4 Epicenter agship stores increases customer engagement.!
With its diverse product range, customers of all price points are able to own a piece of the cultured renement Prada represents.!
Core Competencies!
!Forerunner of style and trends! !Iconic nylon bags and Safano leather bags! !Brand identity infused with cinema and art!
M O R E T H A N! T H E T R E N C H! A N D C H E C K! !
Background!
! Founded in 1856 in Britain! ! Currently headed by Angela Ahrendts and Christopher Bailey! ! Targets customers who want functionality as well as timeless elegance, across genders and generations! ! Core business: Outerwear!
Background!
Burberry Prorsum! Burberry London! Burberry Brit!
Resources - Tangible!
Financial Resources!
!Listed in London since 2002! !Market Capitalization: ! GBP 5,968.76M as at 29/4/13!
Resources - Tangible!
Physical Resources!
!!Wide network of distribution channels!
! 192 Mainline stores! ! 208 Concessions within department stores! ! 44 Outlets!
Resources - Tangible!
Technological Resources!
! Patented fabric Gabardine waterproof, anti-wrinkle twill widely used in Burberrys trench coats! ! Patented trademark check pattern!
Resources - Intangible!
Human Resources! !1,500 employees worldwide!
!Artistic vision of Christopher Bailey!
! British! ! Designer of the Year (2009), British Fashion Awards! ! Menswear Designer of the Year (2007, 2008)!
Luxury Goods 2013 Competitive Analysis
Resources - Intangible!
Reputational Resources!
!10th most valuable luxury brand in 2012, with brand value of $4,090 M (Millward Brown Optimor)! !Reputation for !
! Rich British heritage! ! Casual, wearable, affordable luxury with high fashion appeal!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Close association with all things British!
!Diverse cast of British musicians, actors, and models in ads !
! It Girls like Kate Moss, Emma Watson, Cara Delevingne!
!Burberry Prorsum stages runway shows in London Fashion Week! !Burberry Acoustic showcases emerging British bands!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Pioneer in Digital Marketing!
! Well-established presence on social media platforms! ! Art of the Trench !
! Users could upload photos of themselves wearing Burberry trench coats! ! Aspirational customers can participate by commenting, liking, and sharing! ! Existing customers can click-through to make a purchase!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Burberry at Regent Street: Retail Entertainment!
!Flagship store that has become a local and tourist attraction! !Museum-like brand exhibits! !Huge event space with monthly music gigs by Burberry Acoustic!
! Mirrors transform into screens and display relevant video content when triggered by RFID tags in products!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Burberry Bespoke: Mass Customization of trench coats!
Capabilities!
Commitment to corporate responsibility!
!Sustainable production! !Burberry Foundation - helps young people develop their skills, condence and connections in the fashion industry! !Extensive employee training and performance-based remuneration!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Operational Excellence!
!Streamlined supplier, IT, and logistics networks! !Use of SAP worldwide!
Classicism with a Twist Nonstop reinvention of the iconic trench and plaid !
Operational Excellence!
Classicism with a Twist Nonstop reinvention of the iconic trench and plaid !
Burberrys relentless reinterpretation of the trench and plaid allow customers to capture a slice of British heritage that reects modern trends and personal tastes.!
Operational Excellence!
Delocalization of production does not disassociate Burberry with Britain. The lower labor costs and faster delivery allow more collections to be delivered to customers, who continue to identify Burberry with British high society. !
Operational Excellence!
Aggressive digital and in-store marketing reaches a broad audience and invites them to participate in the world of Burberry and foster a deep identication with the brand. Efforts in corporate responsibility builds an image of conscientiousness as well.!
Operational Excellence!
Flexible communication channels online and friendly, courteous, helpful staff in stores enable Burberry to understand their customers better and provide an accessible, human touch to the brand.!
Core Competencies!
!Inimitable British heritage! !Signature trench coat and plaid pattern! !Integrated online and ofine marketing to deliver synchronized products and experience!
W H E N Y O U R! O W N I N I T I A L S! A R E E N O U G H! !
Background!
! Founded in 1966, Italy! ! Acquired by PPR in 2001! ! Currently headed by Marco Bizzari and Tomas Maier! ! Targets uber-wealthy, modest and discreet customers! !
Background!
! Core business: Bags, 85% of revenue in 2012! ! Price points much higher than competitors, most over 2000 euro and reaching 50,000 euro for some!
Resources - Tangible!
Financial Resources!
!Company under PPR, listed in Paris since 1988! !Market Capitalization of PPR: "20,977.02M!
Resources - Tangible!
Physical Resources!
!1 factory in Vicenza, Italy! !196 directly-operated retail stores!
Resources - Tangible!
Technological Resources!
! Intrecciato a leather weaving technique that allows thin leather to work with sewing machines while achieving the strength and body for leather accessories!
Resources - Intangible!
Human Resources! !Over 100 artisans in BVs factory, all skilled in Intrecciato! !Tomas Maier, head designer!
! Precise perfectionist who seeks understated elegance! ! Saved BV from the brink of bankruptcy and increased sales by 800% since joining in 2001 !
Luxury Goods 2013 Competitive Analysis
Resources - Intangible!
Reputational Resources!
!Reputation for !
! Artisanal craftsmanship! ! High quality and durable leather goods!
Capabilities!
Philosophy of Stealth Luxury Branding!
! No logo on its products! ! Maintains high quality! ! Generates a sense of exclusiveness!
!
Capabilities!
Long-term sustainability of craftsmanship!
!Craftsman school in Italy!
! Generates a new generation of craftsman!
!Only those with more than 15 years of experience with the brand will participate in the production of Intrecciato!
Luxury Goods 2013 Competitive Analysis
Capabilities!
Effective management of a less diverse product portfolio!
!Products with very limited discounting and sales! !Focuses mainly on leather goods with high quality!
Contemporary functionality!
Bottega Veneta focuses on the fundamental integrity of the product, making sure that they are rare and valuable in themselves, not because of a logo or a tag. The timeless designs make it easy for customers to wear or use them for a long period of time, regardless of trends.!
With its price points set in a higher and narrower range than most luxury brands, Bottega Veneta knows its target customer expects higher quality materials and craftsmanship from them. Made in Veneto promises as much. But they took it one step further and started the manufacturing process before the runway shows, ensuring rst dibs on the nest materials. !
The high net worth individuals in Bottega Venetas target segment do not aspire to own products marked by logos to prove their status. Instead, the brand molded itself to represent the anti-thesis of many other luxury brands a quiet, stealth type of luxury that wealthy customers in the know appreciated.!
Core Competencies!
!Bottega Veneta applies Intrecciato across most of its categories.
!Stealth luxury branding to position itself in the market positioning ! !Able to capture consumers changing tastes and preferences!
Luxury Goods 2013 Competitive Analysis