Down but not out, the luxury market should look to new categories — along with female and older consumers — to boost its bottom line in 2010.
That was one of the messages at “Luxury Beyond The Crisis,” a conference organized by The International Luxury Business Association at the Hotel Westin in Paris last week.
New luxury categories — including technology, furniture, travel and spas — will help the sector register a 4 percent revenue increase next year, said Jean-Marc Bellaïche, partner at Boston Consulting Group in Paris. Minus such categories, a 3 percent dip is projected for the sector.
Although luxury fashion brands are already rallying in Far East, Bellaïche said he is also optimistic about growth prospects in the U.S., where the recession has hurt sales.
“The U.S. is a growth market, but we still have to find the key,” he said.
Bellaïche explained that women, whose salaries are closing in on men’s, are buying more luxury goods for themselves. Meanwhile, consumers aged 60-plus offer opportunities for gains.
Bellaïche advised brands toadapt stronger positioning with “less ostentation and more truth about the product.” He also warned against too many product launches. “Consumers want products to keep their value over time; too much fashion kills fashion….There needs to be less acceleration of cycles,” he said.
Other tips included changing assortments to include a wider price range and shifting costly marketing investment toward more “intimate media,” such as in-store events and the Internet.
A panel of retailer and luxury brand executives, such as Printemps chief executive officer Paolo de Cesare, Harrods’ managing director Michael Ward, Baccarat ceo Hervé Martin and Puig Fashion Group chief brand officer José Manuel Albesa, said they were already springing into action.
“It’s all about trading up for us,” said Ward, who added that has translated into 11, 13 and 18 percent increases over the last three seasons in average transaction at Harrods.
“I like to sell at full price,” said de Cesare, explaining the store reduced discounts in 2009 compared with the previous year.
And firms are putting the focus back on value and brand positioning while reducing the number of product launches.
Although a 15 percent decline in sales is expected at Baccarat by yearend, Martin said he sees growth in new categories, such as lighting and jewelry. “The crisis should not modify your brand positioning; you must pay careful attention to merchandising without trading down,” he said.
Meanwhile, speaking at the Milan Fashion Global Summit last week, Paola Durante, the head of corporate broking for Bank of America Merrill Lynch in Italy, forecast luxury sales would grow 5 percent next year from an estimated 5 percent decline in 2009.
Durante said high-end accessories were leading the way, with revenues expected to gain 5 percent this year, while luxury apparel was suffering the most with revenues set to decline in 2009. Citing a consensus of analyst estimates, she said sales of luxury watches and jewelry would fall 6 percent this year, and perfume sales would drop 1 percent.
In terms of profitability, Durante said the projected recovery and cost-cutting initiatives undertaken by luxury companies this year would boost their bottom lines in 2010. Sector earnings before interest, taxes, depreciation and amortization would likely increase 17 percent next year, from a 5 percent decline this year, and profits would gain 13 percent from a drop of 9 percent in 2009.
Most luxury executives who attended the event declined to provide their own estimates but echoed Durante’s forecast for a sunnier year.
“I am quite confident for next year,” said Chopard Italy ceo Davide Traxler.
Tod’s SpA ceo Diego Della Valle repeated his bullish outlook, saying if sales continue through December as they have been so far in the fourth quarter, the group, which owns the Tod’s, Hogan, Fay and Roger Vivier labels, would achieve results that are “more than satisfying” in 2009 and beat full-year forecasts.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion