Paolo De Cesare

Striking store designs, exclusive and emotional experiences and “high-touch” services are among the prescriptions for a luxury sector transitioning to a new world increasingly dominated by social media, travel and online and off-price spending.

So says Paolo de Cesare, chairman and chief executive officer of Printemps, which operates 18 department stores in France, four Citadium units for sport/lifestyle and the Place des Tendances web site. The French retailer boasts 70 million visitors per year and stocks more than 3,000 brands.

A no-nonsense executive with a sociological bent, de Cesare argued that the main drivers of luxury over the past two decades are yielding to new dynamics, putting the onus on merchants to surprise, enchant and engage consumers who are changing spending patterns and priorities.

For example, sales of luxury cars grew roughly 8 percent, luxury hospitality 7 percent, fine art 6 percent and designer furniture and fine foods 4 percent between 2014 and 2015, eclipsing the meager 1-2 percent gain in spending on personal luxury goods, de Cesare said, citing data from Bain & Co.

He also noted that online, off-price and duty-free are the fastest-growing channels for luxury goods, already accounting for 23 percent of the market. He forecast they could grow to 40 percent in the next 10 years.

At the same time, the boom in Chinese tourism — expected to swell to 142.4 million outbound travelers this year — is starting to plateau, meaning a principal engine of the recent luxury boom is sputtering.

“We cannot continue to expect that growth will continue to be driven by Chinese tourism,” said de Cesare, whose Boulevard Haussmann flagship has felt the pullback as visitors shun the French capital in the wake of a series of terror attacks.

De Cesare characterized luxury goods as one of the best industries in the world, having expanded more than three times over the past 20 years to an estimated 253 billion euros in 2015.

But with the sector slated to grow perhaps 1 or 2 percent this year, trailing global GDP expansion, “it means luxury is not keeping up,” he lamented.

Most of the drivers of the luxury boom of the past two decades are yielding to new realities, de Cesare said.

Star designers like Tom Ford, John Galliano and Karl Lagerfeld, who led Gucci, Dior and Chanel respectively, to new heights over long careers, are yielding to a revolving door that spins ever faster.

De Cesare touted the recent arrivals of Gucci’s Alessandro Michele and Dior’s Maria Grazia Chiuri for introducing “retro chic” and “romantic rock” respectively, new aesthetics to excite consumers and animate heritage brands.
Seasonal advertising campaigns by star photographers have been swept aside in the social media age by “disposable” imagery with a life cycle of perhaps a few hours, the executive said.

What’s more, personalities are trumping institutional media and even brands. He mounted a slide showing a photo of model Kendall Jenner, a member of the Kardashian clan, modeling a swimsuit in Vogue. The image earned 200,000 likes on the magazine’s web site, trailing the 2.2 million it earned on Jenner’s personal Instagram account.

Other tactics that are running out of steam are category expansion and retail rollouts, with some brands reaching up to 450 stores, versus about 100 only two decades ago.

“Are we being too opportunistic?” De Cesare asked as he highlighted the homogeneity in store designs across various channels of distribution, including travel retail.

Yet the executive argued that the desire for luxury is there to be captured. “Customers have money, but they want to spend it on experiences,” he said.

Enter department stores, which have the capacity to excite and educate consumers via bold architecture, transporting displays, designer events and exciting brands to discover.

In January, Printemps plans to unveil its new men’s building in Paris, overhauled by Yabu Pushelberg with a soaring six-story escalator bank and vast VIP suite designed by Jean-Michel Wilmotte.

And spying an opportunity in bridal, it has assembled a range of designer brands including Elie Saab, Valentino, Viktor & Rolf and Lanvin and recently staged an in-store wedding fashion show for 1,000 customers.

Temporary installations, such a mini Sicilian village to showcase the collections of Dolce & Gabbana, have also resulted in strong sales.

“The role of a department store is to provide a customer experience, as opposed to being just a selection of brands,” he said.

load comments
blog comments powered by Disqus