In a Changing World, Quick-Moving Brands Seeing SuccessDecember 01, 16
Undoubtedly this is a difficult time for luxury brands, with 2016 proving to be a somewhat patchy year with some companies doing well and others almost standing still. While some markets have accelerated, others have been static.
For example, Kering, the owner of Gucci and Boucheron, among many other big-ticket item sellers, has reported double-digit gains. On the other hand, Burberry has seen no growth. And just this week, Tiffany & Co. reported that worldwide net sales edged up just 1% to $949 million while comparable store sales declined 2% in the three months ended October 31.
As the diamond industry knows all too well, it's all about finding niche markets and having the agility to jump into a new market and not being fixed on one particular country or region. This has been seen clearly since the middle of the year when Britain surprisingly voted for Brexit.
Most people did not see it coming. What has been clear, however, is that the sharp decline in the value of the pound has led to a sharp rise in tourist numbers and the goods they are buying in Britain, while overseas buyers are also delighted to order items in the UK which suddenly have become much cheaper.
In other words, macro-trends are all very well, but in order to survive companies need to be highly specific, according to branding experts. We all know that there has been an anti-corruption crackdown in China for more than a year, that the economy there has slowed down and that Chinese tourists have been shunning Hong Kong and Macau and other countries where they have traditionally done their shopping. Japan has also seen a downturn in visitors from China due to the strength of the yen.
Pinning hopes on Asian customers with big pocketbooks is an out-of-date concept and too general an approach to bring success. And expanding to third and fourth tier cities is also an outdated approach.
Furthermore, there has been a maturation of the luxury market. There aren't really any more low-hanging fruit. Companies need to implement much more pin-pointed strategies to succeed.
But there's another problem, as industry experts point to what they describe as anti-brand trend. One example is luxury handbags where increasing numbers of consumers are buying items with little or no visible branding. According to data from The NPD Group, an information gathering firm, one-third of the handbags purchased in the United States in the year ending June 2016 did not have a visible logo. Sounds like a cliché, but consumers want to be one in a million, not one of a million others. High-quality, non mass produced items are in demand.
It's all about identifying sudden movements in consumer buying patterns and changes brought about by political or other factors, and not sticking to tried and tested methods.