Global Luxury Trends

The luxury industry is currently on a remarkable journey: quarter after quarter, Hermès, Louis Vuitton, Gucci and their counterparts announce record sales in a growing market with profits in double digits. Luxury companies, nevertheless, affirm unanimously that this journey is as challenging as it is exciting: the acceleration imposed by globalized markets, stock markets and digital technologies, to name but a few, demand velocity, agility and continuous adaptation.

Stand alone or merge? Be accessible or exclusive? Internationalize, but where? How fast? Strategy is all about choice!¹ The first choice: what is your offering? The second choice: who are your clients (and competitors)? The third choice: how do you sustain a viable business? In a landscape that is fiercer than ever,² these choices are critical and demand consistent implementation capabilities.We explore some emerging paths on strategizing, that is, the way top-managers frame, practice and act to build a sustainable advantagefor their companies. Along the lines of Richard Normann,³ we approach strategizing through the lens of framing: framing the map and the landscape”, configuring the company and reconfiguring the mental space. Consequently, we do not offer best practices or ready-to-use formulas, but we will provide some food for thought, hoping that it might give you some insight into the minds of luxury decision-makers, be they top-managers or entrepreneurs. Maybe right away, maybe later, but, at one moment, to connect with some previous knowledge in your mind and … you reframe! Which emerging paths are we interested in? The first path is that of business model innovation (BMI) in the luxury industry; we then explore effectual luxury strategies before finally moving to behavioral strategizing.

China’s luxury goods market will be worth an estimated US$ 27 billion by 2015, representing 20 percent of global luxury sales.¹ As observed in other sectors in China, the speed at which the market took off is impressive. Louis Vuitton entered the market 20 years ago, has currently more than 40 stores in China and is opening more at a fast pace.² No surprise that (Western) luxury groups are in great shape, reporting double-digit growth and profits. This market big bang has been a bonanza for Western luxury conglomerates and companies and their commercial partners in Hong Kong and mainland China. Strong growth and high profit margins have of course attracted newcomers, but no local brand exists so far to challenge the likes of Louis Vuitton, Hermès, Gucci or Prada in China, and even less abroad. Given China’s economicgrowth, rich craftsmanship tradition and growing availability of financial and managerial competences, there are grounds for such a development.

This chapter aims to take a tour around Brazil’s flourishing luxurymarket. It starts by presenting an overview of the market before delving into the emblematic case of Osklen’s new luxury.

In the last quarter century the luxury industry has enjoyed incredible growth, increasing in size a good ten times during this very limited timeframe. On the one hand, an increasing population of wealthy people was a favorable condition for this expansion. On the other, the savvy introduction of new business models and brand-management techniques made it possible to broaden significantly the client base and appeal to it by offering a wide spectrumof new products and modes of consumption.

Social media are changing so quickly that when one is asked to write about them, there is always at least a slight risk that by the time the paper is published, the statistics provided and the stories told will already be out of date. With this in mind, this chapter will present a brief introduction to the rise of the fashion blog, compare fashion blogs to fashion magazines, explore the relation between fashion blogs and luxury/fashion brands, and will look to the career opportunities for bloggers involved in different fields of fashion.

The transformation of luxury goods from the privilege of the elite to an attainable 21st-century dream has seen dramatic changes in targeting strategies used by luxury goods to reach consumers and geographical markets. An ever-expanding economic and geographic market plus changing attitudes across the consumer landscape are resulting in a disintegration of boundaries, both geographical and socio-demographic. Product-range stretching and extension are adding to a general democratization of consumer attitudes to, and uses of luxury goods. The luxury sector has gradually moved from being perceived as a fairly restricted, elitist dream based on design creativity, to a massive economic sector with sharp retailing skills.

Since Deng Xiaoping started opening China’s markets to international trade in 1978, the economy has undergone rapid growth. Thirty-four years later, China has become the secondlargest economy in the world after the United States.¹ The number of citizens in China with assets over amillion dollars has risen in tandem, reaching approximately 1,110,000 million in 2011.² Shanghai, one of China’s economic hubs, boasts 132,000 millionaire inhabitants (one Shanghainese out of 175 is a millionaire³) and as the saying goes, money attracts money. One of the consequences of the booming economy in China has been the development of the luxury market. Luxury goods are currently enjoying tremendous popularity among Chinese people. Theoverseas Chinese spending during the 2012 Spring Festival reached a record $7.2 billion; according to the World Luxury Association as reported in China Daily,⁴ Chinese purchases account for up to 62 percent of the European luxury market. The Economist reports that “overall consumption in China … will rise by 11 percent annually over the next five years”.⁵ The art sector is, however, not experiencing the rapid growth seen in the other sectors of the luxury market. In the most established areas of Shanghai, it is easy to find European designer stores, as China becomes Louis Vuitton’s largest market.⁶ The art sector has had markedly less successthan the luxury market when targeting the nouveaux riches

As recently as one decade ago, there was no stand-alone luxury brand store in mainland China. At that time, wearing a Rolex watch meant luxury, and such luxury consumers were called “Bao Fa Hu” (new rich in short period). With the reform and opening up of Chinese society, more people became rich and broadened their horizons through foreign travel. They started to change their way of life and their demands for luxury products like bags, watches, cosmetics, cars, clothes and so on increased rapidly. To cater to the needs of these local customers, luxury brands and top auto companies, mainly from Europe, set up their shops and factories in mainland China. From then on, high-end brands have been playing a critical role in mainland luxury world.

Luxury operations in China can be challenging. This chapter first tackles the financial implications of luxury development in Asia and then presents in-depth the issue of licensing. It finishes by presenting two perspectives on what is next in the Chinese luxury market.

As a professional or student in the luxury and fashion management industry, you are probably most familiar with the term “tribe” when it is used to describe an ancient, primitive, outdated system of human social organization based on close kinship ties and close geographical proximity. Further, you may think that today tribes only exist in far-flung corners of the world, in isolated communities, barely touched by the modern world. The study of tribes, surely, is the domain of the anthropologist and documentary filmmakers for the Discovery or National Geographic television channel. What do tribes have to do with luxury brands? And what can you learn from a tribal marketing approach? These are the questions that we seek to address in this chapter. More specifically the aims of our chapter are to:

When it comes to the countries of Eastern Europe we automatically think about Russia, the largest of them all, with its vast territory, its nine time zones, the link between Europe and Asia and theunique behavior there which makes the country so unusual. This country has such an influence, both politically and economically, on its neighbors (including those of the former communist bloc) that there is a need to understand it better before considering its relationship with the world of luxury.

The allure of luxury intensifies if ownership is restricted at one end and the thirst to possess is unadulterated and lusty at the other. The super-rich can afford the luxury they desire. But what adds greatly to the desirability is not being able to get it. Genuine rarity and unattain ability has a particularly powerful persuasive appeal. To be and to remain exclusive, the price of admission must be high. Entry to the club must be restricted to a few, but desired by many. The greater the barrier to access, the more magnetic the offering.

Sports have always been a privileged tool or vector exploited by most brands in order to communicate their image, looking for notoriety, awareness and visibility. When used in the right configuration, sport, synonymous with dynamism, physical prowess, aesthetics and health, seems to represent a real opportunity for brands to promote their goods and services, and to create a buzz, with one of the biggest effective reaches and one of the biggest audiences.

The proverb “First deserve, then desire” is not one that may comfortably be applied to the communication of brands in the luxury industry. As the world revolves around the spectrum of luxury industry and the consumers worldwide, we can relate how the communication of brands has been playing around, against this proverb. Many modes of communication are prevalent in the luxury and fashion industry, but there are certain hidden elements that strategically form the concrete stimuli of the luxury consumption.

Since its creation in 2003, Tesla has faced financial, management and technical challenges to become what it is today: an emerging luxury brand in the automotive industry. Much of the company’s success is down to its co-founder Elon Musk. Elon Musk is a visionary whose only goal is to make the world a better place to live in. This eminent risk-taker has founded many companies, each and every one of them special and each and every one of them contributing to his primary goal. From founding PayPal to launching the nation’s biggest solar-energy supplier Solar City and creating the SpaceX, Elon Musk’s life has been one adventure after another. In 2003, Musk was faced with one of his biggest challenges. Together with two other engineers, Martin Eberhard and J. B. Straubel, he created Tesla, a company that produces the world’s best electric vehicles. The only question was whether the company would succeed and turn from an unprofitable to a lucrative business. Seven years later, not only has Tesla reached its goals, but it has also surpassed car enthusiasts’ expectations and altered the wayelectric vehicles are viewed today. What started as an Americanbasedcar manufacturer with the ambition to create something valuable for the world has become a serious challenger in theautomotive industry.

This article reviews recent consumer research on what drives consumers to purchase (or not to purchase) luxury products. We discuss the various types of psychological processes, situational influences and individual differences that impact the decision to buy luxury goods and highlight a few gaps in the literature worthy of further investigation.

ELIE SAAB made a decision to go online based on a belief that this was the future way of communicating with its supporters. Once the brand decided to get involved in web marketing, it did not hesitateto communicate its Haute Couture line alongside the Ready-to- Wear line online. The brand has successfully differentiated the Haute Couture and the Ready-to-Wear lines without diluting the couture-brand status. In addition, although ELIE SAAB has never used any online advertising, its web marketing, which runs counter to many other luxury brands’ strategies, has brought fascinating results in just one year. Due to the brand’s relatively short online life, its online presence must and will be studied further in the years to come. This chapter will analyze ELIE SAAB strategies and achievements thus far.