Crisis in the luxury business in japan
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Crisis in the luxury business in Japan. The Mc Kinley Team. 12/16/09. Summary. Luxury in Japan The crisis in this business Opportunities to overcome this situation. Introduction. Interview done with Marie-Rose Tricon, Global vice-President Marketing of Clarins. Luxury products.

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Crisis in the luxury business in japan
Crisis in the luxury business in Japan

The Mc Kinley Team. 12/16/09


Summary
Summary

  • Luxury in Japan

  • The crisis in this business

  • Opportunities to overcome this situation


Introduction
Introduction

Interview done with Marie-Rose Tricon,

Global vice-President Marketing of Clarins


Luxury products
Luxury products

  • Criteria :

    • Scarcity

    • Quality (quality of materials, know-how, an artistic dimension, image)

  • Areas :

    • Fashion : Haute Couture, leather goods

    • Cosmetics, perfume

    • Jewelry

    • Wine and Champagne

    • Others : tableware, automotive, floral art, …

  • Luxury has not always been considered as an economic stimulus :

    • Diderot : “Luxury ruin the rich and increases the misery of the poor”


Why is japan requesting luxury
Why is Japan requesting luxury ?

  • Franco-Japanese exchanges in the luxury industry

    • France : country with the highest number of companies in the luxury sector

    • Japan : imports a lot of luxury goods :

      2nd world market

  • Reasons :

    • homogeneous middle class with strong purchasing power

    • consumerism and tradition of presents

    • High standards of the consumers

    • Less travel abroad so buying on site

    • Influences by fashion

    • Ancestral rituals of beauty


What luxury goods are sold in japan
What luxury goods are sold in Japan?

  • Louis Vuitton

  • Gucci, Prada, Hermès, Chanel, LVMH

  • Clarins :

    • 80% of products sold in Japan are the same as in Europe

      • One product, one fonction

    • Some specifics produtcs


The current situation
The current situation

Source : McKinsey Quaterly, 2007


The current situation1
The current situation

Source : McKinsey Quaterly, 2007


The current situation2
The current situation

General decline of the sales in Japan :

  • LVMH : -20%

  • Gucci : -19%

  • Richemont : -12%

  • Hermes : -4%

20002007 : -3% per year

20072008 : -15% per year


The origins of the decline
The origins of the decline

  • A devaluated yen : expensive importations

  • Financial crisis : decline of purchasing power

  • A gain of individualism "I mix and match my

    clothes according to my own tastes"

  • A priority change : from material luxury to

    immaterial luxury

  • A demographic change : people getting older


The future of this crisis
The future of this crisis

  • Decrease of the sales since 2006-2007 before the economic crisis

  • Then the crisis in luxury market is not exclusively because of the economic crisis

  • How to get out this crisis for the luxury market ?

  • Luxury = know-how + technology + research

  • A luxury product is rare and desirable


The future of this crisis1
The future of this crisis

  • No promotion no more desirable and rare aspect. The brand is no more credible

  • Giving again a taste to sustainable, solid, timeless (the reason why Japanese people bought luxury products)

  • Imply Japanese people in the conception or manufacturing of the products (the population wants more “made in Japan”)

  • Be original according to a nikkei study of December 2008, 86% of Japanese women agree with “I mix and match my clothes according to my own tastes”


Future for clarins
Future for Clarins

  • 9% of decrease in cosmetics (LVMH -30 à -40%)

  • Make understood that beauty is a rite (for cosmetics industry), a tradition (Japan has the oldest population)

  • Clarins in not very much implemented in Japan, the percentage of its turnover is weak

    a lot of flexibility for the moment,

    no real matter for its future position


The future of this crisis2
The future of this crisis

  • However, great brands still displays despite the crisis, relative good performances in Japan

  • Japanese people stay good clients in luxury market

  • This crisis seems to end in short term and will “clean” the excessive aspect concerning the luxury products which developed in the previous years in Japan



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