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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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