Luxury In Turbulent Times Slideshare

LUXURY IN TURBULENT TIMES Deepak Ohri – CEO, lebua Hotels and Resorts

Agenda
Understanding Luxury
Luxury and Recession
What do luxury brands do wrong
New Trends in Luxury
Emerging Markets and Luxury
Focus – Luxury Hospitality and lebua

Understanding Luxury

Do we understand luxury? Luxury ranges from conspicuous austerity to overt opulence

Characteristics of Luxury Segment
How Economists see it
High income elasticity
Positive price elasticity of demand
‘ Snob Effect’
Resilient
Forms of Luxury
Product driven
Home luxuries, personal luxuries ,automobiles
Experiential
Travel, fine dining, entertainment

Luxury- The fine blend

Luxury and Inaccessibility
Luxury is a fine blend of rational and emotional
Most luxury products today act as a bridge between inaccessible luxury and mass luxury
Intermediate Luxury
Intermediate Luxury sooner or later dissolves into mass luxury and consumerism
Products must concentrate on being “emotionally rational”
Emphasis on authenticity and extreme personlisation
Creating an experience, a moment (Tom Ford)

Luxury in Recession

Are the last days near ?

The real changes
Though traditionally resilient, consumer behavior patterns have changed towards luxury
The world’s wealthy still willing to pay a fortune for goods and services that are of high quality and lasting value
Rolls Royce Sales are up while Mercedes and BMW models are sputtering
Hermes bags (starting $7000) sales are up 10% while Coach’s sales (starting $325) have plummeted

Changing Focus
Consumers have become increasingly discriminating in what they buy
Making sure that the experience is of Value
Value does not equate to price
Reducing prices not the solution
Loss of focus on long term brand perception
Neiman Marcus and Saks offered 70% discounts at height of economic crisis and has lost a huge chunk of their customers
Brands must justify their pedigree and promise

So why’s there a slowdown?
Though the super-tier luxury segment is still spending, the aspirational segment (mid-to-upper-class consumers) are tightening their purse strings
Pullback by super-tier segment also due to
Concern over looking extravagant while others lose their jobs and homes
They don’t want to be Ostentatious

Several brands weather recession
Hermes sales up 21% for leather goods and saddlery
Dior (part of LVMH) also saw increase in sales of leather goods
Rolls Royce sales are up
What are they doing Right? Hermes has never chased after the aspirational consumer. The consumer whose wealth grew from middle class to upper middle class over the past decades. They didn't introduce lower priced goods to attract a younger, hipper, "yuppie" client. They didn't try fancy advertising campaigns designed to create envy or desire. Hermes don't flaunt those names to the public to attract trend watching, celebrity influenced consumers.

Shift in spectrum Volvo Origin: Swedish, founded in 1935. Bought by Ford in 1999 Current Owner: Close to sale to Chinese manufacturers for around $3bn Aston Martin Origin: Origin in London, 1914 Robert Bamford and Lionel Martin Current Owner: An anglo-Arab consortium (a racer, collector, Adeem and Dar Investment, Kuwait) Jaguar Origin: 1945 in Britain. Became Britains’s largest car manufacturer in 1960 as British Leyland Current Owner: Ratan Tata. Jaguar in the same stable as Nano.

What luxury brands do wrong

Brand Proliferation and Management
Most luxury brands today are proliferating their brands
An effort to capture different segments and markets
This runs a severe risk of brand dilution and affects the perception of a global customer
True luxury is about creating a unique perception and maintaining it in the minds of customer
“ ..Once the image of luxury is lost, it is extremely difficult to regain élan”.. Luxury Institute, US

LVMH Example Only very few LVMH brands are profitable like Louis Vuitton Multiple brands do not necessarily mean luxury

Innovation

Product vs. Experience The biggest tower does not define the most luxurious experience Today consumers pay for experiential luxury Creation of perception , value and unforgettable moments

New Trends in Luxury

Channels and Pricing
Luxury will appeal to the rational brain again
Back to value added luxury fundamentals
Rational pricing will matter
Luxury awakens to the influence of Gen X & Gen Y
Technological Adoption, E and M – Commerce
In 2009, 22% of luxury consumers executed transaction via a mobile device

Internet and Social Media
Traditional luxury brands will dramatically accelerate their Internet presence and innovation
Fast adoption of web 2.0 and social media marketing
Traditional Channels are passé
Burberry’s revival through Social Media Burberry World
Trust, Authentication, Validation and Certification are to be new words in Luxury lexicon

CSR
Luxury will embrace CSR as a critical component of business model
Gucci and UNICEF
Sustainability will fast become a key component for most luxury brands

Emerging Markets – Is it always the right strategy?

Luxury – Major Markets

Emerging Markets – the right call?
Luxury Brands are exploring emerging economies away from saturated markets
Question is do emerging markets possess the right mindset to embrace luxury brands ?
Epoch Times – Jan, 2009

JAPAN – Top five luxury Brands Source : Luxury Institute Survey - 2009

JAPAN – A closer look
Japan has the most mature of luxury consumers
The brand promise and quality is more important than the fashion statement
Accounts for maximum revenues for most global brands
Luxury Brands Percentage global revenue from Japan Baccarat 35% Bulgari 26% Burberry 36% Coach 22% Hermes 25% Gucci Group 27% LVMH Group 15% Louis Vuitton brand +30% Salvatore Ferragamo 27% Tiffany & Co. 20% Van Cleef and Arpels 33%

JAPAN – A closer look ..II
Women in Japan, the most prolific luxury users, are turning to cheaper, more casual and local brands
Only the aged women remain consumers of traditional luxury brands
Young Japanese reel under unemployment and pay cuts
Japan’s market for luxury goods fell 10% in 2008-09
The originally 1.9 trillion yen market expected to shrink to 992.7 billion yen by end of 2009
Versace has pulled out of Japan after 30 years LVMH has suspended plans of its biggest store at Ginza, Japan Designer brand Yohji Yamamato filed for bankruptcy

CHINA – Top five luxury Brands
Luxury Market is increasingly getting crowded and customers are more discerning
Consumers are huge travelers and prefer to buy from foreign markets due to high levels of duty and VAT in China
Consumers still buy luxury goods for the “bling factor” – status and prestige
China still notorious for counterfeiting
20% of all luxury goods are fake
Consumer Behavior Source: KPMG and TNS research, 2008

INDIA – Top 5 Luxury Brands Emphasis on Home grown Luxury Brands Slower adoption towards global luxury brands Most luxury products are worn as badges to show off Focus is more on fashion statement rather than eye for quality and craftsmanship Consumer Behavior Source: The Hindustan Times

Demographics of the market is a huge factor in determining success of a luxury brand. Key factors are market maturity and attitude towards luxury

Focus - Luxury Hospitality

Two faces of Luxury
Are we intimidating our consumers with luxury?
The initial WOW vs. pragmatic, value for money luxury

The need to innovate Is there a real difference ? Is Innovation lacking? Time to change ?

The best hotel in the World.. Lebua is performing consistently in the top 5% of companies in the Travel & Leisure Sector world wide who have been measured using the TRI*M System (2005-2008). The highest recorded measure in this sector is 116, achieved by a hotel in the UK. A total of 10 companies have achieved scores above 100 of which three were hotels. In the past 9 months, lebua has been in the top 5% 7 times and scored 110 or over 4 times. Customer Satisfaction Survey

Awards for lebua (2008-09)
Best Luxury Hotel – 2009 Business Destinations’ Travel Awards
Tablet Hotels Selection – Tablet Hotels
HAPA Signature Luxury Hotel – The Hospitality Asia Platinum Awards 2008 – 2010
Top 5 Hotels in Asia – HotelClub Awards
Overall Best Luxury Hotel Awards & Luxury Suite Hotel – World Luxury Hotel Awards
Asia’s Leading Design Hotel – World Travel Awards
Best Business Hotel in the World – European CEO Magazine
Best Luxury Hotel – TripAdvisor Traveler’s Choice
World’s Top 1% of Hotels – Expedia Insiders’ Select

Awards for the Dome at lebua
Sirocco – the World’s highest open air restaurant
Thailand’s Best Restaurant – Thailand Tatler
HAPA Thailand Restaurant of the Year – The Hospitality Asia Platinum Awards
HAPA Destination Restaurant of the Year - The Hospitality Asia Platinum Awards
Most Overwhelming Restaurant Experience with a Great Wow Factor – The Art of Travel
The Best Restaurant with a View – RadioBangkok.net
My Favorite International Restaurant – American Express
Hot Nights & Hot Tables –Condé Nast Traveler
Sky Bar
Best Bar in Thailand – Lifestyle+Travel’s Reader Choice Awards
HAPA Best Night Spot - The Hospitality Asia Platinum Awards
Best Bar – HotelClub Awards

Awards for the Dome at lebua
Mezzaluna
Best Restaurant in Thailand – The Art of Travel
Best Italian Restaurant – The Art of Travel
Hot Tables - Condé Nast Traveler Magazine
Breeze
Hot Tables - Condé Nast Traveler Magazine, USA
Best New Seafood Al Fresco Restaurant in Asia – The Art of Travel
Distil
Hot Tables - Condé Nast Traveler
Best Lounge Bar – Metro Magazine
Best New Bar – Metro Magazine

Questions ?

http://hosp-biz-development2012.blogspot.fr	157
http://www.slideshare.net	9
http://hosp-biz-development2012.blogspot.com	1

Luxury In Turbulent Times Slideshare

by deepakohri on Nov 26, 2009

Accessibility

Categories

Upload Details

Usage Rights

3 Embeds 167

Statistics

Luxury In Turbulent Times Slideshare Presentation Transcript