ELIE SAAB CAN BE POSITIONED AS A BRAND IN THE ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT Elie Saab offers : competitive couture pricing without compromising on service exceptional service & top-of-the-line quality Eli Saab is remains a very exclusive brand by targeting: super-wealthy, high-end market, which includes celebrities, royalty, rich and famous.
We see an evolution of the shopping channels and increasing influence of social media, digital marketing activities The convergence of stores with all of this is creating an “multichannel” experience for consumers and has a positive effect on online sales. Some countries offer tax advantages and attract that way regional shopping tourism in South –East Asia (e.g. relevant Indonesian travelling flows to Singapore). Prices are on average 30%-60% higher due to import duties and taxes in Central Asia. So a lot of Asian people are coming to Europe to shop.
The number of “extreme net-worth individuals” keeps growing, especially in Asia. Chinese consumers, including their spending as tourists, now account for over 20 percent of global luxury sales. Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50 percent. The growth rates for Asia Pacific excl China fro 2012 14 to 16% and for China around 18% to 22%
The average age of Asian luxury consumers is decreasing steadily, while that in Japan, Europe and the United States increases, creating a new generation of luxury consumers, but with very different tastes and preferences. Accessories and hard luxury categories, champions of the last years, are expected to consistently outperform the overall market in the years ahead. Consumers are chasing higher quality and greater craftsmanship/materials, which favors absolute luxury offerings. As a result of that, the products in the absolute luxury segment with high-end brands like Elie Saab are outperforming more accessible products.
1. Asian market is gradually maturing but still offers very relevant growth opportunities Additionally market will keep growing, driven by emerging markets as Latin America and India 2. Absolute Luxury segment will keep outperforming the market in the years to come.
Saab began with producing signature dresses for the ultra-high end market. But with the knowledge that the brand can’t live on haute couture alone, and with the desire to expand his product line to cater to a wider audience, Saab launched a ready-to-wear line in 1998 produced in the city of Milan. The ES brand has become one of the preferred brands among the elite market, and we still have much ground to cover. We plan on reaching all parts of the globe and understand the unique needs of our high-end customers.
ES’s vision was to place the brand on any product that was considered luxurious and exclusive. The company planned on diversifying the brand portfolio by offering new products such as eyewear, casual wear, men’s clothing, swimsuits, lingerie, leather goods, home line, airplanes, cars and car accessories, hotels, hotel amenities, luxury sports (golf), information technology and high—tech products. The company was also considering sub-brands and online sales.
WITH the augmenting business also comes with global expansion. To international markets, there are four entry modes
45 multi-brand retailers and department stores across the world, such as Bergdorf Goodman and Neiman Marcus
Seeing a rise in Asian clients at its stores, Elie Saab is now investing in freestanding shops in China. “ We’re starting to see a lot of Asian customers in our existing boutiques, whether in Paris or in London or even in Dubai, and we feel that the brand has had enough exposure for the consumer to start recognizing it,” Elie Saab managing director Chucri Cavalcanti told WWD. Although the label is already in multi-brand stores in Taiwan, Singapore and China, the company is ready for a bigger brand presence in Asia. Elie Saab’s Asia venture will begin with a Hong Kong store followed by stores in Beijing and Shanghai by early 2013. “ We think that Hong Kong could be our starting base in Asia from which we can get into mainland China and into other countries in Asia, like Korea, like Taiwan, like Singapore, in a much easier way once the brand is well established in Hong Kong, which is a very cosmopolitan, international market,” said Cavalcanti.
“ Much of the company’s success in the previous five years was attributable to its rapid growth in the ready-to-wear (RTW) product line”, said Chucri Cavalcanti, the company’s managing director.
geographically speaking, the new markets can also be referred to as the emerging countries such as the Middle East, China, Russia, or India as their average personal incomes rise significantly.
China, for example, is expected to replace Japan as the world's top consumer of luxury goods by 2012.
In these developing countries, luxurious goods are more about a demonstration of social status than in the western markets, and a lot of people are willing to save months of salaries just to by a Louis Vuitton handbag.
In the luxury industry, the brand’s identity is the essential concern of a company. It determines, to a certain extend, the success of a brand. Because not only it is the key to distinguish the brand from others, but also it is the channel of communication between the brand and its target customers and it defines its clients’ level of loyalty.
The development of advantageous items should be intensified, and only in this case can ES hold an invincible position in this industry and grow in all-round way.
even though we suggest ES to get into “affordable luxury” markets, we insist on a relatively high price in each market.
By dressing all those stars, celebrities and royal heads, Saab managed to increase the brand’s awareness without taking the risk of being limited or negatively influenced by a“Muse”.
So we think that to ES, the best way is to limit the number of licensed distributors and open more company-owned stores and ateliers among the world, especially in the emerging new markets.
Elie saab final
CASE STUDYMarielle AH-CHINEKristina BOKOVAMargaux CHERIF-CHEIKHFENG TiantianHUANG Yingying
COMPETITIVE ANALYISIS Industry Forces ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENTCompetitors other haute couture houses(Chanel, Christian Dior, Jean Paul Gautier, Valentino, etc. )ELIE SAAB-Competitive Couture Pricing Without Compromising On Service-Exceptional Service & Top-of-the-line Quality-High Exclusivity-Customer Segments Targeting Super-wealthy, High-end Market(Celebrities, Royalty, Rich And Famous)
Industry Forces Substitutes- “Democratization” of fashion - H&M x MMM Suppliers- Very dependent on materials and fabric suppliers
FORESIGHTKey trends Technological trends- increasing influence of social media and digital marketing activities Regulatory- Tax advantages in some countries- Higher prices due to import duties and taxes
FORESIGHT Key trends Socioeconomic trends- Growing number of “extreme net-worth individuals”, especially in Asia Chinese consumers account for 20% of the global luxury sales Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50% of the global luxury sales
MARKET ANALYSIS Market trends Market Issues- Changing consumers’ taste and preferences Younger consumer base in Asia Aging of customers in Europe, US & Japan Market Segments- Accessories & hard luxury largest category Needs & Demands- chase for higher quality and greater craftsmanship/materials favors absolute/high-end luxury offerings
MARKET ANALYSISMarket trends Switching Costs- High brand loyalty Revenue Attractiveness- Asian market (China and Hong Kong) + emerging Markets- Absolute luxury segment €40B in 2011
MACROECONOMICSMacro-economic forces Global market- Luxury fundamentals remain strong in the medium term
BUSINESS MODEL Value Proposition Design - Brand/status – Customization - PriceNEED?A unique design made of exquisite materialsWHAT?Haute Couture, RTW, accessories and wedding dressesFUTURE?Any luxurious and exclusive productsEfficiency of fittingsPersonalized servicesLifetime experienceVery selected manufacturers
BUSINESS MODEL CustomersNiche marketPRIMARY TARGET:Feminine, Elegant and Personal assistanceSuper Wealthy Women Co-creationNATURAL TARGET: Self-serviceCelebrities and RoyaltiesFUTURE PLANS:To diversify
BUSINESS MODEL Distribution ChannelsAWARENESS:Events, Catalogues, Advertorials to the corporate website, Interactive portal, AdsEVALUATION:Visit the stores, Try the dresses, Watch the catwalk showsPURCHASE:Flagship stores, Concessions, Multi-brand retailers, CatwalksDELIVERY:On site, at homeAFTER SALE:Guarantee repair
BUSINESS MODEL Key activities Design of luxury stores Haute Couture Customers proximity Animate the online website
BUSINESS MODEL Key resourcesPHYSICAL:Stores, fabrics, sewing materialsINTELLECTUAL:WebsiteHUMAN:Creative + BusinessFINANCIAL:Shareholders, Bank loan
BUSINESS MODEL Key partnershipsTO BE SOLD:Retailers, Department stores, Beauté Prestige InternationalTO BE KNOWN:Celebrities, Charitable organizationsTO EXPAND THE BRAND UNIVERSE:Hotels, Yacht companiesKEY SUPPLIERS:Fabrics supplier, RTW manufacturer
BUSINESS MODEL Cost and Revenue structureMOST IMPORTANT COSTS:General, selling and administrative expenses, Cost materials andoutsourced production, Salaries and Fashion showsTHE MOST EXPENSIVE KEY RESOURCES:Stores and FabricsTHE MOST EXPENSIVE KEY ACTIVITY:Fashion showsREVENUES:Sales, Licensing, PartnershipsRTW: $1500-$21000Haute Couture: $34000-$1000000
Diversified :enhance its prestige in every aspect of the luxury sector. SIGNATURE HOTELS 2008 Tatweer/Dubai Properties Signature HotelsU.K. BOUTIQUE AT HARRODS 2008.7 ‘Eveningwear’ Department, First Floor
PARFUM ELIE SAAB 2009.9 10-year fragrance and cosmetic license contract.LUXURY YACHTS DESIGN 2010.1 Weyves International Ltd. and OceancoFLAGSHIP STORE IN DUBAI 2010.7 First flagship store in the Gulf region, The Dubai Mall
VARIOUS MODES OF ENTRYLicensingPartnershipsThird-party DistributionCompany-owned Stores.
LicensingPROS AND CONSMinimizes risk and investment.Speed of entryAble to circumvent trade barriersHigh ROI (Return On Investment)Lack of control over use of assets.Licensee may become competitor.Knowledge spilloversLicense period is limited
PartnershipsPROS AND CONSOvercomes ownership restrictions , cultural distanceCombines resources of 2 companies.Potential for learningViewed as insider Difficult to manageLess investment required Dilution of control Greater risk than exporting a & licensi Knowledge spillovers Partner may become a competitor.
Third-party DistributionPROS AND CONS Trade barriers & tariffs add to costs.Minimizes risk and investment. Transport costsSpeed of entry Limits access to local informationMaximizes scale; Company viewed as an outsideruses existing facilities.
Company-owned Stores.PROS AND CONSGreater knowledge of local marketCan better apply specialized skillsMinimizes knowledge spilloverCan be viewed as an insiderHigher risk than other modesRequires more resources and commitmentMay be difficult to manage the local resources.
SWOT Strengths Weaknesses •Member of the Chambre Syndicale •Weak presence in multi-brand shopsde la Couture •The dilution of the brand into many•Direct ownership of its stores except activities (yachts, hotels…) and theDubai (for local expertise) plan to expand even further•One of the few certified « Couture » •Still low sales in Asia, USA and Russiahouse•Trust and loyalty of stars and royalty Opportunities Threats •The rise of the number of World •Trend : to mix luxury andHigh-net-worth individuals (HNWI) affordabilityand of their wealth, especially in •Trend : people tend on dressingAsia more casual•The asian market •Party ladies are no longer high-class•Huge potential in Asia not yet aristocracy but new-world billionairefulfilled
Elie Saab’s competitive advantageThe ultimate personalized experience provided bythe brand for Haute Couture customers. + the personality and know-how of the designer ElieSaab Elie Saab really applies the principles of HauteCouture.
STGAE OF Product Life CycleChange OF Company’s Positioning AndDifferentiation Strategy
Haute couture : Maturity phase.Elie Saab has a great expertise in this activity.Sales are hight but tend to stagnate.Ready-to-wear & accessories : Sales are in constantprogression.More recent activity in Elie Saab portfolio.
Positioning and differenciation• At first, the brand focused exclusively into Haute Couture and exceptional custom-made clothing for super wealthy customers.• Launch of a Ready-to-wear activity to extend the portfolio More affordable and easier to produce in large volumesA greater return on investment and turnover. Less exclusive global situation but more accessibility and commercial attractiveness
Should ES target a new market? For example, the emerging ‘affordable luxury market?’
Our overall recommendations for ES Maintain is brand image: “High-end, one-of-a-kind designs made from the finest fabrics and materials” High quality customized service
Product Diversification“Mass” class - main part of luxury consumers Accessories & cosmetics, etc.“New rich” – status/wealth Domestic outfit, luxury hotels, automobiles and yachts’decoration, etc.
Consolidation The haute couture has always been and must continue to be the core and soul of ES’s business.
Distribution Another trend in the luxury industry is that manufacturer/retailer relationships have lost an element of trust. A bad choice of licensee retailer may result in a disaster for a brand’s image.