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Luxury Point of Sales the 2013 challenges of luxury retail Cedric Laforge – International Marketing & Communication Manager Backes & Strauss London


WHO AM I ? Cedric Laforge French Current Position: International Marketing & Communication Manager at Backes & Strauss London Worked for Cartier & Hermès Based in Geneva Msc Luxury & Fashion management Gemological Institute of America – AJP Luxury addict and passionate person


1 – LUXURY RETAIL & CURRENT EVOLUTIONS 1.1 The different Retail Point of Sales

1.1.1 - Brand boutique 1.1.2 - Multibrand stores 1.1.3 - Corners & Shop-in-Shop 1.1.4 - Flagship stores & Pop-Up stores 1.1.5 - Internet retailing 1.1.6 - The good practice in store


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different Retail Point of Sales – Brand boutiques

Drawbacks Costly Ex: Yves Saint Laurent – PPR - 1999

Advantages Perfect control of the brand (Product, Price, Image) More margin VS Wholesale Supply Chain Finetuning Marketing Finetuning Each Sales representative is a brand ambassador


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Multibrand stores


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Multibrand stores

Advantages High Concentration of potential customer Demanding customer

Drawbacks Competition Costs


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Corner & Shop-in-Shop


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Corner & Shop-in-Shop


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Corner & Shop-in-Shop

Sales representative are your sales representative or the stores sales representative Different contracts ⇒Different You normally pay on the a sales area basis. May be rewarding but needs to be visible. Cartier N°1 in France and in the UK are located in Big Shopping Center


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Flagship stores


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Flagship stores

The perfect vitrine of a brand Costly but rewarding retail opportunity Located in big luxury cities – home of the brand Very good contribution to the brand building process in a country Good for big brand, Risky for medium brands and not necessary for smallest brands A world of endless mutation


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Flagship stores

WHERE ARE THE MOST IMPRESSIVE FLAGSHIP STORES ?


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Flagship stores


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Pop-Up stores The perfect vitrine of the brand creativity / expertise Costly / Attractive / Seasonal Create a new approach to the brand Create a new experience to the brand Create your perfume Create your chocolate / macaron Petrossian Caviar Experience Chocolate RTW Fahion Show

Limited editions Good contribution to the brand rejuvenation Advertise to increase sales


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Travel Retail


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Internet retailing

Is it luxury ?


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Internet retailing

Who are the best Internet Luxury buyers ?


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Internet retailing

N° °1: USA


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Internet retailing

N° °2: JAPAN


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – Internet retailing

N° °3: China


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – The good practices in store

Do not let the customer wait Having a first contact with a sales representative is very important to reduce time. Real Time

Perceived time

Up to 90 secondes

Exact

2 minutes

3 to 4 minutes

3 minutes

5 minutes

4 minutes

Far too long


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – The good practices in store

Understand what customer want in store They want to

They don't want to

Experience their luxury purchase

Queue

Look at themselves in a mirror

have to many mirrors

Find things by themselves

Be forced to ask idiot questions

Speak to someone

Find unreadable lables

Be nicely treated

find a product out-of-stock

Touch the accessibles

Dont have access to the most expensive things

Close a good deal

Be dominated all the time by the sales rep


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales – The good practices in store - Rareness

A luxury product requires: A financial effort (price) A cultural effort (initiation) Time Patience

All level impacted:

Few POS Precise POS location Quality Sales representatives POS of dream Merchandising ⇒ Creating rareness is the key to increase brand attraction


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail POS – The good practices in store – Develop your exclusivity


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail POS – The good practices in store – Develop your exclusivity


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail POS – The good practices in store – Develop your exclusivity


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail POS – The good practices in store – Develop your connections

Keep on maintaining or develop sales through connections Tourists guides Clés d’Or Concierge Private Conciergerie Influence Club Store Events


1 – LUXURY RETAIL & CURRENT EVOLUTIONS The different retail Point of Sales

WHICH STORE FORMAT WOULD YOU PREFER FOR YOUR SECTOR ?


1 – LUXURY RETAIL & CURRENT EVOLUTIONS 1.2 Developping a worldwide strategy


1 – LUXURY RETAIL & CURRENT EVOLUTIONS Worldwide retail strategy – The biggest centers of luxury


1 – LUXURY RETAIL & CURRENT EVOLUTIONS Worldwide retail strategy – The most important luxury streets

5th Avenue Rodeo Drive Madison Avenue

Sloane Street Bond Street Knightbridge

Shinjuku Shibuya Harajuku Nihom-Bashi

XianPingLu The Bund

Champs Elysees Boulevard Haussmann Rue de la Paix Place Vendome La Croisette

Orchard Road

Bahnhofstrasse Rue du Rhône


1 – LUXURY RETAIL & CURRENT EVOLUTIONS Worldwide retail strategy – Choosing the right retail location

CBD

Main Street

Shopping Gallery

Shopping center

Independant

The big size attracts people

+

-

-

+

-

People are living in the neighbouring block

+

+

+

-

-

Amusement park

?

-

-

+

+

Security

-

-

-

+

-

Important opening periods

-

-

+

+

+

Diversified shopping experience

-

-

-/+

+

-

Rental fees

+

+

+

-

+

Pedestrian Area

+

+

+

+

-

High competition

+

+

+

-

+


2 – MARGINS & COSTS IN THE LUXURY RETAIL


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Attraction Power

The percentage of passersby that enter your store = Number of people entering your store / total number of people passing through your store


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Conversion rate

= Total number of buyers / total visitors in your store

Natural Barrier => High conversion rate Issue in China Latest stores opened (per day, per hour, per age group, per nationality, per product line,


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Turnover per m²

= Total turnover over a period / total sales surface

Important index for fashion, food, wine brands and leather goods


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Turnover per m²

Cold Zone

Hot Zone

Entrance


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Sell-through index

= Number of article sold * / Number of purchased and displayed articles** Can reach easily 70 % *considered sold at full price ** for a brand boutique, a purchased article is an article ordered by the store (purchased virtually)


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.1 The different performance indexes – Stock Rotation in value

= (Annual Sales / 365) / Average stock value per day Luxury Fine food: 20 to 50 Cars: 1 to 10 Watches & Jewellery: 5 to 15 Fashion & Handbags: 10 to 20


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.2 The impact of wholesale on a company direct margin

Definition: The sale of goods in large quantities, as for resale by a retailer

Different Calculation: On export price or on VAT included price Be careful with the management of your margin Retailers can be too demanding above all if your brand is unknown Your margin can be different from one product to another one.


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.2 The impact of wholesale on a company direct margin

Perfume: 50 to 75 %

Luxury Watches: 30 to 50 %

The more you go mass market the more u give !! Standard margin Sales representative rewards/bonus Contribution to taxes (South America …)


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.2 The impact of wholesale on a company direct margin

http://www.amf-france.org


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.3 Turnover objective

Turnover objectives - Need to be reviewed each year - Marketing suggests / sales team reduces - Rareness & Limited Editions pieces can drive to an exit => Be sure to have cash-cows when you develop your collections


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.4 Margin control in store

Discount management - A common game in the luxury business - Some brands don’t give any discount - Hermès on Kelly Bags - Cartier on certain Limited editions

- List of VIP’s Be sure not to give to much of your margin to the final customer to preserve your margin over time


2 – MARGINS & COSTS IN THE LUXURY RETAIL 2.5 Cost control in store

Cost management - Retail space – Rental fees ⇒Real estate Agencies

- Sales team Adapted in number to the high level of services

- Additional Expenses Hotel rooms Champagne


3 – THE POINT OF SALES AS A COMMUNICATION TOOL


3 – THE POS AS A COMMUNICATION TOOL 3.1 The store merchandising

- Homogeneity - No cultural adaptation needed - High quality creation - Design Concept One design per store except Bvlgari

- Sensorial Marketing


3 – THE POS AS A COMMUNICATION TOOL 3.2 The sales team – Recruiting an ideal one

The ideal team At least 3 to 4 persons

- An experienced store manager - Young motivated salesmen Adapted in number to the high level of services

- Various languages spoken English + Japanese / Russian / Arabic / Chinese Portuguese / Spanish


3 – THE POS AS A COMMUNICATION TOOL 3.2 The sales team – Training your sales representatives Promotion in store – Backes & Strauss Example Your sales team are the best and the first relationship to the final customer. We have created with our local partners, training seminars for local sales team in order to raise their own brand awareness, to give them the key points to close sales and increasing the closing ratio on Backes & Strauss watches. Every sales representative will be given the « Backes & Strauss: meeting of Masters » latest edition, our training book.

CEO, Vartkess Knadjian Training Seminar – June 2012 45 sales representatives from different stores


3 – THE POS AS A COMMUNICATION TOOL 3.2 The sales team – Training your sales representatives Retail ambassador program One ambassador per sales point - Who is he (or she) ? A sales representative - What is his (or her) role ? Be the reference for your brand in the store - More precisely ? He (or she) is the person knowing everything about your brand, your products, your heritage, ... It’s the person who will help its counterparts in store during a product presentation to a customer if needed. He (or she) is the contact person in store that will receive all the news and informations from the headquarter


3 – THE POS AS A COMMUNICATION TOOL 3.3 The store needs to be communicated


3 – THE POS AS A COMMUNICATION TOOL 3.3 The « magalogue »: the brand magazine


4 – LIMITED EDITIONS: A WEAPON OF MASSIVE MARGIN IN CRISIS TIME


4 – LIM. Ed.: A WEAPON OF MASSIVE MARGIN 4.1 The development of limited editions

Work on - Your Identity & Heritage - Co-branding - Events & Celebration - Unique Materials


4 – LIM. Ed.: A WEAPON OF MASSIVE MARGIN 4.2 The power of figures

The most demanded figures - First editions (0, 1, 2, 3 …) - Last editions (100…) - Number with eight (8, 18, 28, …) - Year of birth


4 – LIM. Ed.: A WEAPON OF MASSIVE MARGIN 4.3 The errors

Be careful of cultural adaptation - Montblanc Gandhi Edition - Chinese new year products


4 – LIM. Ed.: A WEAPON OF MASSIVE MARGIN 4.4 Preserve your limited edition


4 – LIM. Ed.: A WEAPON OF MASSIVE MARGIN 4.5 Massive margin

Create margin on - The names involved - The material - A limited edition to sell a more common collection


Luxury Point of Sales the 2013 challenges of luxury retail Cedric Laforge – International Marketing & Communication Manager Backes & Strauss London

Luxury Point of Sales - The 2013 challenges of Luxury Retail  

Discover in this presentation the content of the class given to msc Luxury & Fashion Management student on Saturday, 23rd 2013

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