From a Business Standpoint: When thinking about the woes of CNN, I thought of a practical lesson for all luxury brands and retailers.
You can’t be everything to everybody
As any observer might notice, there is a deep bifurcation in American politics today. It seems that in its quest for objectivity and nonpartisan reporting, CNN has become everything and/or nothing to viewers. MSNBC and Fox are doing well because they have a market focus. Whether or not you agree with their specific political views (the products), Fox and MSNBC may be doing a better job in serving (customer satisfaction) their viewers (customers).
Note: There’s a link to some jobs at the bottom of the post.
Last week, our Luxury and Retail Club had an event at the Mason School of Business. The event was titled “Looks Count – A Presentation on Professional Dress for Men and Women”. Here’s how we described the event: Continue reading
4/15/12 – After the keynote address from Max Azria, I went on to some of the panel sessions. The panel sessions are a little more intimate than the keynotes because you get to hear different perspectives on the same issues that concern retailers today. You’ll see competitors, collaborators, and disruptors in the same room. This year there were four panels and I attended two:
Emerging Markets – The panelists were:
- Anya Ayoung Chee – Designer, Project Runway Winner
- Kai Schoppen – CEO, Brandsclub Group
- Malte Horeyseck – Co-Founder and Managing Director, Dafiti
- Tikka Karpurthala – Chief Representative in Asia for Moet-Hennessy/Group Advisor Louis Vuitton, India
New Business Directions – The panelists were:
- Anthony W. Campbell – EVP of Administration, Vice Chairman’s Office, Perry Ellis International
- Julie Bull – Director of Investor Relations, Dillards
- Mark Bonchek – SVP Communities and Networks, Sears Holdings
After coming out of the station I took this picture of the entrance to the Back Bay Station:
Right across the street from Back Bay Station is an iconic property – Copley Place. This was a good experience for me because just the day before I had the pleasure of conversing with Howard Elkus and Ken Himmel, famous architect and renowned developer respectively.
Later in the evening around 6pm, I went on to the Sheraton Commander Hotel for a networking session and keynote address by Steven Kolb, CEO, The Council of Fashion Designers of America (CFDA). He set the conference off on a good tone discussing the role and history of the CFDA as well as its efforts to push intellectual property rights for designers in the US.
So here I am in wonderful Boston for the Retail and Luxury Conference at HBS. It’s been a year since I’ve been back. I’ve had a wonderful time so far, traveling via the subway/rail system. I think I like it better than NYC’s subway system. Watch out for more posts (with pictures).
Below are the top 10 posts based on readership.
Key Takeaway from The Luxury Doctrine (a new resource in development):
If you want to be successful, especially in luxury, you have to think of, and act like the customer, at all steps in the value chain… you have to manage the customer’s experience
– Edmund Amoye, Lessons in Luxury
For those who have been following my posts on the different luxury segments, you’ll notice that the key catalyst for success in today’s environment is innovation in managing the customer experience. If you are new to this customer-centric theme, I have a list of related posts at the bottom, to get you up to speed.
In every business there are seasons and cycles – ups and downs. At their rollout to end-users, luxury goods and services are sometimes heralded as innovative novelties and “must haves”. However, as brands permeate, manufacturers innovate, and marketing teams penetrate (I had to use that rhyme… too easy to pass up), commoditization sets in. Luckily, the Ford Motor Co. is doing something about that with its Lincoln automotive brand.
– Top View of the 2013 Lincoln MKZ Continue reading
Article Link – Penney’s Pricing Strategy takes a Toll on Sales
Ron Johnson’s bet on JCP’s new retail strategy will not come without its costs. Analysts on Wall Street are expecting JCP’s revenues to drop by “seven percent this fiscal year”. This is worse than the previously forecasted two percent drop because analysts believe “shoppers accustomed to seeing big discounts [will] go to rivals like Macy’s Inc.”. Same-store sales are expected to drop nine percent – lower than the four percent drop that was originally anticipated.
Penney’s new strategy is simple – three tiers:
- “Everyday” prices that are 40% lower than what they were charging a year ago;
- Month-long sales on select items; and
- Clearance events during the first and third Friday of each month (to coincide with employee payroll distributions)
Though the street expects dire consequences for JCP’s stock in the short term, it also believes that Ron Johnson’s plan will pan out in the longer term by eliminating “unprofitable promotions and [improving] its profit margins overall”.
If successful, this will be a major change in retailing because suddenly the promotional activity will decrease and other retailers will also have to find ways to attract customers… but this is going to take time.
– Walter Loeb, New York-based retail consultant
JCP is expected to offer more details on its performance when it reports its quarterly earnings results in May.
My View: This is a long-term bet, not a strategy that will yield postive returns in the next six to 12 months. Ron Johnson is not trying to change his strategy – he is trying to change the rules of the retail game. His bet is riding on a revamp of the entire retail experience.
Disclaimer: I do not own, or plan to buy any JCP stock in the next 48 hours.
Earlier today, I used my free trial of Netflix to watch “Born Rich”. The movie is directed by Jamie Johnson (heir to the J&J empire) and documents the nuances that come with living a privileged life. Below is Nexflix’s synopsis of the movie:
The heir to the Johnson & Johnson pharmaceutical empire, Jamie Johnson, points his documentary lens in the direction of some privileged children who stand to inherit millions in the not-so-distant future. Johnson manages to pry revelations from heirs with some famous last names — Trump, Bloomberg and Vanderbilt, to name a few. They speak frankly about money, family pressure and their often extravagant lifestyles.
After reading the above summary, I decided to watch the movie. I was hoping for some perspective on how the “currently-rich-and-soon-to-be-richer” might define luxury. It seemed to me that the answer was simple – freedom. Many of the individuals in the documentary saw wealth as a somewhat vulgar prison, lacking much in moral fabric, or social accountability. They so deeply wanted to fit in with common people, but found it hard to begin to try.
Let me know of any movies that you think expose unique perspectives on luxury. Check out “Born Rich”. It won’t cost you anything if you use the Netflix trial. Just don’t blame me if you forget to cancel before the trial is over.
Credit for this post goes to Chase Harps, one of my MBA classmates.
I often find myself having to evangelize for the luxury industry, especially to people that may be skeptical of its necessity or long-term viability. For those people, I am posting a link to a new 2012 brand ranking report from Brand Finance. Based on its findings, the company issued a viewpoint on luxury brands. Entitled “Recession Fails to Dent Consumer Lust for Luxury Brands“, the article lists the following main points. Continue reading
One of the substantial influences that prompted me to start Lessons in Luxury was an industry conference I attended in April, 2011. The event was the Retail & Luxury Goods Conference hosted by the student-run Retail & Luxury Goods Club at Harvard Business School (HBS). Meeting business luminaries such as Tommy Hilfiger, William Lauder, and Stephen Sadove did a lot to help me develop my career ambitions.
This year, you can join me and my cohorts in the Luxury and Retail Club from The College of William and Mary, in Boston, MA. HBS will host the 2012 iteration of its annual conference from April 14, 2012 to April 15, 2012. For more information on registration, keynote speakers, and logistics, go to http://www.hbsrlgconference.com.
Previous speakers at the conference have included:
- Stephen Sadove – Chairman and CEO, Saks Incorporated
- William Lauder – Executive Chairman, The Estee Lauder Companies
- Tommy Hilfiger – Principal Designer and Visionary of the Tommy Hilfiger Brand
- Bernd Beetz – CEO, Coty Inc.
- Terry J. Lundgren – CEO, Macy’s Inc.
- Patrizio di Marco – CEO, Gucci
I look forward to seeing you there.
By Renee delCastillo, MBA 2013 @ The College of William and Mary
The business world is not just about reaching potential, it is about redesigning it. In modern business environments, success is no longer measured in the bottom line of the income statement, but a triple bottom line: people, planet and profit. While the luxury sector is more immune to small economic downturns, the prolonged effects of recent global financial crisis have made all consumers (including buyers of luxury goods and services) more cautious of the social and environmental impacts of their purchasing decisions.
I found this great article at www.fastcompany.com. The major take aways for businesses that do not want to compete on price are:
- Develop Powerful Branding – Effective and unique branding puts your product in a competitive space that has little to do with price, and more to do with being cool, trendy (or timeless), and of great quality.
- Strategic Marketing – This encompasses the four Ps of marketing and much more. In luxury marketing you need to be thinking about the four Es (exclusivity, emotion, engagement, and experience). While Apple won’t admit that they intentionally create product shortages in order to create a buzz, it is certainly part of the reason why customers are willing to pay huge premiums to have their products as soon as they are released.
- Excellent customer service – Customer service is something you can not afford to lack. From getting customer’s to try your products and services to keeping them loyal, customer service is the lynch pin that sets you appart from competitors.
- A product that doesn’t disappoint – All of the above won’t mean anything if you don’t have a stellar product. Take a page from companies like Apple and Patagonia who are committed first to making the best product possible.
If a product can’t live up to the expectations set by its marketing, it won’t be successful for the long term
I had promised to provide some tips on how luxury firms might want to go about pursuing successful (and sustainable) business strategies. A good friend of mine has a blog with some cool points for any business to follow. Welcome him to WordPress by giving him a read. I thought he had some good examples.
Countless research studies confirm that it costs a small business 10X more money and resources to attract a new customer. So why do most small (and many large) businesses continue to focus solely on new customer acquisition? It’s like having a cow farm and not building a fence around the field to keep them from running away! Small business owners should focus on three critical areas:
1. Creating marketing systems that attract highly qualified prospects
2. Creating sales systems that convert those prospects to customers
3. Creating nurturing systems that WOW current customers so they not only buy again but also recommend your products and services (this is where the majority of businesses fail)
When a prospect becomes a customer, the following should automatically occur:
The prospect is updated to a client in your database>the customer is segmented based on profitability to your company (Gold, Silver, Bronze)>each segment (Gold, Silver, Bronze)…
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Building on the confusion of yesterday’s post, today’s entry focuses on the academic justification for a firm’s participation in the luxury segment. Though what appears below is very intellectual, it is very similar to the thoughts I had on the matter long before I ever knew I wanted to work in the luxury segment.
In his work covering business strategy, Michael Porter explains that there are two main categories, in which a firm’s competitive strengths fall: cost leadership and differentiation. Depending on the firm’s market focus (broad or niche), and the uniqueness of its products (custom or commodity) and services, Porter posits four generic strategies a firm can use to develop a competitive advantage. Continue reading
There is nothing more deliberate than having a goal. Goals if done the SMART way can really help you develop in every aspect of your life – personally and professionally. The last time I set a goal on this blog, it was the “30-day Challenge“, where I committed to publishing at least one post per day for 30 days. Seems like since then, I let the other aspects of my life (like the intense MBA program at W&M) take over my blogging responsibilities (yes, I do believe I have an obligation to the readers that spend a “click” to come to my part of the blogosphere).
Today, I am making another commitment – longer than 30 days, but less punishing in frequency. I am going to publish one post per week for the next three months. I call it the Post Per Week challenge (lets call it the PPW Challenge). Later today, I’ll publish the first PPW post. Here’s a peek at what I am thinking for the post. Continue reading
As we end the first month of 2012, thoughts of the progress I have made with blog and my other luxe pursuits baffle me. Here’s my summary of it all…
Sometimes you never know what will come of your crazy ideas. Before you know it, you have a brand. The brand isn’t really yours. It belongs to those who identify and personalize it in their hearts and minds.
Your brand is the befitting proxy for your beliefs, tastes, vision, and passions, whether or not you are physically present in the many conversations, transactions, and encounters people have with it.
Beyond all material success, the pursuit of an identity is the single most indomitable challenge some of us will ever undertake.
Here’s to pursuing the weird ideas that make us who we are. The worst that can happen is that you fail. Failures are necessary transit points to success. Even if you fail at something, you are closer to finding out just who you are.
Keep thinking, stay hungry, and embrace the beautiful struggle.
– Edmund Amoye Continue reading
In Paris, major perfume giants have been fined for colluding to keep prices high. This is an update to a 2006 case prosecuted by French agencies monitoring competition in the luxe capital. A total of 13 companies are named in the decision, which concerns collusion practices that took place from 1997 till 2000.
For details on the developing story, click here.
Take part in a poll on my recent post: Christian Louboutin vs. YSL: A Battle of Trademarks.
Today in my class on Customer Experience Management (the name makes it sound contrived but it’s a great class) we had some discussion on this article about the trademark battles between Christian Louboutin and Yves Saint Laurent (owned by PPR). If you would rather watch a video than read the backstory, here is a video.
From a business standpoint, it makes perfect sense for Louboutin to go after other manufacturers that could “cramp its style” – but does it honestly matter in the business of fashion where imitation is rampant and normal? Moreover, if Louboutin is successful, will it hinder the creative process that drives fashion? My answers are “no” and “yes” in that order, but I’d love to hear what some of our fashionista readers think. I’ll even give you the opportunity to write your own post on this topic if you have more than four lines of thoughts on the issue. Continue reading
THANK YOU FOR READING MY BLOG.
My comrades at W&M and WordPress.com have been phenomenal in spreading my posts all over the internet. I wake up a lot of mornings surprised to see the array of readers I have from all over the world, looking in on my scribbled thoughts. I’ve gone from having only one reader – my wife – to getting as many as 100 unique views on days when I do my job right. For me, the metrics don’t really matter as a marketing strength, but as a reflection of interest. So thanks for your interest. I really appreciate it. Let’s grow together in 2012.
Ok, on to today’s rant…
Sometimes, finding good topics for this blog can prove quite challenging. So, I’m always thankful for the readers who send in great material – some of which I am using in today’s post.
First, you should know that the luxury goods and services market in China is growing at an astronomical rate. Forecasts indicate that Chinese luxe will grow at a rate of 20% CAGR by 2015, at which time it will be the second largest market in the world.
One sector of luxury in China that is doing very well is jewelry. Estimated at a worth of $39 billion, the Chinese jewelry market is growing at around 15% per year. Growth has been fueled by a couple of factors:
- A growing middle class living outside of the tier one cities are spending more on gems and gold.
- Rising inflation concerns in the region are making gold more attractive as a hedging instrument; and
- Lastly, the wealthiest segment of the Chinese population are been getting richer.
What is most surprising is the fact in spite of the availability of world renowned jewelry manufacturers and retailers such as Swarovski and Cartier, Chinese consumers are paying increasing attention to homegrown brands – specifically Chow Tai Fook (CTF). The company, owned by billionaire Cheng Yu-tung recently went public. With 1500 outlets and 2010 sales of $4.5 billion, CTF is twice the size of Tiffany & Co.
I’ll leave you with a graphic from The Economist, developed by George Washington University and L2 (a think-tank). It asserts that CTF, as a brand, outperforms well-known international brands in the hearts and minds of Chinese consumers.