In Dec. 2011, I wrote a post about how Swatch Group was “Creating a Shakeout in the Swiss Watch Industry“. Today I just read an update to that event. The Reuters article gives a clearer picture of Swatch’s overall strategy to make things more difficult for strong rivals such as LVMH.
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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.
Today’s post focuses on luxonomics (luxury economics). Since luxury goods embrace the concept of rarity, it would be an obvious deduction to assume that the more scarce a luxury product or service becomes, the more demand it enjoys. Consequently, prices can appreciate – to levels that can be absorbed by few.
Some of the factors affecting supply include:
- Input Prices
- Technology or Government Regulations
- Number of Firms
- Substitutes in Production
- Producer Expectations
Today I want to show you some “scarce” luxury products, whose supply has largely been affected by government regulations. As the cited MSN Money slideshow states, all the products listed are affected by legal restrictions limiting their production, distribution, and sale in parts of the world. Much of the reasoning behind these bans is aimed at protecting the environment. Continue reading
30-day Challenge – Day 24
For a company with revenues in excess of $6.5B, Swatch is considerably the worlds largest watchmaker. The Swiss company recently received approvals from the regulatory agencies to stop supplying competitors with the movements they use to make their timepieces. This is an ironic twist of events, because I am forced to ask myself, “why didn’t Swatch’s competitors invest in producing their own inner workings?”
30-day Challenge – Day 21
If you are an affluent consumer earning more than $100,000 in annual income, then the recent report by Bain & Company on diamond prices should worry you. If you make upwards of $250,000 a year, then you shouldn’t be as perturbed because you will not be greatly affected by the forecasted jump in diamond prices.
The global consulting firm has put out a report estimating that diamond demand will grow at a 6% CAGR over the next decade. The company believes that as we approach 2020, diamond supply will not be able to keep up with demand due in part to the growing economies of China and India. Those markets alone are estimated to push diamond demand at a CAGR of 6.6% in diamond volume alone. While demand is estimated to grow, diamond supplies are only expected to grow by 3% (CAGR) in volume. Continue reading
30-day Challenge – Day 11
Over the course of writing this blog, I have learned a lot by covering the evolving themes in the business landscape occupied by premium brands.
For any of my readers interested in working in the luxe space, these themes are what I believe will dictate and most possibly define their success. I have talked about luxe-related issues ranging from social media to responsible business. Today I want to talk about sustainability. If you have already got a dose of this in my earlier posts, then I am re-emphasizing it in light of recent news articles highlighting how some brands are introducing sustainability in their corporate strategies.
Who would have ever known that acclaimed jeweler, Tiffany, would build a dedicated web page to highlight its efforts in corporate social responsibility (CSR); or that the renowned Peninsula Hotels would make a bold (and maybe costly) decision to stop serving shark fin in its restaurants?
Well, its happening all around us today. Whether or not you believe in the sincerity of these varying corporate initiatives, sustainability is no longer a matter of lip-service. Brands are actually paying attention to many of the concerns of consumers. In his opinion piece on luxurysociety.com, Leslie Pascaud, Director of Added Value Paris, discusses why luxury brands should and will embrace sustainability in the near future. See the article here.