Part II:Speed 【Time 2】 Article 2
How Online Direct Sales Saved This Luxury Business
In this ongoing series, The Fix, we look at real problems faced by real companies and how they solved them.
The Challenge: Steve Caradano, founder of Vero Linens, thought he'd an uncovered a firm niche--selling imported Italian luxury linens to boutique hotels in the U.S. Then, in 2008, the perfect storm hit: The price of the euro had risen significantly, devaluing the U.S. dollar and reducing his company's profits. The price of cotton spiked, inflating Vero's production costs. The financial crisis on Wall Street led to a crumpling of the travel and hospitality industries and upscale hotels either stopped buying new linens or they downgraded to lower-quality brands. "The price of cotton was outrageous, and it was clear we were headed into a recession where our customers weren't buying nearly as much as they did before," says Caradano, owner and founder of the 15-employee company with operations in Michigan and Florida. "I'm sort of looking at my situation and saying, ‘What do I do?'"
The Fix: By early 2009, Caradano realized he needed a new sales strategy. Industry magazines and groups reported that many luxury consumers continued to buy high-end linens, even as their 401(k) value tanked and business and leisure travel markets slowed. Caradano decided to try diversifying his customer base and breaking into the consumer market by creating an online store where people could buy Vero's linens direct from the company's Web site. "Retail commands about a 225 percent to 250 percent markup in luxury linens," he says. "I was thinking, ‘I have the Internet here. I'm going to take a step out of the value chain" and start selling online.
The transition to online sales wasn't seamless, however. The first Web designer Cardano hired cost $25,000 and didn't incorporate the right features into the site, he says, so he ended up scrapping the site and starting over. In fact, Caradano says he went through four different designers between 2009 and 2012 before getting Vero's ecommerce site looking good and functioning correctly.
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【Time 3】 Figuring out how to generate online publicity and stand out in a crowded market of linen makers selling online was also challenging. He's ultimately learned that generating word-of-mouth publicity is important in the consumer luxury market. Caradano says he now reaches out to interior designers who blog and other bloggers with more affluent readers in hopes of drumming up publicity for his brand.
Though he won't disclose his exact revenue, he says the shift to consumer sales has helped him recover so that he's at about the same revenue he was at before 2008. One reason direct online sales has worked for Vero is because consumers are willing to spend more--often $1,000 versus $500--on quality linens than hotels. While an upscale hotel will typically buy three to four sets of sheets for every bed, the profit margin on those sheets is far less than consumer sales, Caradano says. His profit margin on each set sold is 50 percent more for direct online sales than selling to hotels.
Moreover, Caradano says he travels far less than he did before. While he still travels to hotel clients and prospective hotel clients occasionally, he has refocused on online sales--saving the company several thousand dollars every year.
Overall, Caradano says he plans to focus more of his time and energy on online sales and less on the hotel business. "I never felt the Internet would be something where people would be buying $1,000 sheets sight unseen," he says. "But the Internet has become such an easy accessible thing where people purchase everything."
The Takeaway: Moving from business-to-business sales and selling to consumers online can open up new sales opportunities and increase a company's profit margins.
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Source:
http://www.entrepreneur.com/article/228208
【Time 4】 Article 3
"The Journey of a Luxury Consumer":Albatross Global Solutions and 1000mercis Group release an international study on the Luxury Consumer of today
NEW YORK, Nov. 15, 2013 /PRNewswire-iReach/ -- Albatross Global Solutions, a market research firm specialized in improving retail performance and understanding consumer trends in the luxury industry and 1000mercis Group, a digital data marketing firm specialized in helping advertisers leverage their marketing strategies, partnered to study the behaviors and desires of the modern luxury consumer. This collaboration measured how this type of consumer desired and engaged in a luxury experience, both at boutiques as well as online.
On Friday, September 27th 2013 at the Gramercy Park Hotel in New York City the findings of our study were presented by Albatross' founder Christophe Caïs and Dorothée Lacroix, 1000mercis Group International Managing Director to a select group of influential and informed luxury industry representatives.
The study polled 900 eligible consumers who purchased a luxury product in the last 6 months from 5 continents: USA, China, Japan, Brazil and the EU. These participants were asked about their desire, choice, experience, satisfaction and online activity when buying a luxury product.
"This study has enabled us to give feedback to our clients on what motivates the consumer and how they perceive luxury brands around the world and show major cultural differences", said Christophe Caïs. "For example, 51% of the US consumers declare that the brand values are a key criteria when choosing a luxury brand, when this is the case for only 28% of the Japanese consumers".
"With this study, we discovered that for the US luxury consumer the brand's website is as powerful as the boutique when searching for product information", says Dorothée Lacroix. "Striking contrasts like these showed the importance of understanding the different luxury consumers around the world."
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【Time 5】 Christophe Caïs adds: "This collaboration celebrates our relationship and shared foundation in the luxury industry. [Albatross and 1000mercis] have a shared passion to increase the sales of our clients through results that will empower the brands to tailor strategies, advertising, and training to reach the affluent consumer".
About Albatross Global Solutions
Albatross Global Solutions is the leading market research firm specialized in improving retail performance and understanding consumer trends in the luxury industry. The company was founded in 2005 and has 22 offices around the world covering all continents. It employs 220 staffs and serves 160 premium and luxury brands for a turnover of $13,5 million. For more information please visit www.albatross.fr .
About 1000mercis Group
1000mercis Group pioneered the Interactive Data Marketing revolution with its award-winning solutions for companies willing to optimize their customer acquisition and retention through online media (Internet, Mobile, Social Media and RTB CRM Display). 1000mercis has become a major actor on the market by combining new clients acquisition and customer loyalty management. The Group employs 200 people and its annual revenue soared to €36.4 million in 2012, 33% of which came from Ocito, its Mobile Marketing subsidiary. Based in Paris, New York and London,1000mercis Group operates in more than 30 countries. 1000mercis is a NYSE Alternext listed company. For more information please visit www.1000mercis.com .
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Source:
http://finance.yahoo.com/news/journey-luxury-consumer-albatross-global-173200140.html;_ylt=A2KJ3CWE45ZSUVgAk1eTmYlQ
【Time 6】 Article 4
Louis Vuitton Moet Hennessy: In Search of Synergies in the GlobalLuxury Industry
The case discusses the key elements of corporate and business strategy employed by LVMH. It first develops the context of the luxury business, providing an in-depth look at the performance drivers, key players and their strategies. Set in the landscape, it then examines the specific strategies adopted by the biggest player-LVMH. The company wants to double its current sales ($10 billion in an $80 billion industry) and profits by 2005. In marching towards this goal, LVMH has entered into multiple business lines ranging from leather goods to wines, and spirits to art auctions. Many of these acquisitions have come at steep premiums and none have turned a profit yet. Investors and analysts feel that the company should divest some of its holdings and get back to its roots in leather goods and wines. Mr. Arnault, the CEO of the company, however, feels that there are significant synergies that emerge when operating a portfolio of global brands across the entire landscape of luxury businesses. This sets the stage for a good evaluation of its value chain and value-adding activities, the promised synergies and their potential impact on revenues and profits. It also raises questions on how LVMH can grow in this business, which geographic regions it should invest in, and which product-market it should retain.
This is a Thunderbird Case Study.
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Source:
http://hbr.org/product/louis-vuitton-moet-hennessy-in-search-of-synergies-in-the-global-luxury-industry/an/TB0151-PDF-ENG
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