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Crisis in the luxury business in Japan

Crisis in the luxury business in Japan. The Mc Kinley Team. 12/16/09. Summary. Luxury in Japan The crisis in this business Opportunities to overcome this situation. Introduction. Interview done with Marie-Rose Tricon, Global vice-President Marketing of Clarins. Luxury products.

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Crisis in the luxury business in Japan

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  1. Crisis in the luxury business in Japan The Mc Kinley Team. 12/16/09

  2. Summary • Luxury in Japan • The crisis in this business • Opportunities to overcome this situation

  3. Introduction Interview done with Marie-Rose Tricon, Global vice-President Marketing of Clarins

  4. Luxury products • Criteria : • Scarcity • Quality (quality of materials, know-how, an artistic dimension, image) • Areas : • Fashion : Haute Couture, leather goods • Cosmetics, perfume • Jewelry • Wine and Champagne • Others : tableware, automotive, floral art, … • Luxury has not always been considered as an economic stimulus : • Diderot : “Luxury ruin the rich and increases the misery of the poor”

  5. Why is Japan requesting luxury ? • Franco-Japanese exchanges in the luxury industry • France : country with the highest number of companies in the luxury sector • Japan : imports a lot of luxury goods : 2nd world market • Reasons : • homogeneous middle class with strong purchasing power • consumerism and tradition of presents • High standards of the consumers • Less travel abroad so buying on site • Influences by fashion • Ancestral rituals of beauty

  6. What luxury goods are sold in Japan? • Louis Vuitton • Gucci, Prada, Hermès, Chanel, LVMH • Clarins : • 80% of products sold in Japan are the same as in Europe • One product, one fonction • Some specifics produtcs

  7. The current situation Source : McKinsey Quaterly, 2007

  8. The current situation Source : McKinsey Quaterly, 2007

  9. The current situation General decline of the sales in Japan : • LVMH : -20% • Gucci : -19% • Richemont : -12% • Hermes : -4% 20002007 : -3% per year 20072008 : -15% per year

  10. The origins of the decline • A devaluated yen : expensive importations • Financial crisis : decline of purchasing power • A gain of individualism "I mix and match my clothes according to my own tastes" • A priority change : from material luxury to immaterial luxury • A demographic change : people getting older

  11. The future of this crisis • Decrease of the sales since 2006-2007 before the economic crisis • Then the crisis in luxury market is not exclusively because of the economic crisis • How to get out this crisis for the luxury market ? • Luxury = know-how + technology + research • A luxury product is rare and desirable

  12. The future of this crisis • No promotion no more desirable and rare aspect. The brand is no more credible • Giving again a taste to sustainable, solid, timeless (the reason why Japanese people bought luxury products) • Imply Japanese people in the conception or manufacturing of the products (the population wants more “made in Japan”) • Be original according to a nikkei study of December 2008, 86% of Japanese women agree with “I mix and match my clothes according to my own tastes”

  13. Future for Clarins • 9% of decrease in cosmetics (LVMH -30 à -40%) • Make understood that beauty is a rite (for cosmetics industry), a tradition (Japan has the oldest population) • Clarins in not very much implemented in Japan, the percentage of its turnover is weak a lot of flexibility for the moment, no real matter for its future position

  14. The future of this crisis • However, great brands still displays despite the crisis, relative good performances in Japan • Japanese people stay good clients in luxury market • This crisis seems to end in short term and will “clean” the excessive aspect concerning the luxury products which developed in the previous years in Japan

  15. Thank You for your attention ! Questions ?

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