Beyond the crisis. In the height of luxury. But at a time like this, when such contradictory factors seem to determine market success, can we really establish any rules for withstanding the blows of the recession? Unfortunately not; we can only identify certain trends that catch on quickly and, just as fluidly, turn into new trends which are increasingly difficult to associate with any of the abstract patterns once so popular with schools of marketing thought.
It has now been ascertained that a significant slice of sales turnover derives from trade with the BRICS – Brazil Russia India China South Africa – but in actual fact, till receipts in European stores are also registered against purchases made by non-European tourists. Travel shopping represent 50% of luxury sales on the old continent, up by 5% over the previous year. According to statistics recently compiled by Exane, the trend reveals a progressive increase in the share of sales attributable to shopping tourism, above all in Italy – Venice, Rome, Milan and Florence, in order of preference as a shopping venue – and France where such shares are now in the region of 40% and 60% respectively, suggesting that there is a margin for greater growth in the boot-shaped peninsula, as opposed to the purchases of Italian consumers, which continue to drop off. To a lesser extent, the same scenario characterizes the United Kingdom, where foreign shoppers account for half of luxury sales. Germany, on the other hand, seems to be only very marginally affected by this trend, with tourist shopping equivalent to a mere 20% and no signs of any increase for the year in course, partly due to the strong nationalist spirit of German consumers, but also because Germany is not perceived as an attractive shopping venue.
The top spenders of Tax Free Shopping are the Russians whose purchases represent 26% of the total, closely followed by the Chinese (19%) and Japanese (8%) who, with a respective increase of 68% and 37%, contribute to fuelling this soaring trend. Fashion is definitely the driving sector, accounting for 73% of sales. How do luxury brands respond to this trend? By raising their prices: as Prada, Louis Vuitton and Hermès have already done, celebrating their successful results with a general increase of 7%. On the other hand, shopping in the land of the Dragon, costs 20% more, due to taxation, and this encourages the Chinese to purchase on the other side of the Great Wall.
Devastated by the economic crisis, multi-brand stores are losing more and more ground to the outlets, on one hand, and to mono-brand stores on the other: all this has unfortunately registered the shut-down of no small number of long-standing boutiques which just did not manage to carry on, often leaving their spaces to the designer signatures, increasingly obsessed by direct retailing. The winning strategies of those who, in the face of all adversity, do achieve success, mainly seem to be a rapid re-assortment of merchandise, an all-round shopping experience that starts from the window display and leaves nothing to chance and an innovative approach to distribution channels. The unquestioned leader of this latter strategy is the Florentine boutique Luisaviaroma, with 90% of its 44 million Euro profits derive from online sales, almost totally consisting in foreign business. It goes without saying that those boutiques able to count on tourist shoppers make this their main source of income.
Another key factor is that of on-going research into brands that encounter the tastes and portfolio of Europeans, to alternate with the more renowned and expensive ones. And that’s not all, as in the medium term, this will be an additional element to keep the flag flying in the BRIC countries which, with the Sugar Generation, will be flaunting consumers with greater product awareness and less obsession for brands: it is no coincidence, therefore, that the luxury giants – LVMH and PPR, first and foremost – have already focused their sights on emerging brands to woo a more sophisticated clientele. To continue to ride the waves of the crisis without going under.