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HHa_e -(a_e -( DCF and valuation pIndustry oaramevervieterws I Points of view from EY global sector Digital tango with China and other industry professionals Luxury brands invest for omni‑channel integration In addition, more and more luxury houses that have Though proven success is yet to come, digitalization When luxury brands were asked how much and in an outlet business are collaborating with multi-brand is in progress. which activities they were planning to invest for the e-commerce sites to have a presence online. next three years, there was a clear distinction between market entry brands with a limited online O`ic` g^ ygmj Zmsiness egdel se_eenls is egslly inÖmenced Zy ygmj di_ilal sljale_y7 presence versus mature brands that are well-presented online. The luxury brands with a Customer segments relatively low online presence are planning on Revenue streams spending an average of up to US$4m to US$5m on Cost structure building presence on third-party e-commerce sites Now and social media, collaborating with KOLs, and Channels Future marketing their brand history in order to create Now and future Customer relationships online awareness with (new) Chinese customers (see graphic below). These strategies aim to introduce Value proposition new customers, via e-commerce, to foreign luxury 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% brands, as Öagship stores are less present in smaller cities and more rural areas. Luxury brands that are well-presented online often Annesleenl in sales and eajcelin_ and cmslgeej Investment in a holistic operations approach have an online presence on third-party e-commerce jelaligns`ip eana_eeenl ;JE! aclinilies mp lg MK,(e sites. Some brands plan to invest up to US$40m in up to US$4m to US$5m the next three years to build their own online • ?eneration of traffic to channels • Fetoorc secmritq, data storage and mobile'tablet platform; integrate mobile, tablet and PC; and compatibility integrate their online and ofÖine innentorq • Online marketing • Digitization of sales processes management and supply chain (see graphic at right). Luxury brands building their own platform seems to • Content production • Own integrated platform, i.e., e-commerce and be the future trend, since they do not need m-commerce third-party e-commerce sites to build their brand. • KOLs and social media presence • Omni-channel infrastructure Moreover, if they grow in China, a part of their sales will go to these third-party e-commerce platforms if • Platforms: e-marketplaces and mobile platforms they do not have their own. • Customer relationship management (CRM) to manage cmstomer profiles and relationships The luxury and cosmetics financial factbook 2016

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