Executive summary PPage 3age 3 e summary utiv ec Ex The industry faces three main challenges in the year ahead: This edition of the factbook, based on your feedback, offers operational and financial • Manage demand worldwide — This year, the industry has been impacted by currency aggregates on the industry, along with key valuation parameters and multiples. It looks at volatility: many consumers have abandoned local markets and shopped abroad instead, the industry’s future trends and includes input from our sector leaders. We hope you find to benefit from pricing differences. Most dramatically, while domestic consumption this report insightful and that it provokes constructive thought and discussion within your in mainland China dropped 3% in 2014, Chinese consumers increased their spending organization. globally by 8%. Luxury companies have started to re-think the idea of a consistent offer Do not hesitate to contact us for any comments or suggestions. throughout the world, to minimize further effects of currency variations. The choice is between maintaining a consistent pricing policy without adapting to specific local fluctuations, or presenting a variable price for each area, chasing exchange rates and purchasing power. • Define an omni-channel strategy — Most companies are refocusing their strategies on the customer experience: omni-channel, flawless retail management, people excellence. Flavie Lacault Roberto Bonacina Marco Pier Mazzucchelli Brands are seeking to take control of their operations by managing a dedicated retail [email protected] [email protected] [email protected] network. In parallel, companies have to deploy their presence worldwide and thus continue to develop their wholesale portfolio, focusing on the high quality of their partners. Digital is increasingly important, both as a marketing tool and as a sales channel. Companies can no longer focus on a single channel: they have to define a consistent strategy for all distribution networks and adapt their DNA specifically for each channel, including social media. • Fine-tune the retail model — The muscular retail strategy carried out by the major international brands in worldwide tier-one cities has lowered the return of top-line growth that can be obtained by increasing direct distribution networks. Today clients are well informed about what they want to buy because of a combination of continuous on-line/off-line switches, word of mouth, social communities. This may lead to a partial redefinition of retail strategies, with selected closures of less-performing retail shops, focus on core locations and well-positioned flagships, reduction in the average size of directly operated stores (DOS) to improve main sale ratios and reduce costs. The luxury and cosmetics financial factbook 2015