Asian luxury brands should capitalize on the
current financial crisis to innovate and rethink distribution
channels. With e-commerce and mcommerce identified as among the
key drivers propelling growth in the luxury industry in Asia,
brands need to stay ahead of these trends to capture the US$200.7
billion of key discretionary spend by the affluent in Greater
These are among some of the findings of
a MasterCard commissioned report - The Luxury Industry: Lessons
Learnt from Past Crises.
examines the growth of the global luxury industry through the
various crises and distils lessons for brands to apply in the
current economic climate.
The report is developed in
conjunction with the ESSEC Business School in Paris, which runs
the a luxury brand management MBA program.
MasterCard’s research shows that the key discretionary spend by
affluent consumers in Greater China will reach US$200.7 billion
in 2015 – with US$166.9 billion of spend by consumers in China,
US$17 billion by consumers in Hong Kong and US$16.8 billion by
consumers in Taiwan.
To capture this market, improving services
in luxury online and offline stores has been singled out as a
top priority for luxury brands. With consumers demanding a total
experience that is functional, sensorial and emotional, brands
need to think of more innovative and customized ways of
engaging its affluent clientele.
As part of this, e-commerce
and m-commerce have been identified as key drivers propelling
growth. MasterCard research shows that online shopping is holding
up in the region despite the global economic crisis.
percentage of respondents looking to shop online continues to
increase steadily, with China (94%) having the highest number of
respondents intending to shop online when surveyed.
global luxury industry is facing challenging times in the current
economic crisis, the report recommends that brands view this
instead as an opportunity to strengthen their market share and
keep ahead by defining their brand personality, offering product
innovation, improving stock management and value chain
optimization, and implementing strong risk management programs.
“The luxury houses
have evolved tremendously over the last 30 years, moving from
family-run businesses to corporations run by shareholders, finance
and marketing professionals. The evolution has been shaped by
many of the past economic crises, as economic crises provide
opportunities for businesses to grow either through innovation or
mergers and acquisitions. The current crisis provides an
opportunity for brands to rethink and refine their strategies
so as to emerge even stronger post-crisis. Brands that manage to
do this and do it well will succeed and increase their market
share,” said Prof Michel Phan, Director of MasterCard-ESSEC
Luxury Brand Management Executive Program and LVMH Chaired
Professor, Marketing Department, ESSEC Business School in Paris.
While no one crisis is identical to the next, the report
identifies four strategies which have been key in helping major
luxury groups grow through the previous crises. They include:
- Developing a strong retail network through new store openings
and/or store refurbishing in key strategic locations
Launching new products to continuously stimulate consumer demand
- Improving financial health by cutting costs, creating greater
efficiencies and better managing logistics/supply chain
- Diversifying into strategic but complementary businesses, or
acquiring greater control of current businesses
years, MasterCard has devoted extensive resources to developing a
deeper understanding of consumer trends and the business and
economic environment in the region through surveys and independent research studies. This report adds to our knowledge
and key insights on the luxury industry, and we believe that there
are important lessons that can be learnt from the past. We are
glad to be sharing this with our customers and valued
merchants, as together we seek to innovate and emerge stronger
from the economic crisis,” said Jeff Portelli, group executive,
Global Products & Solutions, Asia Pacific, Middle East &
Africa, MasterCard Worldwide.
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