Abstract
What is luxury, and what is the luxury industry? According Jean de Mandeville, luxury is everything that represents more than what is strictly necessary. Luxury is about everything that we consider as superfluous and not necessary. Luxury is about sophistication and stylistic refinement of life styles. Luxury is affordable and is maintening through large expenses, that is why it used to be reviled by political thinkers.
We can consider luxury as an economic sector by itself since the XVII century in France. It emerged as an opposition from the Nobility with the industrial revolution. The luxury industry is defined by three criterion: the visibility of the brand or the House, the temporality (the cultural references of the brand) and the efficiency of the brand (quality). Global luxury group have been faced to a sharp change of their environment and markets.
2003 has been the first time the turnover of some luxury groups went down. Groups have been impacted by the unfavourable conjunction of circumstances. Profit margin are getting less important and debt are increasing as a result of the crisis. On the management level, luxury groups who are facing a complex environment and have to develop new strategies to change their way of development.
In this paper, we are going to have a look and compare three major European groups: LVMH, Gucci- PPR and Richemont. The point if here to analyze how major groups within the same sector present different structures and do not take consider the same opportunities and threats within the sector.
A complex environment In the 1990's, a concentration trend set up the luxury industry as it is still now. The market is dominated by multi-brand groups (LVMH, PPR-Gucci and Richemont) and a few specialiased operators mostly american or japanese. The beginning of the 2000's was the first period in which the luxury industry showed a sharp decrease. Here is a graph that show the grouth rate of the luxury industry.
Experts forecast an increasing growth rate for the coming years, however, the groups will have to pay attention to new strategic routes to keep increasing. First of all, to be bearable and more fruitful,groups have to develop their ability to extand their brands to the "middle-class". The "hyper luxury" for the "mega rich" must also be reinforced. Then, emerging countries represent the new challenge and is creating a lot of opportunities.
Finally, it is important for the groups to maintain the "brand capital". Any expanding strategy should respect the identity of the brand and its culture.
