ALTAGAMMA 2008

WORLDWIDE MARKETS MONITOR

Claudia D’Arpizio

Milano, 21 ottobre 2008

Today we are going to present three different
luxury market segments

High – End Luxury Yachts Personal Luxury

Furniture Goods

2
Foreword on methodology and sources

• Price segment based • Price segment based • Bottom-up brand based

Methodology market evaluation market evaluation market evaluation
• Bottom-up control • Bottom-up control panel • Build up of retail
panel comprised of comprised of about 50 turnover by brand
about 40 players international players • More than 220 brands
analyzed in details
• Company annual • Company annual • Annual reports, analyst
Sources reports, market reports, market reports, press releases
reports, press reports, press • 2008: quarterly results
releases releases of listed luxury
• 2008: press release, • 2008: press release, companies
interviews interviews • Interviews
Confidence on
2008 data
3
High End Furniture Market: structural long term
growth with a likely stop in 2009

High – End Luxury Yachts Personal Luxury

Furniture Goods

4
2007 and 2008: other two years of solid growth
for high end furniture market
High End Furniture Market, B€
€20B 18,7 CAGR:
7%
17,3
15,7
15 13,9
12,4 12,9
11,7 12,0
CAGR 04-06 +8%
10 10%
CAGR 01-04
3%
+10%

5
+13%
+2% +3% +4% +8%

0
2001 2002 2003 2004 2005 2006 2007 2008E

5
High end segment is gaining market share:
“brandization” is ongoing
YoY Growth YoY Growth
‘06-’07 ’07 -’08 E
Total Furniture Market (B€)
+2,9% +2,6%
308,7 317,5 325,8
100%

80

60 +2,5% +2,1%
293,0 300,3 307,1

40

High-End segment
20

18,7 +9,8% +8,0%

15,7 17,3
0
2006 2007 2008E

% High End
Segment
5,1% 5,4% 5,7%

6
Europe is the largest market followed by USA,
Asia-Pacific and Middle East are catching up
High End Furniture Market - 2007
€20B
1,2 17,3
3,4 7%
15 20%
5,8

10 33% Mainly
6,9 Middle East

5
40%

0
Europe Americas Asia-Pacific RoW Total

YoY '06-'07
Growth
3% 3% 10% 13% 5%
CAGR
6% 6% 9% 7% 7%
'01-'07

7
Living & Bedroom covers 50% of the market,
but smaller segments are growing faster
Market growth by product segment, 2007
10%

Outdoor 1,8 B€
8 Kitchen
2,0 B€
CAGR '01-'06

6 Lighting 2,3 B€
Living
& Bedroom
8,7 B€ Bathroom 2,5 B€
4

2
€2B

0
0 2 4 6 8 10 12 14 16%
YoY '06-'07 Growth

8
Design, design, design... for amateurs and
aspirational consumers (finally!)
LIVING & BEDROOM (B€)
CAGR 05-07: 11%
8,7
8,1
7,0
06-07
growth
+7%

2005 2006 2007

• Very fragmented segment (~70 players)
• Main markets are still Europe and USA (~70% of
total), with USA slackening and Russia fast
growing
• Upholster production more and more shifting to
Asia Pacific
• Client purchasing lead by interest in Design and
Brand; fast growing emerging segment of
aspirational consumers to mirror the apparel
customer segmentation
• Real estate trend still drives the growth path, but
personal based consumption plays an
important role
9
Increasing importance of bathrooms, technology
enriches the proposition
BATHROOM (B€)*
CAGR 05-07: 11% 06-07
growth
+12%

2,2 2,5
2,0

2005 2006 2007

• Few players really dedicated to luxury bathrooms:

niche players in USA and category leaders in Italy
• Growing importance of design with consequent
increase of prices
• Technology in the bathroom (waterproof TVs,
mirror internet enabled, ...) together with luxury
furniture with an high level of customization (contract
segment)
• “Designing for life” (dedicated spaces, sauna,
jacuzzi, ...)
• Water efficiency is an hot issue following the
increasing worldwide attention to ecology and climate
*High end production of big industrial players is included in changes
the analysis
• Correlated with kitchen and real estate trends
(contract segment)
10
Larger, eco and high-tech kitchens

KITCHEN (B€) 06-07

CAGR 05-07: 12% growth
+12%

1,6 1,8 2,0

2005 2006 2007

• Very concentrated segment with Italian companies
gaining market share and challenging German
leaders
• Central role of ecology and technology (propelled by
domotics):
–Increasing use of eco-compatible materials
–Saving energy efficiency and appliances remote
control
–Multifunctional solutions: lighting-cowl filtering
the air, air conditioner cowl, ...
• International trends:
–Night kitchen as formal receiving room: use of
semi-precious materials
–Cooking show-restaurant: kitchen, open to the
living room, where the chef is the main actor
11
Outdoor living is becoming more and more
sophisticated
OUTDOOR (B€)
CAGR 05-07: 14% 06-07
growth
+13%

1,4 1,6 1,8

2005 2006 2007

• Fragmented market going through a

consolidation phase.
• No real international leaders
• Main market USA followed by Europe
• From Outdoor to Over-door... inside-out living
spaces that seem like the interior with massive
fireplaces, heated flooring, custom kitchens and
artwork
• Growing use of vibrant color and plush details
• Testing of new expensive materials borrowed by
automotive or aeronautics (ex. carbon)

12
Beyond lighting: objects for well-being
LIGHTING (B€)
CAGR 05-07: 12%

06-07
growth
+13%

2,0 2,3
1,8

2005 2006 2007

• Fragmented market: around 25-30 players

mainly European...
• ...but in a phase of concentration
• High importance of the brand and continuous
innovation of design
• Architects more and more influencers in
purchasing process
• Energy saving trend (ex. increasing use of LED)
• Lights become real sculptures/ furniture
complements that add art to houses
• Fashion brands entering the segment
13
 2009: a difficult year with several question
marks ....
High End furniture market growth forecast (2009) • Financial
market
stabilization
€20B 18,7 What will happen in 2009? 17-18 18-19 • Eco incentives
17,3 and regulation

• Consumer
consumption slowing 0%
15
down
• Stagnant Real Estate
=
10 market -5% -3%
• Economical crisis of
major markets
5 -8%

0
2007 2008E 2009F 2009F
base optimistic
scenario scenario
Political factors can limit 2009 slow down

14
...while long term potential is assured by
structural drivers

• Mature markets: beyond the consolidation

-“Brandization” at full potential
-Ecological/sustainable driven tendencies to stimulate the
market and revitalize “personal” consumption
-Urban areas re-qualification: chance to export Design and Well
being/living to the community/urban social scale

• Emerging markets: from a centralized approach to a consumer

centric habit
-Real estate continuing to fuel the growth and generate
innovative solutions
-Retailing plays a key role for “educating” consumers and
normalize the trend

15
Luxury Yachts: a resilient market to economical
cycles

High – End Luxury Yachts Personal Luxury

Furniture Goods

16
Luxury Yachts market more than doubled in the
last 8 years, important growth in 2008

Luxury Yachts Market (€B, 2000-2008E)

CAGR:
€12B 12%

10,3
10 9,5
8,8
7,8
8
7,0
6,2 6,3
6 5,2
4,2
4 9%
8%
2
24% 19% 2% 11% 11% 13%

0
2000 2001 2002 2003 2004 2005 2006 2007 2008E

17
 Luxury Yachts market can be segmented by price
range

Segments Description
€12B
10,3
10
3,4 • Over 15M€
8 (33%)

• 7M€ - 15M€
6 1,2(12%)
1,5(14%) • 3,5M€ - 7M€
4

2 4,2 • 750k€ - 3,5M€

(41%)

0
2008

18
Super luxury segment (price over 15M€) over
performing

Luxury yachts market growth by price segment

20%

Super Luxury From 3,5M€

Over 15M€ to 7M€
15
CAGR 00-07

10

From 7M€
Entry to 15M€
5
From 750k€
to 3,5M€
0
0 5 10 15 20%
08E-07 Growth

19
 Significant long term potential of yachts market
mainly driven by HNWI growth

Drivers
Luxury Yachts Market by average price, B€
• Growth of HNWI
CAGR - top income individual
€15B over € 15M 07-10 - turnover among HNWI
€ 7M - € 15M 13,0
€ 3,5M - € 7M
- emerging markets
€ 750k- € 3,5M

+18%
• GDP and market trends
9,5 4,9
10 - low price segment more exposed to
economic cycles
3,0
1,7 +15%
• Growth of new large boat berth
1,1 1,9 availability
5 1,3 +13%
- new recreational infrastructures
4,6 (Luxury Resort)
4,1 +4%
• Development of new luxury
0
2007 2010 charters and services
• Local taxation, regulations and
financial instruments availability
for yachts buying/ leasing

20
 Future growth will be fuelled by emerging
markets and super-luxury segment!

Luxury Yacht Market 2007 (B€) Luxury Yacht Market 2010 (B€)

4,8 2,8 1,9 9,5 +10% +8% +21% +12%

100% 100%

1,3 3,0
1,0 0,7 +19% +18%
80 80
+13% +24%

0,5
1,1
60 0,4 60 +12%
0,6 0,3 +15%
+10% +26%
1,3
0,4 0,3 +12%
40 40 +8% +13%
+25%
over € 15M

2,3 € 7M - € 15M
20 4,1 20
1,0 0,7 +3% +4% € 3,5M - € 7M
+2% +13%
€ 750k- € 3,5M

0 0
EU USA RoW Total EU USA RoW Total

21
Personal Luxury Goods: 2007 very good, 2008
safe, 2009..probably the worst year in a long row

High – End Luxury Yachts Personal Luxury

Furniture Goods

22
On a nutshell: 2007 good, 2008 safe!

Worldwide Luxury Goods Market trend (1995-2008 E)

CAGR:
€200B 7%

170 175
159
160 146
130 134 134 128 134
120 111 CAGR 04-08 E
7%
93 98
84 CAGR 00-04
80 76 0,8%
+3%
CAGR 95-00
14%
40 +6,5%

11% 10% 5% 14% 17% 3% 0% -5% 5% 9%

0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20072008E

23
High level of exogenous turbulence asks for a
detailed analysis

US$ US Sub Prime US$ US$ Peak Stock markets US$

1,25 Credit Crunch 1,37 1,59 crash 1,47
+1
+1,4 175
+3,2
-0,4
+1,4 170
+2,9
+3,5
+3,0
159

+6,5% +3%

2006 1Q 2Q 3Q 4Q 2007 1Q 2Q 3Q 4Q 2008E

QoQ
growth 8,6% 9,5% 7,7% 2,7% 8,7% 2,6% 3,5% -1%

24
How exogenous events influenced the luxury
goods market
Facts
• Strong €
• Hectic exchange rates fluctuations
• Sub-prime credit crunch
- Decrease in consumer confidence
- Erosion of discretionary spending
of low-middle classes in US
- Rebound on consumer confidence
in Europe and Japan
• Instability of worldwide economy
- BRICs growing
- Western economies stagnating
- Financial crisis
- Stock markets crash
- Financial crisis impact on real
economy (Recession?)
25
Impacts on Luxury Goods
1. Real market growth affected by
exchange rates
2. Tag–price increase which did not
turn into higher average prices
3. Entry-to-luxury brands less
resilient to exogenous turbulence
4. Retail (mainly new stores) growing
more than wholesale (risk adverse)
5. Boom of on-line shopping:
different consumers and lower
psychological barriers
6. Emerging markets providing a
buffer of growth to luxury players
7. Strong slow-down expected for
last quarter of 2008
1. Real market growth affected by exchange
rates
Average exchange rates €/$

1,25 1,31 1,35 1,37 1,45 1,37 1,50 1,56 1,50 1,35 1,47
8,7
estimate

8,7 1,3 175

-4,5 -0,3
9,8 170
-4,5
-3,4 +6,5% At current exch. rate +3%
159

+12% At constant exch. rate +6%

+6,5% -2,5% +5,5% -3% +5% -3% +1% -0%

2006 1H K 2H K 2007 1H K 2H K 2008E

Currency Currency Currency Currency
effect effect effect effect
26
2. Tag–price increase which did not turn into
higher average prices
• Increase in tag prices in $ and Yen
• Emerging markets: super - luxury segment
• Mature markets: focus on entry • Mature markets: absolute luxury more
items of aspirational brands resilient to exogenous turbulence
(in particular Japan)
• Emerging markets: “massive“
compulsive shopping of luxury 8 178
goods
40%
11 170
-8
60%
159

+12% +6,5%

2006 ∆ Volumes ∆ Prices 2007 K ∆ Exchange 2007

rate
27
3. Entry-to-luxury brands less resilient to
exogenous turbulence
The 3 “A” of Luxury Trend by segment 2007

•Market giants keep their growth pace

•“Star” brands in the fashion segment
•Aspirational consumer base not stable
10%

Aspirational
Absolute 8

CAGR 96-06
6

Aspirational Accessible
4

Absolute
2

0 •Resilient segment
Accessible 0 5
even in10stagnating 15%

07-06 markets
Growth
•Exchange rate effect •Hard Luxury and High-
•Sub-prime crisis affecting End RtW
mid-low end luxury •Emerging markets
consumers

28
4. Retail (mainly new stores) growing more than
wholesale (risk adverse)
2007 vs 2006 Retail growth analysis
(Index:2006=100)
5 109
4
100 • New openings:
55% - China
45%
- Second tier locations Europe
and USA
• Like for like:
• Last years opening brought
at full speed
2006 Like for like Perimeter 2007
growth growth

2007 vs 2006 Growth by 8 170

channel (B€) 159 3

+9% +5,5%
79%
80%

20% 21%

2006 Retail Wholesale 2007

29
 5. Boom of on-line shopping: different
consumers and lower psychological barriers

Luxury Goods On-line shopping by

area and by channel, B€
€3B
06-07
2,5 2,5
growth China 5%
+40% Japan 10%
Retail
2 Europe 40%
20%
1,5

1 USA
Wholesale
65%
60%

0
2006 2007 2007 “Can I call you back? I’m
by area by channel shopping”

30
6. Emerging markets providing a buffer of growth
to luxury players

RUSSIA CHINA INDIA BRAZIL

Population 145 M people 1.3 B people 1.1 B people 190 M people

HNWI (‘07)
138.000 415.000 123.000 143.000

Luxury goods 3,6 €B 4,5 €B 0,6 €B 1,3 €B

market (‘07)
% tot market 2,1% 2,7% 0,4% 0,8%

Expected 20% for the next 30% for the next 25% for the next 35% for the next
growth
5 years 5 years 5 years 5 years

31
 7. Strong slow-down expected for last quarter of
2008
Based on listed companies results
Bain estimates

Luxury Goods Market growth by quarter (2008, QoQ growth)

8,7%

Total
year+3%

3,5%
2,6%

“Listen, everybody
-1%
feels a little depressed
1Q 2Q 3Q 4Q
around this time of
Build-up of year!”
1,8% 0,6% 0,8% -0,2%
2008 growth

32
Asia Pacific keeps growing, US and Europe solid in
real terms, Japan hardly suffering

Worldwide Luxury Goods Market by Area YoY ‘07 vs ‘06 YoY ‘08E vs ‘07

€175B
€170B
5% +10% +9%
Rest of World 4%

Asia-Pacific 11% 12%

+14% +15%

Japan 13% 12%

-2% -7%

Americas 34% 33% +4% +0%

Europe 38% 38% +10% +5%

2007 2008E
33
Europe remains the first market and drives
growth thanks to Eastern Countries
EUROPEAN MARKET
CAGR 98-08E +6%
58 64 67

+10%
+5%

CAGR 06-08E
7,5%

2006 2007 2008 E

Growth @
11% 6%
K exch.rate

• In 2007:
- Record year for growth in absolute terms
- Strong impact of emerging markets (local consumption
+ tourist flows)
- Jewellery (+14,5%) and Shoes (+15%) driving growth
• In 2008:
- Strong € killed tourist flows from USA and Japan
- Local consumption of mature markets slowing
down, growth mainly driven by Eastern Europe

34
Americas is entering into tougher periods
AMERICAN MARKET
CAGR 98-08E +5%
58 58
55

+4%
+0%

CAGR 06-08E
2%

2006 2007 2008 E

Growth @
14% 7%
K exch.rate
• In 2007:
- Record year for growth in real terms
- Sub-prime credit crunch affecting accessible segment (+2%)
- Leather (+10,5%) and Hard luxury (+9%) driving growth,
while apparel suffering (+2%)
- Brazil blossoming market (1,35 €B, +35%)
• In 2008:
- First year of stagnation after post-Sept 11 crisis
- Strong impact of super €: big impact of tourism from € area
but strong reduction of local consumption

35
Japan: the only market in “luxury recession”

JAPANESE MARKET
CAGR 98-08E +5%
CAGR 06-08E
-4%
22 22 21
-2%
-7%

2006 2007 2008 E

Growth @
8% -7,5%
K exch.rate

• In 2007:
- Second year of stop affected by weak Yen and
decreasing consumer confidence
- Fragrances (+2,5%) and Shoes (+2%) the positively
growing categories: lowering of average ticket for
luxury goods
- Absolute luxury brands are more resilient to market crisis
• In 2008:
- Real recession: private consumption crisis is deepening
due to echoes of international financial and economical
crisis
• Question mark on new generations attitude towards
fashion and luxury
36
Asia Pacific Luxury market fuelled worldwide
luxury goods growth
ASIA PACIFIC MARKET
CAGR 98-08E +9,5%
CAGR 06-08E
14%

19 22
17
+15%
+14%

2006 2007 2008 E

Growth @
15% 15,5%
K exch.rate

• In 2007 and 2008:

- Solid growth confirms past trends and consolidates
market dynamics also thanks to China explosion
- Perimeter driven growth: about 450-500 new stores
openings in 2007-2008
- All categories experience hectic growth: Apparel
(+16%), Hard Luxury (+15%), but Leather and
Accessories (+20%) driving growth
- Accessible segment winning: “luxury-knockers”
enlarging luxury brands consumer base
- Local consumption not yet at full potential: much
room for further growth for luxury players

37
The “emerging” China is already the first market
in Asia Pacific, followed by Korea and Hong Kong
Asia Pacific Luxury Market by country (2008, B€)

China South
5,9 Korea
4,9
Hong Taiwan
India Kong 2,7
0,8 3,6
Macau
Thailand 0,6
0,9

Singapore
2,2

38
Excellent performance for hard luxury and
accessories

Worldwide Luxury Market by Category YoY ‘07 vs ‘06 YoY ‘08E vs ‘07

€175B
€170B
4% - 3% -2%
Art de la table 4%

Hard Luxury 20% 21% +10% +7%

Accessories 21% 22% +11% +5%

Perfume and
23% 23% +4% +3%
Cosmetics

Apparel 29% 28% +6% +0%

2007 2008E
39
Europe is “the market” for womenswear even if
increasingly competitive
WOMENSWEAR
CAGR 98-08E +4,5%
23,5 23,6
22

+6%
+0,5%

CAGR 06-08
3%

2006 2007 2008 E

Growth @
11%
K exch.rate

• In 2007:
- Growing in line with overall market
- Europe makes the bulk of the growth (+1€B) while
Asia (+17,6%) and Rest of the World (+14,9%) are
the fast growing
- Aspirational and absolute brands are best in class
(+9,9% and +8,5%)
- First lines over performing (+ 8%): fast fashion
players stealing share to second and third lines
• In 2008:
- Strong stop: other luxury categories stealing share of
discretionary wallet
40
Menswear is starting to slow down its growth
pace
MENSWEAR
CAGR 98-08E +6%
23,5 23,5
22

+6%
+0%

CAGR 06-08
3%

2006 2007 2008 E

Growth @
12%
K exch.rate

• In 2007:
- Growth slow down with respect to previous years (+6% vs.
+9% 05-06 growth)
- Strong growth concentration by area: over-
performance in Europe (+14%) and Asia (+19%), stop in
Japan (-4%) and first signals of stagnation in USA (+1%)
- Aspirational brands are winning (+13%)
- First and second lines over-performing (+ 9%), sports lines
suffering (0%) mainly for exchange rate effect
• In 2008:
- First year of stop after a long growing period, also
due to currencies fluctuations
41
Cheaper is chic in Japan while Europe and USA
ask for more precious leather products
LEATHER GOODS
CAGR 98-08E +10%
19 20
17

+10,5% +4%

CAGR 06-08
7%
2006 2007 2008 E
Growth @
16%
K exch.rate
• In 2007:
- Double digit growth in all areas but Japan (+1%)
- In Japan: stagnating volumes but decreasing average
prices (accessible players + entry items of aspirational
brands)
- In Europe and USA absolute brands are winning
- Booming category in emerging markets: Asia (+21%)
and Russia (+20%)
- All segments are growing well, but Absolute leather brands
are gaining share (+12%)
• In 2008:
- Leather keeps growing, even if at a lower pace:
accessorization process seem to be resilient to
42 turbulent times!
Shoes, shoes, shoes!
Record category for the luxury market
SHOES
CAGR 98-08E +7%
CAGR 06-08
10%
7,6 8,2
7

+12% +8%

2006 2007 2008 E

Growth @
17%
K exch.rate

• In 2007:
- First category for growth: all areas have positive
growth
- Both men and women shoes keep their growth pace
(+12% for both)
- Shoes are becoming the most important accessory in a
woman look: “we do not compromise on shoes”
- Absolute brands driving growth (+17%): no impact
of cheap and chic trend
- Fashion forward brands gaining share
• In 2008:
- Still the king category for growth: shoes are becoming
the standalone accessory that differentiates fashion
conscious women
43
Watches ...still an evergreen category in luxury.
Impact of the financial crisis in 2009?
WATCHES
CAGR 98-08E +8%
26,6
24,4
22

+11%
+9%

CAGR 06-08
10%

2006 2007 2008 E

Growth @
15%
K exch.rate

• In 2007:
- Very solid growth among countries and segments:
Asia (+18%) and Absolute segment (+10%) stand out
- Category fuelled by emerging markets (both local
and tourist purchases): usually watches are the first
category to start luxury consumption
• In 2008:
- Watches keep their growth pace
- Forecast of slight slow-down in last 2008 quarter, but
highest end segment does not seem to be affected
at all
• In 2009: ??
44
Jewelry hit the brakes in 2008 after a strong
2007
JEWELRY
CAGR 98-08E +7,5%

CAGR 06-08: 6%
7,8 8
7

+9% +2,5%

2006 2007 2008 E

Growth @
16%
K exch.rate

• In 2007:
- Growth spread among segments and areas.. but
Japan (+2%)
- Europe and Asia over-performing (+12% and +15%)
- Absolute and “pure” jewelers are king in the
competitive arena (+12%)
• In 2008:
- First signals of slow-down after a “golden”
growth period in USA and Europe
- Weakening Christmas holidays expectations

45
 Fragrances more dynamic in 2007, cosmetics less
impacted by weak 2008 Christmas
PERFUMES COSMETICS
CAGR 98-08E +5% CAGR 98-08E +7%
21,8 22,4
18,4 21
18
17

+5% +3%
+2,6%
+3%

CAGR 06-08 CAGR 06-08

4% 3%
2006 2007 2008 E 2006 2007 2008 E
Growth @ Growth @
10% 10%
K exch.rate K exch.rate

• Steady growth rates fuelled by

• In 2007, category affected by
good product launches:
different geographic dynamics
- High competition than rest of luxury market:
- Powerful Advertising - Stagnation in Asia and Japan
• Category not affected by Japan and - US (+4%) over performing, Europe
US crisis (+3% both countries) (+2%)

• In 2008 it is expected to slow • In 2008 it is expected to keep

down mostly due to a weak its growth path with skin care
Christmas holiday period gaining share over make up

46
2009: probably the worst year for luxury goods
consumption in a row
Luxury goods market growth forecast (2009), B€

What will happen in 2009?

175 172-178
170
163-170
• Europe decreasing
significantly
+2%
• US and Japan still -2%
far from recovery
• Emerging markets
keep growing
-3%
• USD and Yen -7%
recovering on €

2007 2008E 2009F 2009F

@ constant @ current
exch. rates exch. rates

For the first time in history currencies fluctuations may

have a positive impact on luxury goods market growth
47
Anyway, in perspective, luxury goods market
shows strong basics for long term potential!

Long term drivers for luxury

• Increasing personal wealth in all
markets, growing HNWI
• Sustained growth expectations in long
term global GDP and emerging markets
• Strongly increasing tourist flows
• Growing spend by working women
• Increasing number of men choosing
global luxury brands
• Continuing democratization, strongly
growing aspirational consumer base
- saving less
- substituting traditional categories
within luxury
• New opportunities may come from
changing values and consumption habits

Enlarging customer base!

48
How to manage in turbulent times: 3 imperatives
to prepare for the next phase

1. Stay tuned on your consumers

2. Push for organic growth

3. Inject cost culture

2003 2004 2005 2006 2009

49
1. Stay tuned on your consumers

What to do
• Know your consumers at best
• Re-think the shopping experience
• Leverage on loyal customers and brand
communities
• Localize marketing activities
• Re-allocate marketing budgets to below
the line activities
• Understand what’s in for quality

What to avoid
• Fully delegate clients’ relationship to
salespeople “Another catalog”
• Deploy a global product and marketing
approach
• Keep useless complexity in product
features
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2. Push for organic growth

What to do

• Slow-down retail expansion

• Strengthen entry price offer,
selectively increase other prices
• Focus on excellence initiatives:
CRM, Training, Assortment Mgt
• Invest in retaining / hiring talent
• Keep gaining market share

What to avoid
“The guy that knows about the
• Increase prices across the entire books isn’t here today. I’d be
offer more than happy to suggest a
• Focus on strategic initiative: bookmark.”
Repositioning, acquisitions, etc.

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3. Inject cost culture

What to do

• Hunt for profits: G&A, suppliers,

working capital...
• Bring IT to full potential
• Streamline processes and
organization

What to avoid

• Cutting strategic costs: marketing,

retail, creativity,...
• Block investments “Of course that’s only an
• Aggressively cut personnel estimate. The actual cost
• Under-spend competitors will be somewhat more.”

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To conclude...

Personal Luxury
• Very promising industry with strong long term potential
Goods
• Market is the sum of interesting but different segments/niches
• Need to carefully manage 2009 slow-down to prepare for the next step

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