2. COMPETITIVE ANALYISIS
Industry Forces
ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT
Competitors other haute couture houses
(Chanel, Christian Dior, Jean Paul Gautier, Valentino, etc. )
ELIE SAAB
-Competitive Couture Pricing Without Compromising On Service
-Exceptional Service & Top-of-the-line Quality
-High Exclusivity
-Customer Segments Targeting Super-wealthy, High-end Market
(Celebrities, Royalty, Rich And Famous)
3. Industry Forces
Substitutes
- “Democratization” of fashion - H&M x MMM
Suppliers
- Very dependent on materials and fabric suppliers
4. FORESIGHT
Key trends
Technological trends
- increasing influence of social media and digital
marketing activities
Regulatory
- Tax advantages in some countries
- Higher prices due to import duties and taxes
5. FORESIGHT
Key trends
Socioeconomic trends
- Growing number of “extreme net-worth individuals”,
especially in Asia
Chinese consumers account for 20% of the global luxury
sales
Asian consumers (i.e., adding Japan, Korea, and
Southeast Asia) account for more than 50% of the global
luxury sales
6. MARKET ANALYSIS
Market trends
Market Issues
- Changing consumers’ taste and preferences
Younger consumer base in Asia
Aging of customers in Europe, US & Japan
Market Segments
- Accessories & hard luxury largest category
Needs & Demands
- chase for higher quality and greater craftsmanship/materials
favors absolute/high-end luxury offerings
7. MARKET ANALYSIS
Market trends
Switching Costs
- High brand loyalty
Revenue Attractiveness
- Asian market (China and Hong Kong) + emerging Markets
- Absolute luxury segment €40B in 2011
9. BUSINESS MODEL
Value Proposition
Design - Brand/status – Customization - Price
NEED?
A unique design made of exquisite materials
WHAT?
Haute Couture, RTW, accessories and wedding dresses
FUTURE?
Any luxurious and exclusive products
Efficiency of fittings
Personalized services
Lifetime experience
Very selected manufacturers
10. BUSINESS MODEL
Customers
Niche market
PRIMARY TARGET:
Feminine, Elegant and
Personal assistance
Super Wealthy Women
Co-creation
NATURAL TARGET: Self-service
Celebrities and Royalties
FUTURE PLANS:
To diversify
11. BUSINESS MODEL
Distribution Channels
AWARENESS:
Events, Catalogues, Advertorials to the corporate website, Interactive portal, Ads
EVALUATION:
Visit the stores, Try the dresses, Watch the catwalk shows
PURCHASE:
Flagship stores, Concessions, Multi-brand retailers, Catwalks
DELIVERY:
On site, at home
AFTER SALE:
Guarantee repair
12. BUSINESS MODEL
Key activities
Design of luxury stores
Haute Couture
Customers proximity
Animate the online website
13. BUSINESS MODEL
Key resources
PHYSICAL:
Stores, fabrics, sewing materials
INTELLECTUAL:
Website
HUMAN:
Creative + Business
FINANCIAL:
Shareholders, Bank loan
14. BUSINESS MODEL
Key partnerships
TO BE SOLD:
Retailers, Department stores, Beauté Prestige International
TO BE KNOWN:
Celebrities, Charitable organizations
TO EXPAND THE BRAND UNIVERSE:
Hotels, Yacht companies
KEY SUPPLIERS:
Fabrics supplier, RTW manufacturer
15. BUSINESS MODEL
Cost and Revenue structure
MOST IMPORTANT COSTS:
General, selling and administrative expenses, Cost materials and
outsourced production, Salaries and Fashion shows
THE MOST EXPENSIVE KEY RESOURCES:
Stores and Fabrics
THE MOST EXPENSIVE KEY ACTIVITY:
Fashion shows
REVENUES:
Sales, Licensing, Partnerships
RTW: $1500-$21000
Haute Couture: $34000-$1000000
17. Diversified :
enhance its prestige in every aspect of the luxury sector.
SIGNATURE HOTELS
2008 Tatweer/Dubai Properties
Signature Hotels
U.K. BOUTIQUE AT HARRODS
2008.7 ‘Eveningwear’ Department, First Floor
18. PARFUM ELIE SAAB
2009.9
10-year fragrance and cosmetic license contract.
LUXURY YACHTS DESIGN
2010.1 Weyves International Ltd.
and Oceanco
FLAGSHIP STORE IN DUBAI
2010.7 First flagship store in the Gulf region, The Dubai Mall
19. VARIOUS MODES OF ENTRY
Licensing
Partnerships
Third-party Distribution
Company-owned Stores.
20. Licensing
PROS AND CONS
Minimizes risk and investment.
Speed of entry
Able to circumvent trade barriers
High ROI (Return On Investment)
Lack of control over use of assets.
Licensee may become competitor.
Knowledge spillovers
License period is limited
21. Partnerships
PROS AND CONS
Overcomes ownership restrictions , cultural distance
Combines resources of 2 companies.
Potential for learning
Viewed as insider Difficult to manage
Less investment required Dilution of control
Greater risk than exporting a & licensi
Knowledge spillovers
Partner may become a competitor.
22. Third-party Distribution
PROS AND CONS
Trade barriers & tariffs add to costs.
Minimizes risk and investment. Transport costs
Speed of entry Limits access to local information
Maximizes scale; Company viewed as an outsider
uses existing facilities.
23. Company-owned Stores.
PROS AND CONS
Greater knowledge of local market
Can better apply specialized skills
Minimizes knowledge spillover
Can be viewed as an insider
Higher risk than other modes
Requires more resources and commitment
May be difficult to manage the local resources.
25. SWOT
Strengths Weaknesses
•Member of the Chambre Syndicale •Weak presence in multi-brand shops
de la Couture •The dilution of the brand into many
•Direct ownership of its stores except activities (yachts, hotels…) and the
Dubai (for local expertise) plan to expand even further
•One of the few certified « Couture » •Still low sales in Asia, USA and Russia
house
•Trust and loyalty of stars and royalty
Opportunities Threats
•The rise of the number of World •Trend : to mix luxury and
High-net-worth individuals (HNWI) affordability
and of their wealth, especially in •Trend : people tend on dressing
Asia more casual
•The asian market •Party ladies are no longer high-class
•Huge potential in Asia not yet aristocracy but new-world billionaire
fulfilled
26. Elie Saab’s competitive advantage
The ultimate personalized experience provided by
the brand for Haute Couture customers.
+ the personality and know-how of the designer Elie
Saab
Elie Saab really applies the principles of Haute
Couture.
27. STGAE OF Product Life Cycle
Change OF Company’s Positioning And
Differentiation Strategy
28. Haute couture : Maturity phase.
Elie Saab has a great expertise in this activity.
Sales are hight but tend to stagnate.
Ready-to-wear & accessories : Sales are in constant
progression.
More recent activity in Elie Saab portfolio.
29. Positioning and differenciation
• At first, the brand focused exclusively into Haute
Couture and exceptional custom-made clothing for
super wealthy customers.
• Launch of a Ready-to-wear activity to extend the
portfolio
More affordable and easier to produce in large
volumes
A greater return on investment and turnover.
Less exclusive global situation but more
accessibility and commercial attractiveness
30. Should ES target a new market?
For example, the emerging ‘affordable luxury market?’
38. BUT…
The prerequisite of this strategy of growing in new
markets is to maintain the brand’s image and prevent
it from being diluted .
Individualization
Communication
loyalty
40. Our overall recommendations for ES
Maintain is brand image:
“High-end, one-of-a-kind designs
made from the finest fabrics and
materials”
High quality customized service
41. Product
Diversification
“Mass” class - main part of luxury consumers
Accessories & cosmetics, etc.
“New rich” – status/wealth
Domestic outfit, luxury hotels, automobiles and yachts’
decoration, etc.
42. Consolidation
The haute couture has
always been and must
continue to be the
core and soul of ES’s
business.
43. Pricing
A pair of sunglasses 350€ – 400€
A custom-made couture $30,000 - $1,000,000
gown
A pair of plain trousers $1,200
A fur jacet $21,000
44. If asked to equate ES with examples of automobiles…
47. Distribution
Another trend in the luxury industry is that
manufacturer/retailer relationships have lost an
element of trust.
A bad choice of licensee retailer may result in a
disaster for a brand’s image.
ELIE SAAB CAN BE POSITIONED AS A BRAND IN THE ABSOLUTE LUXURY/HIGH-END LUXURY SEGMENT Elie Saab offers : competitive couture pricing without compromising on service exceptional service & top-of-the-line quality Eli Saab is remains a very exclusive brand by targeting: super-wealthy, high-end market, which includes celebrities, royalty, rich and famous.
We see an evolution of the shopping channels and increasing influence of social media, digital marketing activities The convergence of stores with all of this is creating an “multichannel” experience for consumers and has a positive effect on online sales. Some countries offer tax advantages and attract that way regional shopping tourism in South –East Asia (e.g. relevant Indonesian travelling flows to Singapore). Prices are on average 30%-60% higher due to import duties and taxes in Central Asia. So a lot of Asian people are coming to Europe to shop.
The number of “extreme net-worth individuals” keeps growing, especially in Asia. Chinese consumers, including their spending as tourists, now account for over 20 percent of global luxury sales. Asian consumers (i.e., adding Japan, Korea, and Southeast Asia) account for more than 50 percent. The growth rates for Asia Pacific excl China fro 2012 14 to 16% and for China around 18% to 22%
The average age of Asian luxury consumers is decreasing steadily, while that in Japan, Europe and the United States increases, creating a new generation of luxury consumers, but with very different tastes and preferences. Accessories and hard luxury categories, champions of the last years, are expected to consistently outperform the overall market in the years ahead. Consumers are chasing higher quality and greater craftsmanship/materials, which favors absolute luxury offerings. As a result of that, the products in the absolute luxury segment with high-end brands like Elie Saab are outperforming more accessible products.
1. Asian market is gradually maturing but still offers very relevant growth opportunities Additionally market will keep growing, driven by emerging markets as Latin America and India 2. Absolute Luxury segment will keep outperforming the market in the years to come.
Saab began with producing signature dresses for the ultra-high end market. But with the knowledge that the brand can’t live on haute couture alone, and with the desire to expand his product line to cater to a wider audience, Saab launched a ready-to-wear line in 1998 produced in the city of Milan. The ES brand has become one of the preferred brands among the elite market, and we still have much ground to cover. We plan on reaching all parts of the globe and understand the unique needs of our high-end customers.
ES’s vision was to place the brand on any product that was considered luxurious and exclusive. The company planned on diversifying the brand portfolio by offering new products such as eyewear, casual wear, men’s clothing, swimsuits, lingerie, leather goods, home line, airplanes, cars and car accessories, hotels, hotel amenities, luxury sports (golf), information technology and high—tech products. The company was also considering sub-brands and online sales.
WITH the augmenting business also comes with global expansion. To international markets, there are four entry modes
45 multi-brand retailers and department stores across the world, such as Bergdorf Goodman and Neiman Marcus
Seeing a rise in Asian clients at its stores, Elie Saab is now investing in freestanding shops in China. “ We’re starting to see a lot of Asian customers in our existing boutiques, whether in Paris or in London or even in Dubai, and we feel that the brand has had enough exposure for the consumer to start recognizing it,” Elie Saab managing director Chucri Cavalcanti told WWD. Although the label is already in multi-brand stores in Taiwan, Singapore and China, the company is ready for a bigger brand presence in Asia. Elie Saab’s Asia venture will begin with a Hong Kong store followed by stores in Beijing and Shanghai by early 2013. “ We think that Hong Kong could be our starting base in Asia from which we can get into mainland China and into other countries in Asia, like Korea, like Taiwan, like Singapore, in a much easier way once the brand is well established in Hong Kong, which is a very cosmopolitan, international market,” said Cavalcanti.
“ Much of the company’s success in the previous five years was attributable to its rapid growth in the ready-to-wear (RTW) product line”, said Chucri Cavalcanti, the company’s managing director.
geographically speaking, the new markets can also be referred to as the emerging countries such as the Middle East, China, Russia, or India as their average personal incomes rise significantly.
China, for example, is expected to replace Japan as the world's top consumer of luxury goods by 2012.
In these developing countries, luxurious goods are more about a demonstration of social status than in the western markets, and a lot of people are willing to save months of salaries just to by a Louis Vuitton handbag.
In the luxury industry, the brand’s identity is the essential concern of a company. It determines, to a certain extend, the success of a brand. Because not only it is the key to distinguish the brand from others, but also it is the channel of communication between the brand and its target customers and it defines its clients’ level of loyalty.
The development of advantageous items should be intensified, and only in this case can ES hold an invincible position in this industry and grow in all-round way.
even though we suggest ES to get into “affordable luxury” markets, we insist on a relatively high price in each market.
By dressing all those stars, celebrities and royal heads, Saab managed to increase the brand’s awareness without taking the risk of being limited or negatively influenced by a“Muse”.
So we think that to ES, the best way is to limit the number of licensed distributors and open more company-owned stores and ateliers among the world, especially in the emerging new markets.