Global Luxury

Organizational Change and Emerging Markets since the 1970s

Pierre-Yves Donzé, Rika Fujioka, Pierre-Yves Donzé, Rika Fujioka

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN:
  9789811052354
• eBook ISBN:
  9789811052361
• Topic: Business
• Subtopic: Business General
• Index: Business

This book explores the luxury industry and how it has undoubtedly been one of the fastest-growing sectors since the 1970s, and one in which Europe has managed to strengthen its competitiveness in the world market. While many aspects of globalization remain abstract and intangible, the luxury industry has created markets where previously there were none, by educating Japanese about the history of French handbags, Chinese about the finest wines, and setting global standards for an elite, inspirationallifestyle. In this edited volume, a wide range of scholars comes together to analyze the history of the business and the innovations in management and marketing that have emerged from it. Invaluable for scholars, industry figures, and dilettantes alike, it will define the field of study for years to come.

© The Author(s) 2018

Pierre-Yves Donzé and Rika Fujioka (eds.)Global Luxuryhttps://doi.org/10.1007/978-981-10-5236-1_1

Begin Abstract

1. Introduction

Pierre-Yves Donzé¹ and Rika Fujioka²

(1)

Graduate School of Economics, Osaka University, Toyonaka, Osaka, Japan

(2)

Faculty of Business and Commerce, Kansai University, Suita, Osaka, Japan

Pierre-Yves Donzé (Corresponding author)

Rika Fujioka

End Abstract

The luxury goods industry has undoubtedly been one of the fastest-growing sectors since the 1970s, and one in which Europe has managed to strengthen its competitiveness within the world market. According to the consulting firm Bain & Company, global sales in the luxury industry (including fashion, jewellery, watches, and cosmetics) shot up from 73 billion euros in 1994 to 253 billion euros in 2015 (Bain & Company 2015).

The second characteristic of this industry is that luxury business is based on relatively new firms, although they hold and manage brands with a history going back to the nineteenth century and even earlier for few of them. In 2013, most of the top 25 largest luxury groups (see Table 1.1) were indeed founded during the 1980s and the 1990s, or are older firms whose growth was based principally on the acquisition of other brands and companies since the 1980s. Hence, one can argue that the luxury business is a new industry, if one considers its organizational structure and largest actors. Yet the contemporary success of luxury goods throughout the world results essentially from their brand identity, which emphasizes both their timeless nature and their embodiment of heritage , craftsmanship, and history. Overcoming the contradiction between the modern organization of luxury companies and the traditional image of their product is one of the key challenges faced by this industry (Donzé and Wubs 2017).

Table 1.1

Top 25 largest luxury groups of the world, 2013

Rank	Company name	Most important brands	Country (headquarters)	Year of foundation	FY13 luxury goods sales (US$mil.)	FY13 total revenue (US$mil.)	FY13 net profit margin (%)
1	LVMH Moët Hennessy-Louis Vuitton SA	Louis Vuitton, Fendi, Bulgari, Loro Piana, Emilio Pucci, Acqua di Parma, Donna Karan, Loewe, Marc Jacobs, TAG Heuer, Benefit Cosmetics	France	1987	21,761	38,717	13.5
2	Compagnie Financiere Richemont SA	Cartier, Van Cleef & Arpels, Montblanc, Jaeger-LeCoultre, Vacheron Constantin, IWC, Piaget, Chloé	Switzerland	1988	13,429	14,275	19.4
3	The Estée Lauder Companies Inc.	Estée Lauder, M.A.C., Aramis, Clinique, Aveda, Jo Malone	United States	1946	10,969	10,969	11.0
4	Chow Tai Fook Jewellery Group Ltd.	Chow Tai Fook	Hong Kong	1929	9979	9979	9.6
5	Luxottica Group SpA	Ray-Ban, Oakley, Vogue Eyewear, Persol, Oliver Peoples	Italy	1961	9713	9713	7.5
6	The Swatch Group Ltd.	Breguet, Harry Winston, Blancpain, Longines, Omega, Rado, Swatch	Switzerland	1983	8822	9128	22.8
7	Kering SA	Gucci, Bottega Veneta, Saint Laurent, Balenciaga, Brioni, Sergio Rossi, Pomellato, Girard-Perregaux	France	1992	8594	12,948	0.4
8	L’Oréal Luxe	Lancôme, Biotherm, Helena Rubinstein, Urban Decay, Kiehl’s	France	1909	7791	7791	14.7
9	Ralph Lauren Co.	Ralph Lauren, Polo Ralph Lauren, Purple Label, Blue Label, Black Label, RLX Ralph Lauren	United States	1967	7450	7450	10.4
10	PVH Corp.	Calvin Klein, Tommy Hilfiger	United States	1881	6200	8186	1.8
11	Shiseido Co. Ltd.	SHISEIDO, clé de peau BEAUTÉ, bareMinerals, NARS, ISSEY MIYAKE, ELIXIR, Benefique	Japan	1872	5404	7659	3.8
12	Rolex SA	Rolex, Tudor	Switzerland	1905	5398	5398	n/a
13	Hermès International SCA	Hermès, John Lobb	France	1837	4975	4975	21.3
14	Coach , Inc.	Coach	United States	1941	4806	4806	16.3
15	Prada Group	Prada, Church’s, Car Shoe	Italy	1913	4776	4776	17.8
16	Lao Feng Xiang Co., Ltd.	Lao Feng Xiang	China	1848	4175	5329	2.7
17	Tiffany & Co.	Tiffany & Co., Tiffany	United States	1837	4031	4031	4.5
18	Burberry Group plc	Burberry, Burberry Brit, Burberry London, Burberry Prorsum	United Kingdom	1856	3704	3704	14.3
19	Michael Kors Holdings Limited	Michael Kors, MICHAEL Michael Kors	UK	1981	3311	3311	20.0
20	Hugo Boss AG	BOSS, HUGO, BOSS Green, BOSS Orange	Germany	1924	3231	3231	13.7
21	Coty Inc.	Lancaster, Calvin Klein fragrance; Licensed fragrance brands: Marc Jacobs, Chloé	United States	1904	3186	4552	−1.4
22	Swarovski Crystal Business	Swarovski	Austria	1895	3095	3894	n/a
23	Giorgio Armani SpA	Giorgio Armani, Emporio Armani, Armani, A/X Armani Exchange	Italy	1975	2904	2904	1.1
24	Chow Sang Sang Holdings International Ltd.	Chow Sang Sang	Hong Kong	1948	2571	3242	4.9
25	Luk Fook Holdings (International) Ltd.	Luk Fook	Hong Kong	1991	2420	2477	9.7

Source: Deloitte, Global Power of Luxury Goods 2015, Deloitte Touche Tohmatsu Limited, 2015, pp. 14–15. Retrieved from http://​www2.​deloitte.​com/​content/​dam/​Deloitte/​global/​Documents/​Consumer-Business/​gx-cb-global-power-of-luxury-web.​pdf (accessed 12 May 2016)

Note: Years of foundation added by the authors

Finally, another major characteristic of the luxury business is its high profitability. In 2013, companies such as Swatch Group , Hermès and Michael Kors had a net profit margin of 20% or more, while nine other enterprises of the top 25 had figure between 10% and 20%. Only one (Coty Inc.) was in deficit that year (see Table 1.1). Consequently, these companies attract the attention of investors and present usually a long-term growth largely superior of other blue chips in worldwide stock exchanges. Such a profitability results from the new management strategy implemented in the 1970s and 1980s which aimed at creating more economic value through building brands and controlling distribution .

1 Understanding the Dynamics of the Luxury Industry

The luxury industry has not always been the big business which it is today. Therefore, it is important to understand the dynamics of this sector in order to have a proper view over the conditions of its historical evolution, the way it was transformed into a fast-growing activity, and the reasons for its present-day success. Scholars in history, business history and management have focused on various aspects and issues of the luxury industry (Donzé and Fujioka 2017). Academic works can be roughly classified into two major fields, each of which adopts a different focus on “luxury”, making it to integrate these two perspectives.

Firstly, there are researches published by management scholars, notably in marketing (e.g. Okonkwo 2007; Chevalier and Mazzalovo 2008; Chevalier and Xiao 2009; Kapferer and Bastien 2009; Tungate 2009; Berghaus et al. 2014). Most of these works provide useful knowledge on luxury companies. They focus on luxury brands and analyze how these brands are built and managed, and h...

Table of contents

• Cover
• Frontmatter
• 1. Introduction
• 1. Organizational Change
• 2. Markets
• 3. New Strategies
• Backmatter