Saithia

🧠Key takeaways
from BoF’s article: Luxury’s Race to the Top, published the 4th of May 2023

💎 Savigny Luxury Index (SLI)

The SLI is a crucial benchmark that tracks the performance of the luxury goods industry. It comprises the 17 biggest luxury goods companies.

📊 Market Dominance: LVMH vs. Kering

The top 5 companies in the SLI generate nearly 80% of total sales and own 142 out of 190 brands. LVMH stands out, accounting for 42% of revenue, surpassing its closest competitor, Kering, far behind at 11%.

💰 Profitability of Larger Companies

Larger companies are more profitable, thanks to economies of scale and persuasive negotiating positions. The top five SLI companies achieved an average EBITDA margin of 31.2%, vs. 20.6% for the rest of the index.

🌟 Strategic Brand Portfolio

A diversified brand portfolio offers strategic advantages in the luxury industry. It enables synergies, risk diversification and allow mitigating brand fatigue by pushing a fresher one when another cools off.

🌱 Opportunities for New Players

Although major luxury conglomerates dominate the industry, new players still find room to thrive. The beauty sector, in particular, presents opportunities for faster growth through multi-brand retailing.

🔍 Acquisition Targets

Rather than becoming consolidators themselves, smaller luxury companies such as Prada, Moncler, Coach or Tapestry are more likely to become acquisition targets.

⚖️ Mixed Performance in Luxury Market

The luxury market’s recent performance showcases a mixed bag of successes and challenges. Hermès, Brunello Cucinelli, and Moncler stand out with remarkable revenue growth. However, Ferragamo and Capri Holdings face declining sales.

📖 Source

Business of Fashion, May 04, 2023, Luxury’s race to the top, by Pierre Mallevay.
Capital IQ, Data as at March 31, 2023.

📚Follow us for more fashion merchandising insights.
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Glossary: Glocal

💡Glocal is the merging of “global” and “local”.

📍In fashion, it refers to adapting a collection to meet customers' preferences in a specific region.

🌍Globalisation brought uniformity in trends and customer behaviours, but local specificities still thrive. Understanding these nuances becomes a valuable business opportunity for brands.

⚖️ By blending global influences with local sensibilities, the concept of glocal aims to find a balance between catering to broader global trends and addressing the unique demands of local markets.

🔑The key lies in maintaining a consistent brand identity while catering to specific market demands. This delicate equilibrium allows brands to ensure global success.

🧬 Responding to local needs doesn’t mean compromising the overall aesthetic and brand coherence. Adapting a little while staying true to your DNA is key.

👉🏼Follow us for more fashion merchandising insights.

⛱️What are the coolest sport slides to wear this summer?

🦶🏻Salomon - RX Slide 3.0
🦶🏻Asics - Actibreeze 3D
🦶🏼Hoka - Ora Recovery Slide
🦶🏼Fear of God x Birkenstock - Los Feliz
🦶🏽Suicoke x Bodega - Kaw-Cab Slide
🦶🏽Keen x Atmos - Uneek
🦶🏾Salehe Bembury x Crocs - Pollex Clog

💡Are there any other slides you’d like to include?

👇🏻Let us know in the comments section below.
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🧠Key takeaways
from McKinsey’s article "Great merchandising never goes out of fashion", published the 15th of Match 2023:

💡Given the current economic environment and unprecedented uncertainty companies are facing, the need to get Merchandising right is even more urgent than usual.

💡Merchandisers should simplify their assortments.

Cut the number of annual collections and reduce the number of total SKUs.

Extend product shelf life to maximize sell-through and minimize markdowns.

💡Digital engagement increases consumer appetite for newness but the volatility of demand too.

As a consequence, novelty products’ lifecycles are contracting.

💡In response, merchants should ensure :

Earlier alignment with Production and Marketing.

Distinct go-to-market calendars for newness and carry-overs.

An increased in-season flexibility.

💡Walk the talk on Sustainability.

Merchandisers have a key role to play here. They can reduce waste by limiting overdevelopment, prioritizing sustainable materials, design for circularity, and ensure a conscientious supply chain.

💡Decelerating e-commerce growth and rising digital marketing costs require recalibrating distribution channels (retail, e-tail, wholesale, marketplaces) and defining individual assortment strategies for each.

💡Data and analytics continues to be a key focus area for Merchandising. Since few off-the-shelf end-to-end process management softwares are available, companies should build custom solutions to remain competitive.

💡Applying integrated digital solutions to Merchandising could
lead to up to:

50% faster time to market

8% rise in sell through

20% decline production costs

🍾Embedding a more agile merchandising capability that creates flexibility will allow brands to manage through the downturn and respond effectively to the return of growth.

🗞️The original article appeared on www.McKinsey.com. The authors are David Barrelet, Matthew Chapman, Erik Eklöw, Julia Huang, Felix Rölkens, and Hannah Yankelevich.
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