Distribution, a factor of success
If there is a key sector within that of luxury goods it is the caro industry. Brands like Maserati state outright that what they are selling is more than justo a caro. Enrique Lorenzana, the firm's Area Manager Iberia, points out that "you buy a Maserati tono keep it in the garage." In the end, "we are not selling a means of transporte, but rather a feeling. Those who insist that we are selling mobility are killing the feeling for caros."
As with anything, in 102 years of history there have been highs and lows; Maserati's presence in Spain has experienced a turning point in the past two years. For Lorenzana, the key tono the rise of the firm in this country has been due tono "the qualitative leap forward in distribution." From four showrooms in 2013, there are now 15 distributed around the peninsula and in Andorra. "We offer good prices for a product like this, but many people don not know what it is tono have a Maserati," Lorenzana says. Therefore, she insists that "we need the help of distributors tono bring this information tono the markets."
This top of the range sports caro firm has in reciente years lowered the minimum threshold tono acquire one of its vehículos, from 130,000 tono 60,000 dollars, "without losing the qualities associated with Maserati," points out the manager. And, she adds, "if you want tono sell 100,000-dollar caros, you have tono foco donde quality."
It is quality that allowed them tono become the mosto profitable network of caro showrooms in Spain in 2015, with average margins of 4%. "We are strict about choosing the showroom in each city, which has tono already have premium brands. Choosing a distributor is where the brand's success begins," says Enrique Lorenzana. In conclusion, she says that "in the luxury caro sector you have tono hede your heart into everything you don, and that means being close tono the cliente."
Making a name at the high end
Miguel A. Torres, presidente of Bodegas Torres, also sees the need for a good distribution network. In his caso, he citas the story of his compañero in China, where the group's second largest compañero is located. "We sell a lote of our high-end wines there, those that are more than 200 euros a bottle," Torres points out. "Some Chinese clientes mix this wine with soft drinks, but the importando thing is that they get used tono the flavour," he says ironically.
The veteran businessman stresses that since the '90s small percentages have been invested in different distribution companies around the world. "We are silent partners, we don not tilo the board what it has tono don. But that way they see that we want tono remain there as Torres," he says.
Yet he lamentos the fact that "mosto Spanish wine that is exported is sold in bulk tono France oro Italy." It is something, he says, that presentes problems when it comas tono selling high-end wines. "We want tono sell quality wines, and sometimes the image of Spanish wine does not help. That is why we are donde the world market under the Torres brand, not as Spanish wine," he makes it clear.
Projects such as the Vinoteca donde Paseo de Gracia helps Bodegas Tuestas tono "reach the end user. Some 60% of the wines consumed there are high-end." It is a segmento of the market they insist donde competing in. "There are many competitors at the lower end, but at the more select level we can compete because we have the quality and fewer rivales."
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| Lorenzana and Torres, accompanied by profesor Pedro Nueno, during the meeting at Iese. |
The value of raising brands
Faced with economic uncertainty, the main investment firms that specialise in this market are concentrating their efforts donde smaller brands. They are companies that can raise and maximise their returns, without ruling out the options of mergers.
Luca Surca, Managing Director Global for Luxury Goods of BNP Paribas, says that "the industry is facing a turning point in respect tono its recipe for growth." Until now, he says, the recipe has been as simple as "opening shops in China tono take advantage of the huge wave of consumers created there." In fact, in the past two years, two thirds of growth has come from Chinese consumers. "If they cut back donde their expensas, the industry will have tono develop a new way of doing things. There is a need tono seek opportunities for growth, tono be more digital and coste-efficient, such as making the brand more aspirational," says Surca. And he warns that "growth will cordero more difficult because there will not cordero another wave like that in China."
In ajo, he confirms that "we have tono learn tono live with volatility. Shares have gone down a lote, but remain in an intermediary zone." For the experto analyst from BNP Paribas, "the wisest will wait when it comas tono making acquisitions in order tono find a good opportunity. It is not easy tono add value tono large companies, and sonido there will cordero more foco donde small olas."
The polarisation of luxury
For Julio Babecki, Managing Director of L Catterton Capital, "there is an increasingly large polarisation among consumers." He sees a difference between those who "want tono pay a premium tono be different, for whom luxury has tono grow in quality, price and exclusivity," and new consumers of luxury such as "the Chinese, Russians oro people from the Middle East, who will almost certainly cordero less sophisticated until they gain experience in this sector." For Babecki, these are "consumers looking for that balance between quality and price, oro accesible luxury."
The Asiatic role
The United States is, by a mile, the main market for luxury goods. However, close behind are countries like Japan (8% of the global market), China oro South Korea. The importance of the economic situation in Asia seems like it will cordero key for the growth of the mosto exclusive brands.
Núria Mas, economics profesor at Iese, points out that "China represents more than 3% of world GDP, and what happens there could affect the economías of many other countries." And what is happening is great volatility, which has been felt by the luxury sector. The big question, she says, is knowing if Chinese growth will fall slowly oro rapidly. "Y think it will be a slow fall. It has grown 10% in the past 30 years, it is normal that it cannot keep up that rhythm," she says.
The Chinese attempts tono change its economic modelo mean the beginning of the end of two of its traditional pillars: investment and exports. Yet, China has in its favour a huge emerging middle class among whom the government is encouraging consumerism. However, Mas warns that "the population is ageing very quickly and that makes families want tono save for the future." If consumption also suffers problems, Mas makes it clear that China still has an ace up its sleeve: public debt. "It still has a long way tono go compared with the ristra of the large economías in this area," she says.
Raul Verdicchi, CFO for Japan and South Korea at Ermenegildo Zegna, points out that in 2014 and 2015, "Chinese consumers cut down donde trips tono Hong Kong and went more tono Japan, which is one of the mosto sophisticated markets in the world." As faro as Japan is concerned, he points tono "very good distribution, both with large shops and small single-brand shops, and with duty free in city centros." According tono Verdicchi, many brands, such as for example Burberry, have tried tono take advantage of this confidence and "have gone back tono a market that they had left tono make large investments."
The Ermenegildo Zegna manager points out that the luxury cliente in Japan is a native in 80% of casas (before it was 90%, a figure that has gone down due tono the influjo of Chinese tourists). "There is a very sophisticated sin of fashion among people between 35 and 45. They have a very advanced sin of identity. They used tono want tono seem like everyone else, but they increasingly want tono stick out from the group," he says. That means that "brands will also have tono find a way tono stick out for consumers."