AFFORDABLE LUXURY: SUPPLIERS Unlock the full potential...


percentage of travellers are unable to afford luxury or anything like it”. Christian Hoffmann, Marketing


Director at Capella Industries points out that consumers in South and Central America, and emerging African travel retail markets, together with the rapidly-growing Asian middle classes are all avid consumers of affordable luxury.


Stock levels and ranges from market to market can represent a challenge to pricing strategies, says Deloitte.


“Affordable luxury is a category to use to increase footfall, conversion and basket size within each store.”


Mathias Landin, Regional Sales Manager Europe & IMEA - Travel Retail, Daniel Wellington


Martin Lovatt, Managing Director


Martin Lovatt, MD, Magnify Brands.


at Magnify Brands explains that true luxury items are “bought infrequently”. As a result, we are seeing “a huge influx of unknown watch and jewellery brands coming to market which have quickly become established names within retail, driving volume sales through the tills”. Lovatt describes how “on-trend,


good quality, well priced products” are what people desire. “Brand is becoming less important


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– especially within the sub £150/$200 category,” he adds. Gerry Munday, Global Travel


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Retail Director at Furla agrees: “Until recently, the talk within the industry was all about ‘luxury’, conveniently forgetting that a significant


their prices; by March 2017 headline prices in the UK were 5% higher for like-for-like items and a further effective 5% rise was achieved by


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Based on responses from over 1,300 luxury consumers across 11 countries. Source: Deloitte Luxury Multicountry Survey for Global Powers of Luxury Goods 2017.


38 TRBUSINESS


EU membership referendum in June 2016, the pound fell by 18% against the US dollar, according to BenchMarque analysts. “Brands responded by raising


Pricing sensitivity Developing the conversation, Munday notes: “It’s easy to focus within retail on high-spending nationalities such as the Chinese, but circumstances are changing all the time – the anti-corruption and austerity policy in China and the effect of the economic downturn on spending by the Russians.” “The austerity clampdown was an


issue for higher-end luxury brands, so in this case with Furla being an inclusive luxury brand, we were not affected.” She


continues: “The


demonetisation in India obviously affects sales in all markets in India.” Data from BenchMarque, luxury


Deloitte’s pricing


analytics suite, shows that luxury goods companies respond to currency movements in order to maintain their pricing structures between countries. In the weeks following the UK’s


Daniel Wellington Cambridge travel retail exclusive combo.


replacing existing inventory with higher-priced products,” according to BenchMarque analysts. “Conversely, when the rouble


appreciated during 2016, companies cut the prices of their luxury goods in Russia by over 11% to remain competitive. However, there remain significant regional price disparities within the luxury goods market”. “Despite


increasing


internationalisation, US dollar- adjusted prices for equivalent items are on average over 50% higher in China than in Italy and France. This presents a clear arbitrage opportunity for travellers from Asia, and maintains the pre-eminence of European brands’ home markets as shopping destinations.” According to BenchMarque,


“although a premium is charged in Asian markets for all brands, pricing strategies vary and the price difference between China and France varies from just 20% to over 70%, depending on the brand”. The findings also reveal that the


highest premium is on watches and jewellery (55% on average) and the lowest is for bags (40% on average). This indicates that many luxury


brand owners may choose to optimise their price range for select travel retail markets to find a more ‘affordable’ route to sales growth.


Exclusivity reigns Fabrice Dessart, Regional Director at Retrail, believes the industry could be held back by retailers’ ‘conservative approach’ in not trying something new and taking risks, instead opting to showcase the same brands time and time again. If “everything looks the same” and there are no “novelties and


FEBRUARY 2018


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