FAST FORWARD
YOUR ROUTE TO
CONSUMERS
April 8th, 2017
HIGH-QUALITY DESIGN ON A STEADY GROWTH
PATH SURPASSING PRE-CRISIS LEVEL
CAGR +4%
CAGR -9%
CAGR +4%
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16E
YoY Growth:
+3%
-1%
+4%
+9%
YoY Growth @ constant exchange:
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
+4%
2
ALL SEGMENTS WITH POSITIVE PERFORMANCE IN 2015,
LIVING AND BEDROOM THE WINNING CATEGORY
CATEGORIES
GEOGRAPHIES
CHANNELS
'15
'15
'15
'16
'16
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
'16
3
YET, DESIGN STILL REPRESENTING A SMALL PORTION
OF THE GLOBAL LUXURY CONSUMPTIONS
4
%
OF TOTAL
LUXURY
Personal
Luxury
Goods
Luxury
Cars
Luxury
Hôtellerie
Luxury
Wines &
Spirits
Luxury
Food
Fine
Art
HighQuality
Design
Luxury
Private
Jets
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
Luxury
Yachts
Luxury
Cruises
TOTAL
2016E
4
BRANDS IN DIRECT CONTROL
-
+
• Enlarging luxury
customer base with rising
middle class of emerging
market
• Shifting consumption from
unbranded to branded
high-end furniture
• Conquering of further
away high potential
underpenetrated
geographies
• Taking ownership of
contract business
HIGH-QUALITY DESIGN
HAS A STRONG LONGTERM POTENTIAL
3
X
'16E
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
LONG TERM
POTENTIAL
5
BUT TO DO SO IT MUST
MOVE INTO ITS NEXT
STAGE OF DEVELOPMNET
High-quality design & interior design markets vs
luxury consumers spending by geography (2015|€B)
• The industry is made up
predominantly by small and
independent pure design
players (average size ~60M€),
often very specialized (almost
80% are mono-category) and
stuck in a "manufacturing
mind-set"
• Most players are European,
struggling to serve a global
consumer outside of their
domestic market, because of the
difficult route to market
• Limited profitability, compared
to other luxury segments, limits
necessary investment to
overcome route-to-customer
complexities
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
6
TODAY DESIGN RETAIL PRESENCE IS STILL MARGINAL
WHEN COMPARED TO PERSONAL LUXURY
Mono-brand network of pure
design brands
Mono-brand coverage of design
brand vs personal luxury brands
Personal luxury
goods
~20.000 stores
Pure
design
brands
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
7
BUT EVEN IN PERSONAL LUXURY, THE RETAIL
EQUATION IS UNDER STRESS
• Traffic in store declining across the board
RETAIL
SALES
OPEX
=
EBITDA
- Reduced tourist flows due to price harmonization
- At global level off-price stores are the only ones to strongly attract
consumers
- The e-commerce channel is booming on two key drivers: bargain
and convenience, aka the opportunity not to visit a physical store
• Conversion rate flat on the surface but strong polarization
with players fighting to engage with more opinionated and
demanding local customers
• Full price sales decreasing due to the higher incidence of in
season mark down
• Rent costs increasing in top locations as brands fight for the
top spot to intercept the dwindling traffic
• Marketing costs increasing in order to support new customer
engagement strategies
• Channel profitability suffering with polarization between
brands that have managed to adapt to the new environment
(experience and omni-channel) and those that haven't
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
8
YET PERSONAL LUXURY BRANDS ARE REASSESSING
THEIR ROUTE TO MARKET
Global Personal Luxury Goods Market by channel &
format (2016E|€B)
Real terms trend
+13%
+26%
+23%
IN THIS PIVOTAL MOMENT FOR RETAIL, DESIGN BRANDS SHOULD
THINK OUTSIDE OF THE BOX TO DEFINE A FORWARD-LOOKING
HOLISTIC ROUTE-TO-CUSTOMER
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
9
TO UNLOCK THE POTENTIAL, DESIGN BRANDS MUST
LOOK AT WHO WILL BE THE FUTURE CONSUMER….
Luxury consumers share by generation
(2016F-25F|#)
TODAY MILLENNIALS
ALREDY REPRESENTING
35% OF LUXURY
CONSUMERS
OLDER
GENERATIONS
GEN X
MILLENNIALS
35%
'16
58%
IN THE NEXT 10 YEARS
MILLENIALS AND
GENERATION Z WILL
REPRESENT 65% OF
CONSUMER
GEN Z
'25
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
10
… AND AT HOW TODAY'S CONSUMERS ARE ALREADY
EVOLVING
MILLENNIAL IS A STATE OF MIND
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
11
WHAT DESIGN BRANDS SHOULD BE LOOKING
OUT TO AND START PREPARING FOR:
1.
SEAMLESS expectation
2.
EDITED for ME
3.
COMMUNITY: need for belonging
4.
I must EXPERIENCE IT
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
12
1
.
SEAMLESS expectation
CONSUMERS THINK BRAND-FIRST:
A SEAMLESS & CONSISTENT SHOPPING EXPERIENCE
IS MORE IMPORTANT THAN WHO IS ACTUALLY INVOICING YOU
ONLINE AGGREGATORS OF PHYSICAL MULTIBRAND STORES ARE ABLE TO DELIVER A UNIQUE EXPERIENCE TO
CUSTOMERS, MOST OF WHOM THINK THEY ARE BUYING FROM A SINGLE STORE
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
13
2
.
EDITED for ME
UNLIMITED CHOICES ARE LESS EFFECTIVE THAN A CURATED
SELECTION, ESPECIALLY WHEN LEVERAGING THE SAME EFFICIENCY
ONLINE STARTUPS ARE USING AMAZON AS A LOGISTICAL PARTNER WHILE CRAFTING A RADICALLY
DIFFERENT CUSTOMER EXPERIENCE ON THEIR OWN PLATFORM, EDITING PRODUCTS IN ORDER TO INSTANTLY
APPEAL TO CUSTOMER NICHES
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
14
3
.
COMMUNITY: need for belonging
STORES CAN BECOME
YOUR COMMUNITY CENTRE
YOGA SPECIALIST RETAILER ENGAGES
DIRECTLY WITH ITS LOYAL COMMUNITY THAT
SHARES THE SAME VALUES AND PASSIONS:
• SHOP ASSISTANTS ARE MEMBERS OF THE
SAME COMMUNITY AND ARE TRUSTED IN
THEIR ADVICE
• STORE BECOMES GATHERING PLACES TO
SERVICE OF THE COMMUNITY ORGANIZING
YOGA SESSION AND OTHER RELEVANT
INITIATIVES
• THE PRODUCTS SOLD IN STORES ARE TRUE
TO THE VALUES OF THE COMMUNITY
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
15
4
.
I must EXPERIENCE IT
YOUR STORE IS WHERE THE CUSTOMER CAN FINALLY GET A CHANGE
TO EXPERIENCE HIS OR HER OWN PASSIONS
APPLE'S NEW STORE CONCENPT IS CENTERED AROUND ENABLING PEOPLE TO DEVELOP THEIR OWN
PASSIONS AND SKILLS THORUGH FREE CODING COURSES, PHOTOGRAPHY SEMINARS, CONCERTS AND MUSIC
CLASSES AND MUCH MORE STILL TO COME
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
16
TODAY DESIGN BRANDS HAVE YET TO RESPOND TO
MOST EMERGING CONSUMER TRENDS
DESIGN BRANDS TODAY
SEAMLESS
expectation
EDITED for ME
Intermediated route to consumer
Widest choice to the peril of a
brand POV
COMMUNITY:
need for belonging
The interest is there, the
cultivation of a community not fully
I must
EXPERIENCE IT
Transactional showroom for rare
consumer need
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
17
IT IS PARAMOUNT TO RETHINK THE CUSTOMER
JOURNEY AND THE ROLE OF RETAIL WITHIN IN
START
AWARENESS AND
CONSIDERATION
CONVERSION
ARCHITECT
INTERIOR DESIGNER
DEALER
INFLUENCER/PRESS
B2C
NEED
A specific and
infrequent
purchasing need,
not initiated by the
brand or the store
itself
CONTRACT
High level of
intermediation
STORE
Store marginal role, crossing only
some customers and their journeys
PARALLEL JOURNEY, LESS DEPENDENT FROM CONSUMERS
AND WITH MARGINAL ROLE FOR RETAIL
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
18
THE STORE MUST BE RE-THOUGHT TO BECOME THE
EPICENTRE OF MULTIPLE & DIFFERENT JOURNEYS
SHOWROOMING
• Chance for the customer to
directly experience the
product
"OUT OF STORE" CONVERSION
• Small satellite spaces
Increases brand awareness
& consideration
• Leverage on online to drive
brand awareness and
consideration
• May lead the customer to seek
additional experiences in
stores
Further opportunities for
showrooming through
contract
• Advance CRM of architects
involved in contract prescription
EXPERIENTIAL
NONTRANSACTIONAL
INITIATIVES
IN STORE
TRAFFIC
CONVERSION
STORE EPICENTRE
PROJECT SPACE
AND STAFF FOR
PRESCRIBERS
TRAINING TO
DEALERS
• Direct support in the planning
and prescription of brand
product
• Tailored catalogues based on the
specific industry/ sectors/
client type needs
Creates promoters
among prescribers
PRESIDIUM OF CONTRACT PRESCRIBERS
- Leveraging on augmented reality
to overcome the need for large
retail surface
- These may also be within
wholesale space
• Brands architects directly to the
customer's home
• Shortening of customer journey,
reduced level of intermediation
Drive traffic to dealers
• Provide support to dealers and
wholesalers:
- Tailored/ edited catalogue for the
local customer and needs
- Trade marketing
- Advanced configurator
- Rapid catalogue access
- Direct communication tool with the
brand
DEALERS LIKE RETAIL
A VIRTUOUS CYRCLE CENTRED AROUND A STORE EPICENTRE
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
19
…SO TO ADDRESS ONGOING CHANGES IN
CONSUMERS
SHOWROOMING
COMMUNITY: need
for belonging
I must
EXPERIENCE IT
Further opportunities for
showrooming through
contract
"OUT OF STORE" CONVERSION
Increases brand awareness
& consideration
EXPERIENTIAL
NONTRANSACTIONAL
INITIATIVES
STORE EPICENTRE
PROJECT SPACE
AND STAFF FOR
PRESCRIBERS
EDITED for ME
TRAFFIC
CONVERSION
TRAINING TO
DEALERS
I must
EXPERIENCE IT
Drive traffic to dealers
SEAMLESS
expectation
EDITED for ME
Creates promoters
among prescribers
PRESIDIUM OF CONTRACT PRESCRIBERS
SEAMLESS
expectation
DEALERS LIKE RETAIL
A VIRTUOUS CYRCLE CENTRED AROUND A STORE EPICENTRE
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent
20