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Luxury Accessories Silk market, upstream vertical integration, supply-chain, Made-in marketing

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20 pages
The current macroeconomic environment presents a strong global growth in the luxury market in general and specially in the accessories segment (ties, shawls, scarves) due to the demand from emerging countries.
French Groups (owners/holders of the main brands) play a key role. They are amongst the leaders in the sector due to the customers' perception value.
The European productive outlook related to these Luxury Groups, in the manufacturing and industrial sectors, is divided between a few Italian suppliers who organized themselves in order to offer a complete service to these Groups.
In France, there is only one organized structure of the chain (controlled by Hermes/HTH). All the other French suppliers, who are positioned as ‘third’ tier suppliers, only manage their know-how.
In order to improve their quality, creativity, confidentiality, timeliness and response to changes, some other Luxury Groups can be potentially inspired by the Hermes/HTH approach. This means combining a productive chain with a strong partnership, guided towards the upstream chain, with implications on the overall upstream chain.
Nowadays, the market offers the possibility of building an aggregated supply-chain for the manufacturing of textile accessories, controlling investments, while controlling the upstream processes of the value chain.
The purpose of the current study is to illustrate the possibilities of such a work based on the current competencies and experiences of the Luxury sector.
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ZeGroup-partners A w h o l e v i s i o n
Accessories products / Luxury market segment
Upstream Vertical Integration, Supply-Chain, Made-in marketing
ZeGroup-partners
Avec le temps et la patience, la feuille du murier devient de la soie
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2
Agenda
Executive Summary
Elements of the Environment AnalysisVision Business Idea Insights Key Concepts SupplyChain evolution Effects of Madein
Value Chain Analysis of key players in the luxury market
Strategic forces and advantages of the vertical integration …..
Opportunities and Threats of Current Strategies
Strategic Plan External analysis 5 forces analysis Threats and Opportunity
Potential ‘Movers’ of the Market: ‘Strategic commitment’ ofthe Chain (FranceItaly) Conclusions Proposal
Partners / Project TeamCore Competencies
References and Sources
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Executive Summary
The current macroeconomic environment presents a strong global growth in the luxury market in general and specially in the accessories segment (ties, shawls, scarves) due to the demand from emerging countries.
French Groups (owners/holders of the main brands) play a key role. They are amongst the leaders in the sector due to the customers' perception value.
The European productive outlook related to these Luxury Groups, in the manufacturing and industrial sectors, is divided between a few Italian suppliers who organized themselves in order to offer a complete service to these Groups.
In France, there is only one organized structure of the chain (controlled by Hermes/HTH). All the other French suppliers, who are positioned as‘third’tier suppliers, only manage their knowhow.
In order to improve their quality, creativity, confidentiality, timeliness and response to changes, some other Luxury Groups can be potentially inspired by the Hermes/HTH approach. This means combining a productive chain with a strong partnership, guided towards the upstream chain, with implications on the overall upstream chain.
Nowadays, the market offers the possibility of building an aggregated supplychain for the manufacturing of textile accessories, controlling investments, while controlling the upstream processes of the value chain.
The purpose of the current study is to illustrate the possibilities of such a work based on the current competencies and experiences of the Luxury sector.
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Executive SummaryVariables and context
‘Made-In’ marketing
Supply-chain (operators)
Product
Variables and context
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Market
Raw Materials
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Executive SummaryVariables and context
Variables
Product
Market
Raw materials
Supply-Chain (operators)
‘Made-in’ Marketing
Observations
Increasing demand (CAGR +10%), growth of the customer base Development of the‘perceived value’from the client side (immaterial part) Customers are paying attention to the different‘messages’of the luxury product (significant goods) Demand for a better global coherence from the luxury brands
Strong development of the luxury markets, despite the effects of recent economical crisis Necessary differentiation vs. Luxury Competitors vs. Fashion Sector Entry barriers on the retail market are becoming more flexible (development of Luxury on internet ) Internet accelerate the knowledge of brands, as well as comparing and perception of“brand message”
Increase of costs (direct and indirect) resourceLess availability of raw material of high quality, thus becoming a strategic Reduction of the number of suppliers able to handle high quality raw material (loss of sense of quality)
Decline of the European chain, instability of suppliers (reduction of the visibility over the continuity) Few players, concentration of some big ones (Italy) Fragmentation of SMEs which are not chain organized in France Complete chain in France, with knowhow and productive capacity controlled by Hermes (monopoly)
‘Origin’(Provenance) perceived by consumers as a key value (intangible) and as an element of coherence between the brand and its history and products element used for differentiation, providing an added value to the product and equity to the brandStrong Rapid evolution of regulatory framework, with enhanced constraints & protection
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Executive SummaryAnalisys / Vision
Upstream Vertical Integration
Supply-Chain organization
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‘Made-In’ Marketing
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Executive SummaryAnalisys / Vision
Parameters
Upstream Vertical Integration
Supply-Chain organization
‘Made-In’ Marketing
Objectives / impacts
To guarantee and ensure the high quality and quantity of supplies Leverage effect on differentiation, additional entry barriers (vs Competitors & New players) To acquire knowledge and culture of the upstream cost structure and to integrate the value chain To disturb /Upsetcompetitors’supplies, reinforce the bargaining power versus suppliers To guarantee confidentiality, products homogeneity and quality control, including global vision along the value chain
Control of an‘enterprise network’and of a knowhow (net of savoirfaire) Global vision along the entire supplychain Management of the complexities, make leverage on the capillarity for innovation and reactivity (coordination of complex products manufacturing) Allows to improve Corporate Social Responsibility thanks to a better control (i.e. avoiding the effect of third parties in domino, like thechinitaly’)
The Origin Labeling conveys the values of legitimacy and coherence The strategy of the Marketing of Origin, by leveraging on the intangible part (of the product), underlines the history background of the brand from which it draws its legitimacy and particularism Reinforces the coherence of the brand with an increase of‘brand esteem’and‘brand equity’ Increases the perceived value of the product and the brand Provides a‘productandbrand’differentiation in creative interpretation (vs «Fashion»)
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Executive Summary  Business Idea
Historic momentwith an increase in the demand of Luxury products, along with an important decline of the supply chain (network of savoirfaire) as well as a diminution of availability high quality raw material (tangible part of the product).
Strategic commitment / games theory (vs competitors, new players and suppliers)
Ensure the availability of supplies, consolidate the qualitative levels of raw materials and finished products
Reinforce positions in the upstream textile supplychain for Luxuryby organizing the control and the support of the supplychain thanks to Quality, Exigency and KnowHow,through an upstream vertical integration process with key suppliers, forming part of a process of‘skills clusters’
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Depth Study
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Key concepts
Brand perception
Differentiation and quality
Origin & “Made in”
… product aspects
Demand becomes more precise and demanding, entering a period where 'intangible investment' takes greater importance. Application of coherence between the brand and intangible content that Origin is a distinctive element.
Extreme need for differentiation in the market between competitors from Luxury vs Fashion industry. Need to leverage the intrinsic and meaningful product characteristics including the Excellence in quality.
Instrument of‘intangiblecontent in theproduct’; transmits a message. Part of the marketing levers to enhance differentiation.
Elements that contribute to increase the perceived value of products
Vertical integration
Adjustment to competing model
Privileged partnership with existing players
… sector aspects
The upstream integration consent vertical control on the availability and quality of raw material and confers a competitive advantage. It agrees to manage any difficulties in certain phases of the process, ensuring supplies and production capacity, and so the time to market. It guarantees the confidentiality of creation / innovation.
Vertical integration has already been activated by one of the actors (Hermes / HTH), which controls the only organized network existing today (France).
The objective is to coordinate (strengthen the link) some key players in the market, creating strategic partnerships strengthened or investing with them.
Need to activate strategic agreements with suppliers to ensure the possibility of establishing the sector and get the competitive advantage and considered positioning
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