In order to supply customers with the growing demand of luxury, luxury retail is
gaining importance on a global scale. More and more new luxury companies and retailers enter the global market and thus render it more competitive. Additionally, the financial crisis has struck many luxury companies and retailers that thought themselves safe from market and demand fluctuation very hard – pushing some to the verge of bankruptcy.
This increases the necessity to make use of resources as wisely as possible and to control costs and investments. But how does this affect luxury businesses?
Table of Contents
1 Introduction
1.1 Problem Definition and Objective
1.2 Course of the Investigation
2 Theoretical Foundations
2.1 Conceptualizing Retail Performance Management
2.1.1 Two Main Guidelines of Enhancing Performance
2.1.2 Target Values and Key Figures
2.1.3 Performance Pyramid
2.1.4 Balanced Scorecard - A Management Instrument
2.2 Concepts of Luxury
2.2.1 Definition of Luxury
2.2.2 Features of Luxury brands
3 Changes in the Luxury Retail Industry
3.1 Recent Economic Developments in the Luxury Industry
3.2 Changes on the Demand Side
3.2.1 Purchasing Power’s Impact on the Luxury Industry
3.2.2 Customer Needs
3.2.3 Shopping Behaviour
3.2.4 The Neo-Wilde Consumer
3.3 Changes on the Supply Side
3.3.1 Flagship Stores
3.3.2 Multi-brand Stores
3.3.3 Online Shops
4 Transferability of Retail Performance Management into Luxury Fashion
4.1 Product Quality & Availability
4.1.1 Sustainability
4.1.2 Logistics: Supply Chain Management
4.1.3 Logistics: Ordering
4.1.4 Distribution Channels & Target Group
4.2 Sales Personnel & Service
4.3 Shopping Experience & Store Policy
4.4 Practical Application of Retail Performance Management
5 Conclusion
Research Objectives & Topics
The main objective of this thesis is to analyze the extent to which retail performance management tools can be applied to the luxury fashion industry, specifically examining the balance between cost-cutting (downscaling) and investment (upscaling) strategies. It addresses the research question: "To what extent can retail performance management be applied to the luxury fashion industry in terms of up- and down scaling?"
- Theoretical conceptualization of performance management tailored to the luxury sector.
- Analysis of recent economic developments and their impact on luxury retail.
- Examination of changing consumer behavior, introduced as the "Neo-Wilde Consumer."
- Evaluation of supply-side changes, including flagship stores, multi-brand retailers, and e-commerce.
- Practical assessment of performance management tools via case studies and expert interviews.
Excerpt from the Book
3.2.4 The Neo-Wilde Consumer
Industry experts perceive a shift back from the carefree – and at times careless – recreational shopper more careful and cost-conscious shopping and customers to really demand more value from a retailer (Asbrand-Eickhoff, 2010; Pilnick, 2010). A changing trend back to traditional values can be perceived, on Duesseldorf’s Koenigsallee as well as on New York’s Fifth Avenue. According to David Pilnick (2010), the biggest difference perceived is that the aspiring luxury customer has left Saks’ business. It has gone back to a true luxury how it was before the economic bubble. Core luxury clientele are much more discerning about their purchasing decisions. They buy more timeless investment pieces now, rather than short-lived brands and thus, brands such as Chanel and Hermès featuring a very good sense of craftsmanship, history, and uniqueness about the product experience hardly any impact by the economic crisis (Pilnick, 2010). In fact, Hermès is one of the few brands without a broader portfolio still withstanding the crisis (Simonian, 2009).
Astonishingly, across the pond in Düsseldorf, exactly the same phenomenon can be described. “At the beginning of the 21st century there was a certain hype reaction, resulting from a healthy stock market at Wall Street, good economic orientation, etc. It resulted form this certain waves of fashion, for instance Ed Hardy and other so-called “Glam Rock Chick”. But since one year we have definitely observed that our customers display a much more sensible approach to shopping.” (Asbrand-Eickhoff, 2010). Since this crisis, the customer is searching for security and a certain value of the brands he purchases, as well as brands with a prestige, such as Dior, Dolce & Gabbana, Hermès, Chanel, and Gucci. Those brands have a very strong exchange value (Mattmüller & Tunder, 2004) The customer knows about the long tradition, as well as the fact that those products will be timeless and have fashion competence for years. Customers nowadays not only buy top-class quality, craftsmanship and tailoring, but also a good brand. Customers nowadays value the valuable (Asbrand-Eickhoff, 2010; Mattmüller & Tunder, 2004; Gibson, 2010).
Summary of Chapters
1 Introduction: Introduces the research problem, objectives, and methodology for investigating performance management in the luxury retail sector.
2 Theoretical Foundations: Details conceptual frameworks like the Performance Pyramid and Balanced Scorecard, adapted for luxury retail, and defines the concept of luxury.
3 Changes in the Luxury Retail Industry: Analyzes economic, demand-side, and supply-side shifts, including the emergence of the "Neo-Wilde Consumer" and evolving distribution strategies.
4 Transferability of Retail Performance Management into Luxury Fashion: Evaluates the practical application of management tools by analyzing quality, logistics, distribution, and service through case study interviews.
5 Conclusion: Summarizes findings and hypotheses, noting that while luxury brands avoid downscaling product quality and service, they are increasingly focused on efficient supply chain management and brand extensions.
Keywords
Retail Performance Management, Luxury Industry, Balanced Scorecard, Performance Pyramid, Neo-Wilde Consumer, Luxury Retail, Consumer Behavior, Supply Chain Management, Brand Controlling, E-commerce, Customer Satisfaction, Masstige, Luxury Branding, Cost Management, Retail Strategy
Frequently Asked Questions
What is the core focus of this thesis?
The work focuses on investigating whether traditional performance management tools, typically used in general economics, can be effectively adapted and applied to the luxury fashion retail sector without compromising the brand's premium image.
Which industries are central to this research?
The research primarily covers the luxury fashion industry, specifically focusing on luxury brands, department stores, and jewelry retailers like Tiffany & Co., Saks Fifth Avenue, and Modehaus Eickhoff.
What is the primary research question?
The thesis asks: "To what extent can retail performance management be applied to the luxury fashion industry in terms of up- and down scaling?"
Which methodologies are employed?
The author uses a qualitative research approach, combining literature reviews on performance management tools with primary data collected through expert interviews with representatives from global luxury retailers.
What are the key elements of the main part?
The main part analyzes product quality, supply chain management, distribution channels, and sales service, evaluating how companies balance the need for profitability during economic downturns with the necessity of maintaining luxury standards.
Which keywords characterize this work?
Key terms include Retail Performance Management, Luxury Industry, Neo-Wilde Consumer, Balanced Scorecard, and Performance Pyramid.
What is the "Neo-Wilde Consumer"?
It is a term developed by the author to describe a new generation of luxury consumers who have emerged post-financial crisis, moving away from "fast fashion" and disposable trends toward more discerning, value-oriented, and long-term investment purchases.
How do luxury retailers manage markdowns?
The study reveals that while some retailers use markdowns, top-tier luxury stores strive to avoid them entirely to protect brand equity, often utilizing sophisticated re-order systems to align inventory with actual demand.
- Quote paper
- Janna Schubert (Author), 2010, Retail Performance Management in the Luxury Industry, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/294170
