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Why is France champion luxury and will continue to be

INTERVIEW Bénédicte Sabadie-Faure, partner in charge of Deloitte luxury, an update on trends in an industry that knows no crisis, in which France occupies a prominent place

Deloitte published Tuesday, May 13 the first edition of the Global Survey Global Powers of Luxury Goods, which ranks the players according to their luxury sales in fiscal year 2012. In this ranking, which lists 75 companies , France possesses 11. Bénédicte Sabadie-Faure, partner in charge of Deloitte's luxury sector, analyzes the main results of the study.

Reveals that the study on the health of the luxury sector?

The study shows that all these luxury groups are highly resistant to a decline in consumption and particularly the French groups. Indeed, in the top 10, we have 3 and when you make a focus on the 11 French groups present in the list of 75 best companies, they outperformed the market with 18.9% of growth against 14.3% in average for the 75 groups.

The place of France in the luxury industry is threatened?

Given the behemoths we have in France, conglomerates they represent number of brands, and the amount of barriers to entry into those markets (market access in premium locations, marketing, innovation , product quality), I do not think that France could be dethroned in the coming years.

What are the main trends driving the luxury sector globally?

The first is that the market is driven by tourism. For France, half of the sales of luxury goods comes from tourism and the tourists come first Chinese (which is not surprising because we know that 40% of the budget concerning Chinese travel shopping) and second the Russians.

Another major trend correlated to the first, knowing that luxury consumption is mainly driven by the BRICS (Brazil, Russia, India, China and South Africa, ed), luxury groups tend to go open stores locally in these countries because they have realized that it increases the consumption of tourists. But what has changed in recent years in their approach to emerging countries is that before they put in place comprehensive openings (for example, they said: "We opened in China") but now they follow a personalized approach city by city, for example by differentiating strategy implementation in Shanghai, and the establishment in Beijing. If consumers in the city are accustomed to the brand, the luxury groups open stores that offer their full range of products, but if they are cities that are not yet familiar with the brand, they offer only the input range. Similarly, brands adapt their products to local customs. Thus, Hermes has launched a line of saris in India and bought the high-end brand Shang Xia in China, which enables it to develop gradually its strategy in China based on this brand. L'Oréal also bought brands already well established locally, such as Yue Sai in China. They are all engaged in a more appropriate local strategy.

The third trend is that there is from brands that are not luxury brands, a propensity to buy more luxury goods. So the luxury brands are forced to differentiate by offering products and exclusive services such as customization. Thus, Louis Vuitton launched the House of luxury in Shanghai, where consumers make the invitation and the opportunity to buy bags designated as they wish. Similarly, on the occasion of his fall parade, Burberry allowed customers to order some products by customizing, which were delivered even before the launch of the collection in store.

Finally, some brands are also starting to play a lot with internet. When groups are not classified according to their turnover, but according to their growth, results are very different. Michael Kors tops, with 65% growth in sales in 2012, which is huge. It is followed by Tory Burch, which shows 56% growth. But when we look at these two brands have done, we realize that they are both very efficient in the use of internet. For example, Michael Kors makes extensive use social networks and advertised on Instagram. Most luxury groups studying many internet. They are forced to go given the rejuvenation of their clients.

For this study, we relied on 2012 figures because we wanted to cover a very wide range of groups. But with the few data we have for 2013, we already see that the major trends in 2013 are not very different from those of 2012.

How is it that luxury companies stand despite decline in consumption?

Mainly through the consumption of customers from the BRICS. When we look at the types of consumers in these countries, a phenomenal enrichment of the middle class is observed. Mature countries are in search of luxury experience rather than purchase. But for emerging countries, which are the new rich, without falling into clichés, seeking above all the attributes for the rich flaunt their purchasing power. And contrary to what one might think, this part of the population does not decrease. When looking at the number of individuals of the so-called class A in the BRIC, it is increasing.

What are the main challenges ahead for the luxury sector?

First of all this will be the true development of differentiated services.Consumers are waiting innovative things. Increasingly, luxury groups openstores that are mostly "flagships", allowing an experience.

Then it will be to manage all the online portion that is still at the beginning, because consumer expectations are very high.

Finally, there will be a subject of access to resources. Groups make a lot of backward integration to secure know-how, but also to secure access to raw materials. For example there is a scarcity of skins. There is also a subject of downstream integration. To appear as premium brands, they must get to keep branding on the entire chain until time of purchase. In fashion, the groups are settled in this strategy and they usually have own stores, but this is less the case for the other branches of luxury. It is being set up in jewelry.For example Swatch bought stores in.

This growing integration does lead to an increase in the number of mergers and acquisitions in the luxury sector, as well as that observed in other sectors such as industry or telecom ?

Clearly, yes. All luxury groups are engaged in the acquisition of local brands well established. In parallel, many investment funds, including Qatar, are interested in the sector. And it is expected that this trend continues.