CPP-LUXURY.COM interviews exclusively Luca Solca, Managing Director (Sector Head Global Luxury) EXANE BNP Paribas
What do you make of the recent reports on the slowing growth of the luxury fashion power-players?
Luxury market growth is structurally moderating, as GDP growth in China moderates and the headroom to driver retail penetration deeper in that market is modest.
Which are the key factors which have been contributing to this slow-down in growth?
1) Store development in China has reached an appropriate level, the “land grab” is virtually over.
2) GDP growth in China is moderating.
How do you see full year 2014 performance of these major luxury companies?
I expect moderate progression, with market growth between 5% and 6%, but strong FX headwinds given the EUR strength.
Are there still any ‘’recession proof’’ players?
I don’t expect a recession scenario in FY14E at present.
Diversified companies – like LVMH and CFR – enjoy the fact that different categories are not in synch.
Hermès enjoys the fact that it “starves” the market of its top selling products, and could during a recession open the tap just a little bit more.
Besides store closures, what do you think luxury companies should do in China to revive their business performance?
What companies have announced makes a lot of sense. Limiting store expansion and working to support brand desirability and product excellence is key.
Lobbying to reduce taxation in China and getting prices on a more level playing field with Europe could also be a good idea.
Please name 5 luxury markets which boast the highest potential of growth in the mid-term?
China, South East Asia, Middle East.
What is your take on the mid-term performance of the mature markets? Europe, U.S. and Japan
I see the USA, Japan, and Europe – in this order of performance.
How do you see the perspectives of the development of India’s luxury market in 2014? Many top luxury brands are not yet present.
Negligible at best. India is saddled with huge import duties. As long as those stay, the Indian market will count for nothing.
More from ANALYSIS
Social media has changed the way individuals interact with each other and gain information about the world, but some of the biggest …
How to deal with the big yet complicate business of fragrances: let’s think outside the bottle! Ask any woman about fragrances …