Retailers should focus on the core products that they are known for and be careful not to exchange their credibility for hard discounting, as they continue to battle today’s tough economic conditions.
That was the advice from Concetta Lanciaux, CEO of Strategy Luxury Advisors and long-time LVMH stalwart, in an interview with the World Retail Congress.
“When the market is contracting you have to fight to gain market share. You do so by adding creativity to your core product line and not new lines, brand extensions or promotional items. You need to focus on what you do best. Become really customer centric and consider a CRM program adapted to your business. Control your selling expenses. Since most retail costs are fixed, focus on reducing controllable costs,” she said.
Lanciaux said once the recession is over retailers will go back to classical strategies, either differentiation or volume with value for money, and brands will sell more of what they know and are known for.
“Brands that try to get rid of stock by hard discounting will lose credibility and have a hard time getting customers to pay full price in the future.
“Customers are buying items now at 70 per cent discount. This means that a few months from now they will no longer trust the brands that are shown not to have a durable value. Customers will not take any risks. Although they still have money, they will have learnt to buy selected ‘real’ luxury or value for money brands, but in any case core products.
“After sales service will regain importance because of its relationship to the new value of durability. They will want to fix again their good pieces. Customers will seek either ‘real’ luxury brands (heritage, quality, durability, design, convincing price) rather than the ‘bubble’ luxury or they will go for mid-market value for money brands, or hard discount,” said Lanciaux.
She advised retailers to focus on making their core offer more attractive and on seeking more direct contact with customers to attract and retain customers in the current climate.
As for the future of retail, Lanciaux doesn’t think there will be a sudden recovery.
“Already today the landscape is contrasted. Some businesses are doing very well. There will be a structural slow change that will begin to be clear by the summer, but I would not call it recovery. This is old language. Speak about transformation.”
Around 100 of the most influential names in retail from across the globe are set to speak when the congress convenes at the CCIB International Conference Centre from 6 to 8 May 2009.