LONDON, United Kingdom — 2014 was a year of geo-political tumult. The crisis in the Ukraine. Hostilities in Syria and Iraq. The Ebola outbreak. Pro-democracy protests in Hong Kong. All played a role in upsetting the global luxury market, which, already weighed down by economic slowdown in the all-important China market, grew by just 5 percent over the course of the year, according to Bain & Company.
2015 is set to be a challenging year for the luxury sector, as well. Germany, the leading economy in a stagnant Europe, is at risk of falling into recession, while Japan, following a brief period of growth, has entered its fourth period of recession since 2008. In China, the luxury goods industry may actually shrink in 2015.
Meanwhile, in India, the election of pro-business prime minister Narendra Modi has sparked a wave of new optimism, but the country has yet to emerge fully as a lucrative luxury goods market. What's more, long-promised growth rates have yet to materialise in Brazil and an increasingly isolationist Russia is on the brink of a fully-fledged crisis, prompted by plummeting oil prices.
There are two bright spots on an otherwise gloomy landscape, however. After years of uncertainty, the United States is back to economic health and digital sales are growing by 25 to 30 percent per year.
BoF spoke to five fashion CEOs to understand their top growth priorities for the new year.
“We continue to have strong double-digit growth in the US, Europe and Asia. Our growth is strategically planned simultaneously in all three regions, to keep a very curated positioning and distribution. Following our repositioning of ready-to-wear onto designer shop floors in US department stores, we saw strong demand in these environments in 2014. One of the major highlights in Summer 2015 will be opening of our first flagship in Europe. London’s Mayfair flagship will be the largest Alexander Wang store worldwide.”
“Since 2014 e-commerce is our biggest retail platform worldwide. We chose to launch Denim x Alexander Wang exclusively through our e-commerce and New York City flagship in December 2014. Simultaneously we revealed Denim x Alexander Wang digital campaign images. This strategy proved extremely successful and also showed how important it is to lead your retail strategies through immediacy and instant accessibility.”
“Overall we continue to see very balanced, strong growth in both our apparel and accessories businesses. This equilibrium and balanced growth is important to our brand’s integrity. While ready-to-wear and T by Alexander Wang lines will remain our priority focus, Denim x Alexander Wang is a new product category with strong potential, which will complement the other lines. We already had a great response from retailers during Pre Fall market.”
Fabrizio Cardinali of Dunhill:
For Dunhill, specifically, Asia remains the key growth area. However as we expand our retail and wholesale network to Europe and the US we will be seeing positive growth there too. Digital sales are hugely important and we are looking at developing this channel in 2015.
“[We will be prioritising] leather goods and we are also focusing on bespoke and made to measure, where we have already seen, in the last six months, a substantial growth. We have also transformed the top floor of our London Home, Bourdon House, into a dedicated Bespoke tailoring area, managed by one of the best Savile Row trained tailors, under the supervision of our creative director John Ray.”
"We are looking at strategic growth in the Middle East, with continued growth in Asia and a strengthening of our home market here in the US. For 2015, our main growth will be in the Middle East and Dubai. The plan is to really solidify and strengthen the home market, whilst building a clear language which can be carried into the developing markets."
"The potential [of digital sales] for us is massive — we have a voracious online consumer who hunts us out — we need to hone in on them and offer an unparalleled service so that they build confidence in us. The world is also our oyster — we are only currently transactional in the US so we will soon be rolling out our transactional site globally."
"[The product category that offers the most growth potential] is no doubt our footwear. We have really focused in on getting the product right — at the right price point — so now we have to get behind the category in a big way."
"We don’t prioritise or plan in the traditional sense, but we can say that next year for sure will be strongly concentrated around the new Dover Street Market in Haymarket London. [Digital sales are] becoming increasingly important and we’ve seen amazing growth this year, but DSM is and always will be primarily about the stores. We give the same energy and attention to all our product categories.
"As we look ahead to next year, we view Europe as a very exciting piece of our long-term growth strategy. We are now on track to open approximately 50 stores across Europe during fiscal 2015. In Japan, we will be opening our second flagship store in Kobe in the first half of calendar 2015 and continue to expect that this market can support over 100 stores. We view Asia as an important region for development as we grow our luxury brand worldwide. We are focused on building the business for the long term, and will be bringing our South Korea business in-house by early calendar 2016. We’ve also seen strong growth in the Far East and believe we can ultimately have 200 locations in this region."
"We remain excited about the opportunities in the e-commerce and digital sales channel. We launched our US e-commerce site in September 2014 and are in the process of building a platform that will be rolled out globally. Our website will offer our company's largest assortment of products for the consumer to shop and we believe that e-commerce and retail store sales combined will result in greater total revenues for our retail segment. Importantly, the new website also allows us to engage existing and new customers with the Michael Kors lifestyle and create innovative ways to keep the brand at the forefront of consumers' minds."