GENEVA, Switzerland — Richemont has put the finishing touches to management changes it began a year ago. While the latest adjustments to the team might not be as eye-catching as, for instance, eliminating the chief executive role, they underline the need for luxury to keep pace with far-reaching shifts in the industry.
Some of the reasons for Richemont's latest reshuffle are company specific. Almost exactly a year ago, the group that takes a famously long-term view, announced a broad shake-up among top executives. Further refinement was needed after the surprise departure of the group's highly regarded head of watchmaking, Georges Kern, in July.
LVMH, the world's biggest luxury goods group, and one that has been enjoying strong sales growth, also this week shook up its top management, announcing a new head of — and new era at — Christian Dior.
One of the biggest hurdles these new leaders must face is the growth of digital luxury.
One of the biggest hurdles these new leaders must face is the growth of digital luxury, where the big brands are focusing a lot of their effort.
Online sales are becoming more important for top-end names. Across the industry, including through mobile phones, they are currently growing at about 25 percent a year, according to John Guy at Mainfirst.
While fashion and leather goods have led the way, areas such as watches and jewellery have traditionally lagged. However, consumers are now increasingly prepared to look at the category online. Richemont relaunched its Cartier Panthère watch — aiming to build on the popularity of its Love bangles with millennials — in a special event at Net-A-Porter. It sold models priced at as much as €140,000 ($163,044) through the website.
This illustrates a big challenge for watchmakers. They've already been building websites and beefing up physical store networks. But they need to take an even more integrated view of their distribution to meet this growing demand. After all, customers don't see much of a difference between buying in a store and online. Richemont also recently announced the appointment of a chief technology officer.
Meanwhile, luxury sales have rebounded over the past year. Richemont said on Friday that it had overall growth in the watch category of about 15 percent in the first half. Sales at its own retail stores were at a figure in the double digits.
Watchmakers need to take an even more integrated view of their distribution to meet growing demand.
But the risks are rising, and not just because there is still a surplus of high-end watches to shift across the market. Tensions in the Middle East are the latest addition to a luxury worry list that already includes the possibility of Chinese demand tailing off, US tax changes failing to deliver a boost to the industry and the strength of the euro deterring high-spending travelling luxury shoppers.
Against this backdrop, consumers need fresh looks to prompt them to buy. That means more emphasis on newness. The change of guard at Dior comes at a pivotal time, following LVMH's purchase of Christian Dior Couture earlier this year.
The luxury sector has enjoyed a revival over the past 12 months. But there is no guarantee that will continue. In an increasingly volatile market, brands need management that can take the textured leather handbag with the smooth.
By Andrea Felsted; editor: Jennifer Ryan.
The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.