The Haute Couture and the luxury ready to wear clothes account for a worldwide turnover of €20 billion. This activity is characterized by a multiplicity of actors and strategies.
The weight of the fashion industry in the French economy represents a sales turnover of € 10 billion (17% men's ready to wear) and around 55 000 employees. This industry is very important in the French economy, but nevertheless, was not saved from the crisis. During the last decade the staff strength fell to 30% under pressure from South East Asian countries and the Eastern Europe where the labor is less expensive than in France. (La mode française 2005)
The consumption of luxury ready to wear clothes has slowed down. Consequently, fashion designers have had to democratize their collections and their prices. They have developed a new range of products that are 30-40 % less expensive. Jungle de Kenzo and KL by Lagerfeld are some examples of this diversification policy.
[...] (Grant 2002) Complementary products of the luxury ready to wear clothes are perfumes, leather goods, or jewelry. Each product has little value individually. The buyer can't be dressed with haute couture clothes while wearing a bottom of the range watch. Some men's luxury brands create, at the same time, perfumes or leather goods as is the case for Gucci or Dior. This model is based on the idea of competition. It assumes that companies try to achieve competitive advantages over other players in the markets as well as over suppliers or customers. [...]
[...] The luxury ready to wear segment, is the best in terms of quality. The price / performance cannot be substituted by another product. The price is not a barrier for the buyer; he will pay a higher price to reach his need for appearances. This type of products can't be threatened by obsolescence; the luxury product life cycle does not know the four phases. Every six months each fashion designer makes a new collection according to the new fashion trends, the new customer's needs, and the innovate technological environment. [...]
[...] - The entry of new actors whose first activity is not the ready to wear sector, like Louis Vuitton, Gucci, Prada or Arrow. This type of company establishes a global strategy built on expansion, of which the main objective is to save an expertise, historically recognized in their origin, to compete in a new market segment. They benefit from a brand name, and fame, to penetrate the market place. In this industry the threat of new entrants is high. Despite the power of current players in terms of notoriety and brand image, the costs of coming into the market are low, and the new entrant chooses the way of diversification. [...]
[...] Porter's five forces model, as applied to the men's luxury ready to wear segment, appears to be an insufficient model to determine the level of profitability and attractiveness. Many important factors, such as innovation, social environment, technical environment, macroeconomic environment or complementary products, are not analyzed. Yet, these factors are very influential on the organization, and also allow us to identify competitive forces in an industry environment. In order to select the desired competitive position of a business, it is necessary to assess the entire industry's environment. [...]
[...] The second one is the occasional customer; he is as important as the first one but can switch easier from one brand to another. Thus the brands need to create customer loyalty. The buyers come from the higher socio-professional group. They are mostly between 35 and 65 years old. According to the Opinion Way (2003) survey of those who purchase luxury clothes like them for their high quality. This type of buyer is not price sensitive but is looking for high quality (comfort, reliability, useful life) and appearance. [...]
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