全球奢侈品：小品牌的未来

Global Luxury Goods: The Future of Small Brands It is time to put small luxury brands under the spotlight, following up on our work on mega-brands (The Future of Mega-Brands, 2013) and trailing “tail” brands (How Long Is Your Tail?2009, Global Luxury Goods: How Long is your Tail? Reloaded 2020). Luca Solca+41 582 723 126luca.solca@bernsteinsg.com Maria Meita+44 20 7170 0540maria.meita@bernsteinsg.com A more stable consumer base is producing a better environment for smaller brands.The fixed cost nature of the industry and new consumers driving most of the growth - allwanting to buy the “luxury essentials” - have favoured mega-brands in the past 30 years.The fixed cost structure of the industry doesn’t change. But a more established consumerbase needing something new to part with their money provides a more favourableenvironment for smaller brands (see Weekend Consumer Blast: The Luxury Mega-BrandBathtub – Redux). Eric Chen, CFA+852 2123 2628eric.chen@bernsteinsg.com Yi-Peng Khoo, CFA+44 20 7676 6822yi-peng.khoo@bernsteinsg.com A CLEARER SMALL LUXURY BRANDS LANDSCAPE IS EMERGING We see four major groups: Specialist Sales High-end specialists Alix Turner+44 20 7762 4044alix.turner@bernsteinsg.com These brands operate at the highest price points and have virtually nothing foraspirational consumers in their assortment. They appear to be best positioned tocapture the richest consumers turning to mega-brand alternatives and have been doing sofor at least 15 years. Given their scale disadvantage, they are likely to continue to producesubstandard retail space productivity, EBIT%, and ROIC. Publicly traded examples of thisgroup areZegna,Brunello Cucinelli, Loro Piana.Privately held companies includeKiton,Stefano Ricci. Category specialists These brands stand out as recognised specialists in their category, while occupyingthe upper end of the pricing pyramidwithin the broader fashion and leather goodsspace. We find a diverse array of players in this cohort, as a function of their idiosyncraticproduct origin - e.g. •Monclerin down jackets •Burberryin trench coats •Bottega Venetain handbags •Tod’sandSalvatore Ferragamoin footwear Most of these brands would like to be bigger and eventually become mega-brands.So they are trying to expand into adjacent product categories. This developmentpath is both appropriate and frustrating:1) Appeal outside of the core category wouldsustain growth (as it has for mega-brands before them: see Hermès or Chanel as examples);2) Yet, moving into spaces occupied by mega-brands and other specialists often results inprofit dilution. Continued on the next page… … continued from the first page Flankers These brands squarely operate in the same price range and multi-category spacethat mega-brands occupy. In most cases, they are not differentiated enough to stand outbecause of either product or price specialisation. They are therefore destined to suffer mostof the time. Their strategic role within larger groups is to serve as “flankers”: occupyingretail space around mega-brands to keep competitor mega-brands at a distance, as well assometimes overlapping in their positioning with competitor mega-brands to try and stealsome of the tailwind behind them. In this group we have the “tail” we have written about:Fendi, Celine, Loewe, Kenzo, Balenciaga, Alexander McQueen, Miu Miu, etc. Meteors Some flankers sometimes hit gold, manage to stand out and get more prominentthan their meagre marketing budgets would normally allow and experience asignificant growth spurt - only to most often fade behind the horizon as theybecome yesterday’s stories. The break typically comes from a hero product (thinkCeline under Phoebe Philo); an aesthetic and marketing statement (think Celine underHedi Slimane or the most recent Miu Miu); a home run success in a product category (thinkAlexander McQueen and sneakers); or a combination of several of these elements (thinkBalenciaga under Demna Gvasalia). The problem with these successes is that they mostoften cannot sustain. We have yet to see a meteor break into mega-brand territory. While wehave seen many disappear back into oblivion. A FEW STRATEGIC IMPLICATIONS EMERGE FROM OUR PROPOSED BRANDTAXONOMY: Shareholder value creation through small brands is structurally difficult, even in thecurrent more favourable consumer environment. Small players are bound to suffer fromstructurally lower ROIC, as they stand at a scale disadvantage. •Investors would need to benefit from small brands continuing to sustain growth,ideally above sector average. This is currently possible for high-end specialists like BCand Zegna; debatable for category specialists like Moncler; improbable for most flankersand meteors over the medium to long-term. •Alternatively, investors would need to benefit from catching a flanker just beforeit turns into a meteor. Which would call for a momentum investment approach withnear-perfect timing. Luxury conglomerates without a mega-brand w