FASHION BUSINESS MODELS

Transcription

1 LUXURY BRAND DESIGNER BRAND PREMIUM BRAND AFFORDABLE FASHION MASS BASIC FAST FASHION Basic Products Fashion Products FASHION BUSINESS MODELS 1

2 Course Overview 1. Fashion & Luxury Markets Market segmentation: criteria Market Figures (Monitor Altagamma) 2. Fashion & Luxury Industry Fashion Pipelines (filiere) Italian Fashion Diamond Model Italian Fashion Districts 2

3 Course Overview 3. and performances Generic strategies Profitability drivers 4. Strategic Business Model Pure Archetypes & Hybrid Models 6. Operational Business Models Make to order & make to stock Hybrid models 3

4 Fashion & Luxury Markets: Segmentation criteria 4

5 Personal Fashion &Luxury Goods 5

6 F&L Goods: segmentation criteria Fashion & Luxury market is characterized by: Market niches (needs, products, prices) Geographic habits (cultures and life styles) Little knowledge of actual end customers (product orientation) Changeable end customers needs (end uses, locations, times of life) Rational versus Emotional needs Cyclic nature of end uses and needs (season) 6

7 Main criteria of market segmentation End customer/end user End uses/end needs (Rational) Taste, style needs (Emotional) Product categories and product range Price range Distribution Channels and Formats 7

8 Demographic segmentation Gender: Men/Women/Children Age range (actual vs mental): Adult/Young (RTW Collection) Baby/Kid/Junior (Childrenswear) Generation: Pre-teens / tweens teen or net generation (Y) generation flex (X) digital natives boomers new seniors 8

9 Psychographic & lifestyle segmentation Self-Expression Edge Cultural Creative Modernist 15% 46% 4% 30% 10% 36% Sensibile Choosers Fast Fashion Flirts 10% 55% 8% 35% Function Regulars Brand Image Out of Fashion 24% 45% Labelist 52% 34% 10% 19% Core Target (% of total Type) Source: Levi s Europe Conformism Total Type 9

10 New criteria for consumer segmentation Conformism 10

11 End uses and product lines Macro segments/lines End uses Product Categories + formal Formalwear Ceremony Evening/Cocktail Shopping/Daytime Worktime Dress, Suit, Tailleur, Elegant Coat, Elegant Shoes, Formal Shirt, Tie, Clutch, Bag Sportswear Daytime Leisure Jacket, Blazers, Trench, Pants, Padded Jacket, Boots, Loafer pric e Casual & Jeanswear Daytime Leisure (Classic) Denim Jeans, Chino, Polo, T-shirt, Sweatshirt, Sneaker _ Informal Active & Beachwear Sporting practise Leisure (Sporting spirit) Technical apparel, Technical shoes & accessories Underwear & Homewear Day/Night Basic and Fashion 11

12 Price range and product categories Price range/name End users/uses Brands + formal Couture ( ) Adult Ceremony Evening/Cocktail Heritage Fashion Houses Luxury Brands Ready to wear / Pret-aporter/Designer ( ) Adult & Young Ceremony Daytime Worktime Designer (black lines) Top Industrial brand (Menswear) pric e Diffusion ( ) Adult & Young Daytime Sportswear Designer (Licensee) Industrial Brand _ Bridge ( ) Adult & Young Daytime Sportswear Designer (Licensee) Industrial Brand Informal Mass (< 100 ) Adult & Young All end uses Mass Brand Mass Retailer 12

13 Examples Marc by Marc Jacobs Chanel Prada Pinko A&F H& M 13

14 Price range and style segmentation PRICE RANGE Valentino Roma HIGH TOP FASHION HOUSE & LUXURY BRANDS DESIGNER AND TOP INDUSTRIAL BRAND Versace Valentino Chanel Prada Armani B.L. Dolce & Gabbana Gucci Moschino Miu Miu RL Collection Donna Karan Calvin Klein D&G Max Mara Couture/Tailor CK DKNY Aspesi RED Valentino Polo RL Diesel MAX&CO PREMIUM INDUSTRIAL BRAND Patrizia Pepe PINKO Ready To Wear- PAP Designer Diffusion Bridge LOW Levi s Gap A & F Banana R. Esprit Desigual ZARA Benetton Mango H & M MASS & RETAIL BRAND Mass Traditional/Classic Stylish Contemporary/Trend Avant-garde STYLE 14

15 Formal Menswear: segmentation Couture Designer Bridge Mass Brioni TAILORS Kiton Exclusive Tailored Brand E. Zegna Mass Brand Zara H Dior Valentino Corneliani Burberry s Canali Pal Zileri Perry Ellis Daks Boggi B. Blass R. Lauren Cardin Odermark M. Dutti Armani YSL H. Boss Comme des Garçon Designer Brand C. Klein Prada P. Smith Kenzo Gucci Versace Premium Industrial Brand Classic Contemporary Modern Style 15

16 Formal Womenswear: segmentation PAP Diffusion Bridge Designer Brand I lines Chanel Givenchy Dior Hermes Prada Fendi Gucci Valentino YSL Versace Armani Jil Sander Escada Cavalli DKaran D&G Kenzo Burberry s G.A. Collezioni Versus Polo RL D&G Designer Brand II lines Trussardi Max Mara DKNY Anne Klein Premium Industrial Brand Liz Claiborne Mass Promod Zara Mass Brand H&M Classic Stylish Classic Modern Style 16

17 Jeanswear: different segmentation Price Contemporary Quality Mainstream Product Range 17

18 Distribution Channels and Formats USA Western F&L distribution EUROPE High End LUXURY Direct stores Luxury Dept. Stores DEPARTMENT STORES Specialty stores Independent stores Middle End MEGA BRAND OWN CHAINS FRANCHISING CHAINS Low End MASS RETAILERS FAST FASHION RETAILERS 18

19 Fashion & Luxury Markets: Market figures 19

20 Worldwide Personal F&L Goods Market trend Luxury Market grows more than global economy Source: Altagamma Monitor, November 2011 ( E, B) 20

21 F&L Market by Product Category Leather Accessories and Hard Luxury are increasing their share 21

22 F&L Markets by Gender Men-ization of F&L market, due to emerging markets 22

23 F&L Good Markets by Geographic Area New growth in mature markets, China, Earthquake effect 23

24 Role of Key Countries and Cities Key Countries and Cities in F&L Market 24

25 China, China, China! Chinese Consumers: inside and outside Greater China 25

26 Fashion & Luxury Industry: Fashion pipelines (filiere) 26

27 Porter s Five Forces Model: Profitability and Growth of an industry, groups of firms, single companies depend on their positioning towards 5 Competitive Forces Threat of Entry Power of Buyers Power of Suppliers Competitive Rivalry Power of Substitutes 27

28 New Entries Threat of Entry 28

29 Threats of Entry: Entry barriers 29

30 Buyers and Customers Power of Buyers 30

31 Buyers power determinants Bargaining Leverage: Buyer Concentration Buyer Volume. Buyer Switching Costs. Buyer Information. Ability to Integrate Backward. Substitute Products. 31

32 Buyers power determinants Price Sensitivity: Price/Total Purchases. Product Differences. Brand Identity. Impact on Quality/Performance. Buyer Profits. 32

33 Porter s 5 Forces Model Power of Suppliers 33

34 Suppliers power determinants Differentiation of Inputs. Switching Costs of Suppliers. Presence of Substitute Products. Supplier Concentration. Importance of Volume to Supplier. Cost Relative to Total Purchases in the Industry. Impact of Inputs on Cost or Differentiation. 34

35 Substitute products and technologies Power of Substitutes 35

36 Power of Substitutes Relative Price Performance of Substitute. Switching Costs. Buyer Propensity to Substitute. 36

37 Competitors Rivalry Competitive Rivalry 37

38 Determinants of Rivalry Industry Growth. Fixed Costs/Value Added. Intermittent Overcapacity. Product Differences. Brand Identity. Switching Costs. Concentration and Balance. Informational Complexity. Diversity of Competitors. Exit Barriers. 38

39 Fashion Pipelines (Vertical Industry) show all the vertical flows (from raw materials to end users) followed by products within the processes of design, manufacturing, services, distribution point out the coordination and integration between backward stages (raw materials and semifinished goods) and forward stages (finished goods and retail) but also highlight the support industries (technology and machinery, publishing and media, services) FASHION PIPELINES TEXTILE AND APPAREL LEATHER GOODS COMPLEMENTARY GOODS 39

40 Textile-Apparel Pipeline TEXTILE TECHNOLOGY AND MACHINERY Raw materials Semi-finished goods Finished goods Agriculture and Farming Chemical Industry Wool Cotton Silk & Man- Made F. Syntetic fibers Wool Spinning Cotton Spinning Silk Spinning Technical Yarns Spinning Wool Yarns Cotton Yarns Silk Yarns Syntetic Yarns Knit weawing Wool & Cotton & Silk weaw Other textile processes Knitted fabrics Fabrics Other compone nts Knitting & Assembling Cut & Sewing Knitwear Clothing Home Textiles Other Industries DISTRIBUTION CHANNELS OFF LINE ON LINE Fibers Finishing Yarns Dyeing & Finishing Fabrics Deying & Finishing Clothing Deying & Finishing 40

41 Leather Goods Pipeline LEATHER TECHNOLOGY AND MACHINERY Raw materials Semi-finished goods Finished goods Farming Chemical & Textile Industry Raw Hide Artificial Hide Technical Fabrics Hide Tanning/Dressi ng Dressed Hide Hide Dyeing Dyed Leather Metal Access Textile & Syntetic Fabrics Cut & Sewing Assembling Bags & Leather Goods Belts & Small Leather Goods SHOES DISTRIBUTION CHANNELS OFF LINE ON LINE 41

42 Competitive advantage of Made in Italy Rivalry promotes local factor creation Factor Conditions Firms, strategy, structure and rivalry Spin-off create suppliers and firms in related industries Related and supporting industries Spin-off create new Italian rivals Rivalry upgrades demand by Italian channels and consumers Demand conditions Image and reputation benefits related Italian industries Source: Porter, The Competitive Advantage of Nations, The Diamond Model,

43 Competitive advantage of Made in Italy The champion industries are grouped into clusters (Textiles and apparel; Household goods; Food and beverages; Personal products) concentrated in a limited geographic area (local districts); These clusters are concentrated in consumer goods (47.5% of all exports). Italy is the world leader in textiles, high end apparel, household goods, and personal products; 43

44 Competitive advantage of Made in Italy Italian clusters tend to be wide and deep. For the most part they consist of final products (clothing), intermediate products (textiles, tanned skins), other inputs (synthetic fibers), specialized machinery (for working leather, spinning etc.), and occasionally support services (design in particular); In many industries Italy has few or no competitive advantages: semiconductors, computers, telecommunications, defense (with the exception of hand arms), consumer electronics, health goods, electricity generation and distribution, office equipment, chemicals, services industries (with the exception of design, engineering, and tourism). 44

45 Factor Conditions Within many industries the specific skills needed are passed down from generation to generation of the same family. Disadvantages in terms of factor conditions have pushed Italian firms towards innovation and upgrading. For example, significant disadvantages in terms of the cost and quality of raw materials as regards woolen fabrics have prompted Italian firms to use recycled wool or recycled wool blended with synthetics; The difficult Italian environment has given birth to a strange variety of advantage: it has made Italian firms pragmatic, and inclined towards adaptation and improvisation. They must juggle various restraints without being overwhelmed by them. 45

46 Demand Conditons In every industry of consumer goods in which Italy has a competitive advantage, Italian purchasers are among the most sophisticated and advanced in the world (clothing, footwear, jewelry, etc.); distribution channels are likewise sophisticated (Best Store, Indipendent Boutiques): retailer are smaller and more specialized than in other countries (trend makers); Italian exports have benefited from the international spread of Italian style and taste; Italian firms do not compete with success in any industry in which the State is an important buyer (telecommunications, electricity production and distribution, medical treatment etc.). 46

47 Related and supporting industries Vertical relationships between Italian champion industries are very pronounced; Entire clusters of industries are concentrated in particular geographic regions; suppliers can therefore provide rapid and efficient service; The level of vertical integration of Italian companies is very low; they perform only limited number of activities of the value chain, the result is a high degree of specialization, the ability to achieve economies of scale, great adaptability as regards production capacity, and the ability to modify products; The clusters often stimulate investment in the creation of factors of production and related activities. 47

48 Firms, Strategy, Structure, Rivalry One reason for this is the style of management: Italians are not fond of hierarchies and aspire to either operate their own business or work in relatively small firms; Entrepreneurs are involved in operational activities; the divisions of tasks is not structured; Managers of larger firms aspire to independence and precise responsibilities; There is a lack of management structures and mechanisms, managers are brilliant improvisers; 48

49 Firms, Strategy, Structure, Rivalry Client relationships are based on family- or personal-type relationships; Owing to the nature of the management model, Italian firms tend to be successful in highly segmented, specialized, and fragmented industries, and rarely achieve good results where standardization, mass-production, or high investments in basic research are required Entrepreneurs do not want external shareholders, so they may preserve independence and control and avoid the need to clearly divide the company from the family 49

50 Italian Fashion Model: key actors The distinctive factor of italian fashion model (70 ) is the unique integration between designers (haute-couture), entrepreneurs of clothing, accessories and textile companies and buyers of top boutiques This mutual cooperation led to introduce seasonal collections (fashion novelties) from haute couture to serial production (ready to wear at first and then diffusion-bridge lines) This process has been facilitated by the historical presence of local industrial districts 50

51 Fashion districts Biella: Woollen fabrics MW Prato: Woollen fabrics WW Como: Silk, Silk accessories Busto A (VA): Cotton fabrics S. Croce (FI): Tanning Solofra (NA): Tanning Arzignano (VI): Tanning Firenze: Leather, bags, shoes Brenta: Elegant shoes Parabiago (MI): shoes Marche: Shoes Milano: Fashion Houses Lombardia-Emilia : Clothing Carpi (RE): Knitwear Perugia: Fine Knitwear Veneto: Casual, Jeanswear Veneto: Eyewear; Jewellery Marche-Abruzzo: Jeanswear 51