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THE OXFORD HANDBOOK OF
LUXURY BUSINESS
THE OXFORD HANDBOOK OF
LUXURY
BUSINESS
Edited by
PIERRE-YVES DONZÉ,
VÉRONIQUE POUILLARD,
and
JOANNE ROBERTS
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LUXURY BUSINESS
THE luxury industry has been one of the fastest-growing sectors since
the 1970s, and one in which Europe has strengthened its
competitiveness in the world market. According to the consulting firm
Bain & Company, global sales in the luxury industry grew rapidly from
77 billion euros in 1995 to 173 billion euros in 2010, and, by 2019
sales were estimated to have reached nearly 1.3 trillion euros (Bain &
Company 2020a: 8). For Bain & Company (2020a) the luxury market
is made up of the following nine segments: personal luxury goods,
luxury cars, luxury hospitality, fine wines and spirits, gourmet food
and fine dining, high-end furniture and housewares, fine art, private
jets and yachts, and luxury cruises.
According to Bain & Company’s analysis, the market for personal
luxury goods, consisting of items such as fashion, jewellery, watches,
and cosmetics, has steadily risen over several decades to reach a
total of 281 billion euros in 2019 (Bain & Company, 2020a: 8). The
COVID-19-induced pandemic, however, has impacted the personal
luxury goods consumption hard, with a loss of value of 25 percent in
the first quarter of 2020. From this point, Bain & Company expects
that the luxury market would need two years to recover1. While the
health-induced crisis has spread throughout the world and is, in Fall
2020, growing stronger again in Europe, the luxury sector
experienced a significant rebound in China that observers attributed
to ‘revenge purchases’ after lockdown-induced shopping bans. The
growth of luxury on newer markets, and especially in China, seems
for now to sustain the luxury industry, although such observations will
need to be verified in the longer term.2
Luxury has always been traded internationally and, as such, it is a
pioneering industry in globalisation. Trade in luxury products and
especially personal luxuries can be traced to the rise of civilisations
almost 5,000 years ago (Frankopan 2016). During the late twentieth
and twenty-first centuries, with the emergence of dominant brands
and multinational luxury conglomerates, the luxury industries have
become increasingly concentrated. By 2019, the top 10 luxury
companies accounted for 51.2 percent of the luxury goods sales of
the top one hundred luxury companies (Deloitte 2020: 17). The first
three luxury groups in terms of economic weight are based on the
European continent: LVMH and Kering in France and Richemont in
Switzerland. The weight of Europe as a global luxury player is
important and does not seem to abate. The recent acquisition by
LVMH of luxury jeweller Tiffany & Co, the most prominent symbol of
American luxury, is an example of the ambitions and dominance of
the European luxury groups. By acquiring Tiffany & Co., LVMH also
consolidates its presence in the realm of luxury jewellery, a domain of
activity where the group needed to strengthen its presence,
especially in relation to Richemont, which owns an important portfolio
of luxury jewellery and watchmaking. The growth of such large luxury
groups rests upon strategies of diversification. However, the
investment portfolios of these groups may show a much wider
diversity of economic activity than the sectors in which the groups
are specialised, as Hubert Bonin shows in chapter 5 in this volume.
Not all European luxury firms are large or belong to public groups.
Important players in the domain have remained private, for example,
the French luxury company Chanel and the Italian luxury company
Armani. Although Hermès is a public company first launched on the
Paris stock exchange in 1993, family members retain a majority
shareholding (over 60 percent of the shares) allowing the company to
retain its status as one that is largely family-owned and a
multigenerational firm. The sixth generation of Hermès has sought to
preserve the company from acquisition by larger groups. Keeping
important luxury firms private has been, in some cases, helped by
protective action from governments. In France, the state may act
notably through the action of the French Autorité des Marchés
Financiers.
As shown by Pierre-Yves Donzé, especially from the turn of the
millennium, the large luxury groups have sought to restore greater
coherency in their portfolios of activities, recentring them around the
luxury activities, or even around flagship brands, as for example, Dior
is for LVMH (chapter 4 in this volume). This refocusing has operated
along the lines of a model of management that scholars describe as
centralised decentralisation. The management of the large groups
proceeds through rationalisations of the activities of their branches,
selling brands that no longer garner the necessary prestige, and
strategising mergers and acquisitions. On the marketing side, over
the last decades, luxury groups have concentrated activities on
luxury, sought to identify strategic areas for growth, but also
diversified their lines and products. As Tomoko Okawa shows in
chapter 9 on licensing, this key strategy of luxury groups is a
balancing act between exclusive luxury products and affordable
branded luxury goods. It is also a balancing act on the global map
that requires profound knowledge of the cultural differences between
the consumers in different parts of the world. This is also reflected in
the evolution of retail, where the department store remains
important, as shown by Rika Fujioka and Jouko Pitkänen (see chapter
16), while the rise of monobrand stores, including flagships that may
be commissioned to the most prestigious architects, have garnered
attention in the industry, as Christopher M. Moore and Stephen A.
Doyle show in chapter 17 dedicated to this type of retail. Finally, the
COVID-19-induced pandemic has accelerated the shift of important
shares of the market to e-commerce, as Sandy Black explains in
chapter 28 on digital luxury in this volume.
Luxury today is more global than ever. The dominance of the
European groups should not overshadow that, to this day, the
premier marketplace for personal luxury is New York. This book seeks
to offer a wide range of geographically diverse examples, such as the
case of Australia which is studied through the prism of brand
extensions and tie-in products by Nicole Stegemann and Sara Denize
(chapter 12). Until recently, Asian consumers of luxury goods tended
to enjoy shopping in Europe, where the powerful attraction of
experience and service added to the enjoyment of owning a product
signed by a prestigious brand. Yet the recent developments in luxury
consumption, especially triggered by the COVID-19 pandemic, show
that it is on the Asian markets that the consumption of luxury has
performed best and shown the most resilience. This volume
approaches both more mature Asian markets for luxury, as Pierre-
Yves Donzé does in his chapter on Japan (chapter 21), and the
currently fastest-growing luxury market, China, which is studied in a
dedicated chapter of this book by Qing Wang (chapter 22). China is
here to stay, underlines a Bain & Company (2020b) report on luxury
in the aftermath of the COVID-19 pandemic.
Hence, luxury is a fast-growing and global industry, dominated by
European firms. Since the 1990s, it has attracted a broad range of
scholars in various disciplines in the humanities and social sciences,
who have contributed to a better understanding of the characteristics
and dynamics of this sector. The objective of The Oxford Handbook of
Luxury Business is to provide its readership with an overview of the
corpus of luxury research conducted in the relevant disciplines over
the past two decades. It reflects the variety of perspectives that offer
complementary views of the luxury industry. At the same time, this
volume is an opportunity to discuss a broad range of global issues
faced by luxury business.
Management
For the past fifteen years or so, the dramatic growth of the luxury
industry has attracted increasing attention from scholars in the field
of management (Berghaus et al. 2014; Chevalier and Mazzalovo
2008; Chevalier and Xiao 2008; Kapferer and Bastien 2009; Okonkwo
2007; Tungate 2009). Alongside this has been the emergence of an
increasing number of management degrees, including master’s and
master’s of business administration degrees that are tailored to the
field of luxury brand management. Moreover, reflecting the growing
academic interest in the area, journals dedicated to luxury and its
management have recently emerged (Luxury: History, Culture,
Consumption, since 2014; Luxury Research Journal, since 2015).
Additionally, various business, management, and marketing journals
have published special issues or special sections focused on aspects
of luxury (e.g., Journal of Fashion Marketing and Management, 2013;
Journal of Business Research, 2017 and 2019; Journal of Branding
Management, 2018). This literature builds on a common point of
departure perfectly embodied in the seminal book of Kapferer and
Bastien (2009): Luxury is different. Consequently, the management of
luxury businesses must differ from that of businesses in other
sectors.
Luxury goods are characterised by a high value-added deriving
from material and emotional factors. Their design, manufacture, and
sale follow specific rules that ensure the marketing of consumer
goods perceived, and purchased, as luxuries. According to Jonas
Hoffmann (chapter 10), entrepreneurs implement a systemic luxury
strategy that integrates various levels of actions, from the contextual
environment, natural and social, to the human sociomaterial
ecosystem and the individual value-creation system. The balance
between the need to innovate, in order to offer new goods to
customers, and the need to follow traditional craft practices, which
grant a brand legitimate luxury status, is a tension at the core of the
creativity process of luxury goods explored by Joanne Roberts
(chapter 8). The control of the supply chain is another key issue that
aims to make sure the manufacturers of luxury fashion or accessories
source excellent materials or components that will contribute to
strengthen the luxury position of their goods, as demonstrated by
Alessandro Brun and Hakan Karaosman (chapter 7). From the same
perspective, Giacomo Gistri (chapter 25) showed that the struggle
against counterfeits aims to guarantee product quality and trust for
luxury brands.
However, management scholars have demonstrated that luxury
business does not rely on mere production issues. The idea of luxury
itself is deeply subjective. It depends on consumers and differs
between cultural and social backgrounds. The difficulty of
understanding consumer behaviour regarding luxury goods has led to
the development of a large number of academic studies on this topic
(Dubois et al. 2005). Klaus-Peter Wiedmann (chapter 14) argues that
the interplay between conscious and unconscious perception has a
major impact on the way individuals perceive luxury. The focus on
emotion patterns and purchase motivations is a key element for a
proper understanding of consumer behaviour. However, as Benjamin
Berghaus (chapter 11) elaborates, companies are not passive actors
in this process in the sense that they deploy luxury branding to
position their products and to communicate to target consumers.
Finally, one must stress that the research on luxury in management
is not only driven by a pure academic objective and the mere will to
offer a scientific explanation to a social phenomenon. It answers also
the demand from private enterprises to carry out applied research in
marketing and to train the new generations of luxury brand
managers. These practical objectives explain the presence of several
former managers among leading scholars in luxury management. For
example, Vincent Bastien was managing director of Louis Vuitton
within LVMH and of the beauty division of Sanofi Group, before
teaching at HEC Paris (Kapferer and Bastien 2009), while Michel
Chevalier was a managing director of Paco Rabanne Parfums and a
consultant before teaching at HEC and Paris-Dauphine University
(Chevalier and Mazzalovo 2008). This mixture of genres is the main
reason for the underdevelopment of critical studies of luxury (see
section “Critical Studies of Luxury”).
History
The existing literature demonstrates the complexity of defining luxury
and its changing meaning over time, as explored by cultural,
economic, and social historians. This complexity arises because the
meaning of luxury varies through time and space, and across
economic, social, and cultural contexts. Luxury is often associated
with excessive quantity and frequently viewed as superfluous,
unnecessary, or an indulgence. The term is also associated with
expensive, rare, elegant, and refined products and services of the
highest quality. Yet, luxury, as a concept, also changes according to
the perspective of scholarly disciplines. Recent scholarship in history
emphasizes that luxury was already an important sector in the
economy of antiquity. During this period luxury was associated with
extravagance, desire, and decadence. In contrast to the virtues of
temperance, luxury was therefore viewed as morally indefensible.
Tracing the transition of luxury from antiquity through to modern
times, Christopher J. Berry (1994) notes its demoralisation in the
eighteenth century when the social and economic benefits of luxury
production and consumption were advanced by the philosophers
David Hume (1752) and Adam Smith (1776). Berry (chapter 2)
pursues these questions in this volume, thereby exposing the long-
lasting importance of the theories on luxury to understand how the
industry came to be what it is today.
Historians have also researched the emergence and ascent of
luxury businesses, and set to the task of addressing questions that
include the place of luxury in the development of capitalism, the
relation between luxury and so-called consumer revolutions, the
interrelations of luxury and globalisation, and issues of periodisation
(Berg 2007; McNeil and Riello 2016; Sombart [1913] 1967; Verley
2006). Historians of modern consumption societies have highlighted
the role of luxury consumption in stimulating economic development
in the eighteenth century (Berg 2007; McNeil and Riello 2016), a
period when Western middle-class consumers increasingly enjoyed
the growth of ‘demi-luxe’ products, many of which were sourced in
Asia, including ceramics, spices, and fabrics. The importation of such
goods motivated domestic producers to innovate and to emulate the
imported luxuries; in this way, luxury consumption stimulated
domestic industrial production. Ceramics made in the West, for
example, attempted to replicate and to adapt sought-after designs
from Asia. The history of luxury reveals that products, markets, and
exchanges are constantly evolving. Historical research has also
emphasised that the formation of a global luxury business was a
relatively recent phenomenon, dating back to the 1980s, as it was
mostly based in Europe, the United States, and Western offshoots
until then (Donzé and Pouillard 2020).
Title: L'onorevole
Language: Italian
L’ONOREVOLE
VOLUME UNICO
MILANO
SOCIETÀ EDITRICE SONZOGNO
14 — Via Pasquirolo — 14
1896.
Proprietà letteraria riservata
Milano. — Tip. della Società Editrice Sonzogno.
INDICE
L’ONOREVOLE
CAPITOLO I.
Partenza!
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