LVMH, Away Travel, Target

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Part
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Competitive Landscape: LVMH

Using credible sources, including the company website, its social media channels, and Seeking Alpha, we have identified information on the background, target customers, perception on social media, direct competitors, competitive advantage, and the experience of the Chief Executive Officer of LVMH. Our findings on this topic are available in rows two through seven of column G of the attached spreadsheet.

OVERVIEW OF FINDINGS

  • Louis Vuitton was organized in Paris in the year 1854 and combined with Moët Hennessy in 1987 to establish LVMH. LVMH later established the jewelry and watches segment of the company in 1999, while also opening its offices in New York. Presently, the conglomerate owns multiple luxury labels from various business sectors, including perfumes, jewelry, wines, and clothing.
  • Regarding its perception on social media, the majority of LVMH's posts on various platforms, including Facebook, Twitter, and Instagram, have received extremely positive responses from users.


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Competitive Landscape: Away Travel

Away luggage was founded in February 2015 by Stephanie Korey and Jennifer Rubio. The company's target customers are between the ages 18-44 including people who like traveling with comfort and style. The brand has positive reviews from users on Instagram, Twitter and Facebook because their stylish brand. Away Luggage's direct competitors include Tumi, Samsonite, Rimora and Delsey. The information has been completed in column G, rows 2 - 7 of the attached spreadsheet.

OVERVIEW OF FINDINGS

  • At Away luggage, one of the core values is “Iterative,” which Korey interprets as “we know we don’t know everything.” Away luggage has a direct to luggage approach- The team emphasizes that in creating their brand, they’ve cut out the middleman but still use the same high-quality materials at other brands, for a significantly lower price.
  • Away luggage company started because the co-founder, Jen Rubio suitcase was broken at the airport and none of her friends could recommend any luggage brands.
  • Away Luggage was launched in February 2015 with four people and currently has over 200 stores, including an international location in London.
  • Storytelling is part of Away's marketing strategy. The brand came up with a custom alphabet for Away and put them on their website. They gave customers the option to pick their style, and have artists hand-paint their initials on the suitcase.
  • Part of the company's success was due to an online sales strategy that included 1,000 influencers pushing its brand on Instagram.
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Part
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Competitive Landscape: Target

Target Corporation was founded in 1902 by George Draper Dayton and the company headquarters is located in Minneapolis, Minnesota. Brain Cornell has been the board chairman and CEO of Target Corporation since August 12, 2014, and he has more than 30 years of experience at leading retail and global consumer product companies. Below is the overview of our findings.

History

  • In 1903, the company name was changed to Dayton Dry Goods company and shortened to Dayton company in 1911.
  • In 1969, Dayton expanded its department store operations and merged with the J.L. Hudson company to become the Dayton-Hudson Corporation.
  • In 1969, Dayton expanded its department store operations and merged with the J.L. Hudson company to become the Dayton-Hudson Corporation.
  • In 2000, Dayton-Hudson changed its name to Target Corporation and sold Mervyn’s and Marshall Field in 2004 to reflect a new focus on its Target stores.

Target Customers/Demographics

  • The company's primary target demographics include people with a median age of 40 and the median household income of approximately $64,000.
  • Approximately 43% of the target demographics have children at home and about 57% have completed college program.
  • The company's target markets include the United States, Canada, and India.

Key Competitors

  • Examples of Target Corporation key competitors include Walmart, Costco, KMart, Lowe’s, Home Depot, Amazon, and the Kroger company.

Competitive Advantage

  • Also, the Target company has been built a successful brand image/reputation of offering quality products to its customers at marked down prices.
  • A report revealed that Target company has differentiated itself from various companies such as Walmart through its merchandise offerings.
  • Target offers products which are affordable and attractive. The company has partnered with various designers and dealers to provide differentiating merchandise assortments at low prices.
  • A report revealed that Target company has put in place various loyalty customers' programs and incentives to enhance products usage.
    The research team has provided additional information regarding the research request in the attached spreadsheet.


Part
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Part
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SWOT Analysis: LVMH

    The strengths of LVMH are identified to be its strong association to quality, brand recognition, extensive network, top celebrity endorsements, and its top designers, while its weaknesses include excessive centralization, lack of sensitivity to foreign cultures, over-reliance on the Japanese market, and exorbitant pricing. Opportunities for LVMH are growing market potential, increase in the number of working women, and rise in per capita income; counterfeiting and managing multinational customization have been identified as threats of LVMH.

STRENGTHS

1. STRONG ASSOCIATION TO QUALITY:

  • Each of Louis Vuitton's brands builds on a specialty legacy while keeping an unwavering focus on the exquisite caliber of its products.

2. BRAND RECOGNITION:

  • The brand is available in most of the large shopping hubs and multi-retail brands around the world.
  • LVMH, the world's leading luxury products group, gathers 70 prestigious brands.
  • Its logo and monogram canvas, which is on most of its products, makes it easily recognizable.
  • It has an extremely high brand recall and global presence.

3. TOP CELEBRITY ENDORSEMENTS:

4. WIDE GEOGRAPHIC PRESENCE:

  • It has a retail network of over 4,590 stores worldwide.
  • It has 156,000 employees globally making it one of the world's top employers in companies dealing with luxury goods.

5. SOUND FINANCIAL POSITION:

6. MARKET LEADERSHIP POSITION:

  • The brand has a strong market leadership position in the sales & marketing industry that has helped the company to scale new products successes rapidly.

WEAKNESSES

1. EXORBITANT PRICING:

  • Overly expensive product prices—a luxury bag or suitcase cost up to $1,500.

2. EXCESSIVE CENTRALIZATION:

  • Louis Vuitton is known to be a harsh employer, and its focus on exclusivity makes it copyright most of its designs.
  • Louis Vuitton's ubiquitous presence may drive down brand desirability.

3. LACK OF SENSITIVITY TO FOREIGN CULTURES:

  • Louis Vuitton is French in styling and design and is not sensitive to trends in foreign countries.

4. OVER-RELIANCE ON JAPANESE MARKET:

  • Japan is one of Louis Vuitton's biggest markets, which reduces the ability of the company to look into other markets.

OPPORTUNITIES

1. GROWING MARKET POTENTIAL:

  • As luxury brands struggle to entice young buyers who always desire new styles, LVMH has been making more investment in some of its smaller brands.
  • Louis Vuitton's Q1 2019 organic revenue grew 11% compared to Q1 2018, which creates a significant opportunity for Louis Vuitton in their prime segment—formal luggage options.

2. INCREASE IN THE NUMBER OF WORKING WOMEN:

  • The need for status symbols is growing at the workplace as more women enter there—73% of LVMH's personnel are women.

3. RISE IN PER CAPITA INCOME:

  • LVMH is expected to propose a 20% dividend increase to €6 per share. This increase is expected to create a surge in demand for non-essential items and luxury goods.

THREATS

1. COUNTERFEITING:

  • The global market for imported counterfeit goods has been growing steadily for years and now accounts for 3.3% of all global trade that luxury goods are facing today, which may dilute the market share.

2. MANAGING MULTINATIONAL CUSTOMIZATION:

  • The forte of Louis Vuitton is its ability to create exclusive merchandise, and this means that they would also need to customize for individual cultures. They find it a considerable challenge.
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Part
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SWOT Analysis: Away Travel

Away Travel's company strengths are content and social care, specific customer targeting, and media influence. Their weaknesses are product durability, mobility, and price. Their opportunities are in their market, new jobs, and the environment. Threats include airline battery bans/flying laws, and the continuously changing technology scenario.

AWAY TRAVEL'S SWOT ANALYSIS


STRENGTHS


DEMAND WITH CONTENT/SOCIAL ENGAGEMENT


  • They pride themselves on having the same cost to produce their luggage as other providers, using the same premium manufacturing materials, along with maintaining a lower overhead, allowing for better price to benefit ratios for their customers.
  • The raw material used by Away Travel to build their luggage products is environmentally thoughtful, intended to have a positive effect on communities, including reducing waste from business partners and supporting non-profit organizations.
  • The company engages in social problems, such partnering with non-profit companies that aid conflict areas, donating portions of their profits to humanitarian efforts.
  • Away Travel encourages and enables their employees to contribute to and work with charitable causes.
  • They offer the option to donate to their non-profit partner company, Peace Direct.

APPEAL TO A SPECIFIC CUSTOMER


  • Their luggage products appeal to millennials especially through variable colors, compartments for electronic devices, removable batteries with USB ports, and social media engagement.

USE OF SOCIAL MEDIA INFLUENCE


  • Away Travel maintains an expansive social media presence with good publicity, notably on Instagram, featuring their products.
  • The brand created an online magazine focusing on travel, supporting their field, mission, and products.
  • Following new airline restrictions on certain types of batteries in luggage, Away Travel avoided significant losses by closely monitoring consumer needs and updating their products accordingly.

WEAKNESSES


DURABILITY ISSUES


  • Away Travel’s luggage products are light-weight, but this "affects the shell’s ability to protect and withstand outside trauma."

MOBILITY ISSUES


  • If used on tougher surfaces, the wheels of the suitcases may have to be replaced after a few trips.
  • The wheels don't lock in place, so it's easy for the bag to roll away from the user.

PRICE


  • Even if they're not extremely expensive, the cheapest away bag costs $225.
  • For people who don't often travel, $200 and higher may be expensive for an item that is not used for most of the year.

HOW THE BATTERY BAN AFFECTED EARLY CUSTOMERS


  • Customers who bought Away Travel bags before airline bans on internal luggage batteries were inconvenienced, even if the company adjusted their products to provide removable lithium batteries later.

OPPORTUNITIES


GREAT MARKET AHEAD


  • The smart luggage market is supposed to reach $2.35 billion by 2022.
  • The rest of the Americas, followed by Asia, are the next continents on the growth list.
  • Partnerships with regional government initiatives focusing on developing smart city projects may be a profitable way of providing innovative solutions in the field.

INVESTING IN CREATING NEW JOBS


  • The great revenues that the company experienced has provided an amazing opportunity to increase employment from 200 to nearly 500 in the next five years.

ENVIRONMENTAL/SOCIAL CONSCIOUSNESS


  • This can be done in order to make a further positive impact and to gain even more customer fidelity by showing the company's promised goals.

THREATS


THE BATTERY BAN/FLYING LAWS


  • The company recently experienced problems with American Airlines, among other flight companies, that were opposing allowing travelers with smart luggage to board flights, fearing possible fire issues.
  • An initial cause of the smart luggage ban was the Samsung Galaxy Note 7 explosion defect.
  • Even with reduced opposition, some customers report that some airlines still fear the use of smart bags with internal batteries.
  • Lack of clarification and outdated travel laws have banned even approved bags, such as some Travel Away products, according CEO Steph Korey.
  • This ban has forced some luggage companies out of business, such as Bluesmart and Raden.

THE ALWAYS EVOLVING TECHNOLOGY SCENARIO


  • The always changing technology scenario is a constant threat to companies that provide electronic features.
  • There are already studies on possibilities to exchange lithium batteries which could cause extensive costs in further product innovation and development.
  • Large companies are forced to always scout new technologies, or risk becoming obsolete and losing business, even completely failing.
Part
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Part
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SWOT Analysis: Target

Target's key strengths include its strong brand presence, ability to differentiate through merchandise, efficient inventory management, its product mix and location attractiveness, its ability to adjust pricing strategy to consumer behavior, its strong private label presence, and its sound financial health better than its competitors. Target's key weaknesses include it's weak online connect with customers, it's declining operating income, susceptibility to data breaches, and its dependence on external suppliers from foreign countries.

A) Strengths

  • Internal Perspective:
1) Strong Brand Presence: One of the key strengths of the company is its strong brand presence in the U.S. The company has large scale operations in the U.S., which makes it one of the largest retailers within the U.S. and allows the company to realize economies of scale in its operations thereby enhancing its buying power and allowing it to offer low competitive prices to its customers. The company has been able to successfully build a brand image/reputation of offering quality products to its customers at marked down prices.
2) Differentiation through merchandise: Another key strength of the company is that it has been able to differentiate itself from the likes of Walmart by means of the merchandise it offers. Target offers products which are affordable yet stylish. It has partnered with various designers and dealers to provide differentiating merchandise assortments at low prices to provide it with a competitive advantage.
3) Efficient Inventory Management: The company has an efficient inventory management system, a prime example of which is their own website that allows customers to search their desired products and availability in other locations. The website which has a friendly and easy user-interface, recommends online purchasing to the customers for the items that are not available within their desired location. This averts customers from switching to competitors like Amazon and also prevents the company from dealing with the hassle of managing gargantuan back-door inventory, thereby reducing its inventory holding cost and boosting its margins.
4) Better Financial Health than competitors: The company enjoys better liquidity and working capital management than its biggest competitor Walmart. Target’s current ratio (1.12), quick ratio (0.44), and networking capital ($1,508,000), which are indicators of liquidity strength of a company, are all superior to Walmart’s 0.93, 0.24, and $-4,380,000 respectively. In addendum, Target has better financial leverage than its competition with a debt to capital ratio of 0.50 (vs 0.38 for Walmart), and thus a better ability to avoid financial distress.
5) Strong Private Label Presence: The company enjoys a strong private label presence with over 750 private labels under its portfolio and the same has been a major part of Target's effort to modernize. It provides its customers with more reason to shop exclusively at Target, and not switch to its competitors like Amazon while boosting company margins at the same time, as private label products tend to be of higher margins. A strong focus on the private label strategy has allowed Target to veer its performance into positive territory in 2018 (+3% comparable sales in Q1'18) after a string of disappointing quarterly earnings reports dating back to 2015.
  • From Target Market/Consumer Perspective:
6) Pricing strategy adjusted to consumer behavior: The company has been able to successfully enhance its loyal customer base and penetrate into the target markets because of its ability to adjust its price positioning according to the trends in the market. The company has been able to successfully connect to its target demographics through schemes such as “Low-Price Promise” and “Expect More. Pay Less” or loyalty programs like 'REDcard Rewards' loyalty program aimed to provide value addition at low prices to the customers. Within 5 years of its launch, the penetration of REDcard reached over 21%.
7) Product mix and Location Attractiveness: The company has been successful in catering to the current consumers’ demographic, which live in concentrated urban areas and needs fewer necessity products, through new branches in urban areas. The company has deliberately focused on operating compact stores with more efficient and convenient product mix in these urban locations. These stores offer target demographics with basic products, such as perishables, that customers use daily thereby averting them the hassle to drive all the way to Walmart or Costco.

B) Weaknesses

  • Internal Perspective:
1) Weak online Connection with Customers: Although the company has an online presence in the form of Target.com, the platform has been sufficiently under-marketed and has remained underutilized. The company has been a latecomer to some aspects of e-commerce and digital sales represent just a paltry amount of company sales. Its online business generated about $3 billion in 2017 accounting for just 4.4% of total sales.

The digital sales have grown by 27%, well short of the company's target of 40%. In addendum, the company does not offer all items on its online platform, which has hampered its urban penetration. Hence, a weak online/digital presence has been a weakness for the company, and it needs to work on enhancing its online awareness and presence among customers.
2) Declining Operating Income: The company's operating income has been on a declining trend over the past few years on account of the high cost of sales and other general expenses. The company's operating level profit has declined from $4,864 million in 2016 to $4,224 million in 2017 and $4,110 million in 2018. On the other hand, the cost of sales has gone up from $49,145 million in 2016 to $51,125 million in 2017 and $53,299 million in 2018. This declining income and increasing expenses have dented the operating profit margins for the company.
  • External Perspective:
3) Susceptibility to Data Breaches: The company has been susceptible to external data breaches and has experienced the same in the past leading to leaking of important data which contained confidential information, including credit and debit card details of its customers. The company has been investing heavily on its data security but the fact that the company is a soft target for such data breaches erodes customer confidence. In addition, the same has led to multiple lawsuits against the company. Target had to shell out $18.5 million to 47 states in the Security Breach Settlement in 2017 which takes a further toll on its operating profit and margins.
4) Dependence on external suppliers from foreign countries: A large portion of Target’s merchandise is sourced from outside the U.S. This causes business risks, as any change in economic or political conditions of these countries can affect the supplies and hence revenues of the company, leading to an overall weakness for the company.

C) Opportunities

1) Expansion in U.S.: In spite of having a large retail presence in the U.S., the company has significantly less number of locations in the U.S. than its competitors like Walmart. As compared to 5,000 Walmart U.S. stores, Target has around 1,822 stores in U.S. Hence, this presents a huge opportunity for the company to enhance its retail presence and market penetration in the U.S. by increasing the number of stores. The company also has the opportunity to close down some of its non-performing stores in other locations, as it has done with 130 stores in Canada, and concentrate on the U.S. market expansion opportunity.
2) Investment in New Technology and Product Development: With its strong and stable free cash flow situation, Target has an opportunity to invest in adjacent product segments, new technologies as well as in new product segments. The company has an opportunity to invest in its supply chain and inventory management systems and also enhance its online operations which the company has thus far been lacking in. This should open a window of opportunity for the Target Corporation in other product categories.
3) Enhance International Presence: The company has thus far not been able to globalize its operations unlike some of its competitors. Outside the United States, the company has a presence in just Canada and India, so international expansion presents a huge growth opportunity for the company. The company has the opportunity to look for unsaturated markets with a low competition environment, and expand its operations, thereby enhancing its global retail market share.
4) Delever its Balance Sheet: The company has the opportunity to delever its balance sheet by truncating its debt levels (which are to the tune of $11.3 billion as of 2019) and thereby reducing its interest liability by using the positive cash flows and surplus cash ($1.6 billion as of 2019) that it has on its balance sheet. The company has thus far been on a store modernization spree and has been adding on its debt levels with much of the cash lying idle in its books. Thus, the company has an opportunity to utilize the same to pare down its leverage and improve its cost of capital.

D) Threats

1) Competition: The competition in the retail industry is a major threat that the company faces. Many online retail companies like Amazon are offering a lower price, causing competition. In addition, a change in consumer behavior to get their non-consumable goods at a cheaper alternative source poses a threat to the company of losing customers to competitors offering similar goods at a lower price. Also since most of the goods offered by Target overlap with that of competitors like Walmart, there is a threat of pricing pressure in the market to retain market share.
2) Slow U.S. Economy Recovery: The company's primary operations and revenue are realized from the United States and any prolonged slowness or reversal in the economic growth of the U.S. can pose a significant threat to the company, as it leads to reduced disposable income, low consumer sentiment and consumer confidence. Thus, Target faces a threat of slowing sales growth, reducing overall sales, and reducing gross margins on account of deteriorating macroeconomic conditions. (Source#1)
3) Change in Tax Laws and Regulations: Since the company's net earnings are pretty levered to the effective tax rate that it pays, Target faces the threat of a higher effective tax rate on account of changes in tax law and related regulations, tax treaties and interpretation of existing laws thereby having an adverse effect on the company's net income. In addition, the company's operations outside of the U.S. may result in greater volatility in its effective tax rate.
4) Lower Credit Ratings: The company faces a threat of a downgrade in its credit ratings on account of continued dismal financial performance and increasing debt levels. Any such downgrade would severely impact its ability to raise any further debt for expansion and also increase its cost of capital.
Part
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Part
07

Category Trends: Luxury Goods

Current trends impacting the luxury good's category in the United States include the changing of the meaning of luxury due to millenialization, use of digital media and internet retailing, new attitudes towards luxury goods, market turbulence with slowed sales and the existence of varied competition between luxury goods categories, with barriers to entry.

MILLENIALIZATION IS CHANGING THE MEANING OF LUXURY

  • The young millennial HENRYs (high-earners-not-rich-yet) have higher incomes relative to the majority of the population, between $100,000 and $250,000 in the U.S. and are rapidly replacing the concept of a luxury good as a status symbol by that of a luxury experience. They are opting to have access to luxury over ownership of it.
  • Luxury brands are therefore being forced to take up a balancing act for the conflicting push-pull they get from their traditional wealthy and older customers who interested in one type of luxury, and their younger, not-rich-yet customers and potential one's who want the experience of luxury, not ownership. Both are integral to the success of the luxury market.

DIGITAL MEDIA AND INTERNET RETAILING

NEW ATTITUDES TOWARDS LUXURY GOODS

MARKET Turbulence AND SLOWED SALES

VARIED COMPETITION BETWEEN LUXURY GOODS CATEGORIES

  • The competitive environment across different luxury goods categories continued to vary in 2017, with categories such as luxury cars, fine wines/champagne and spirits having their top players retain their hold by increasing barriers to entry for other players, such as the share capital required to join the competition.
  • The varied competition and increased barriers of entry into the luxury market have limited the number of new entrants.

Research Strategy:

An extensive search for the current trends impacting the luxury good's category in the United States brought up several lists of trends. The main direct searches were into luxury market reports such as the Euromonitor report on Luxury Goods in America, industry-related magazines such as Forbes Magazine, market research platforms such as Mindshare in the Loop, retailer event website known as Etailer and professional services firms with insights on luxury goods market such as EY. By cross-checking these sources, lists as well as reports, we were able to identify five current trends that appeared in at least two of the reliable lists.
Part
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Part
08

Category Trends: Luggage

Backpacks, lightweight carry on's, spinner wheeled suitcases, GPS technology, and personalization are all current booming trends that are impacting the luggage category in the US, causing companies to adapt to the growing needs/wants of consumers, operations, technology, and the economy.

Trend 1) Backpacks:

  • Description: Backpacks are an up and coming trend for the US luggage industry, as backpacks represent an easier option for travelers to carry throughout their trips. Backpacks have shed their school-related stigma and are now viewed as a hands-free alternative, especially for women, as more women are trading in their purses for backpacks. In addition, the trend is also impacted by the increase in recreational and business travel due to a boom in tourism.
  • Impact on companies: This trend is influencing luggage companies to expand their luggage options to include backpacks styled for both genders.

Trend 2) GPS technology:

  • Description: GPS technology is a new trend that is being incorporated in the US. GPS technology involves incorporating a GPS tracking system within the luggage item itself.
  • Impact on companies: This trend appears to be mostly technology-driven due to the advances in technology which allows GPS systems to be incorporated into luggage. However, it is also consumer and economy-driven because the middle class of consumers is now able to purchase more products and expand their choices. Companies must also consider how they will apply this technology in a way that meets the airline regulation policies (i.e. avoid using lithium batteries, which are banned). GPS technology is predicted to contribute to the growth of the overall luggage market in the next decade.

3) Lightweight carry on's:

  • Description: Lightweight carry-ons have been a growing interest to consumers due to the airline baggage restrictions and the increasing cost of a baggage check.
  • Impact on companies: This trend is consumer-driven but also operations-driven, given that consumers are traveling more by air as opposed to rail or road and they have to follow each airline's luggage restrictions. Luggage companies must also comply with airline restrictions in order to produce lightweight options that consumers can use as carry-ons. This trend is projected to experience a big growth in the next 10 years.

4) Personalization

  • Description: Personalization requires companies to make personal and costumizable products as opposed to a one-sized fits all. This trend is ranked 4th in the fashion trends report of 2019, suggesting that personalization and curation will become more important in the near future.
  • Impact on companies: 90% of travelers would like something more personalized. Due to the increasing desire for personalization, this trend is primarily consumer-driven and is influencing companies to innovate more, which increases the amount of money required per product.

5) "Spinner" wheels suitcase

  • Description: Spinner-wheeled suitcases are of growing interest to consumers, as they comply with airline regulations. These spinner wheels allow for movement in all directions, something older versions of standard rolling suitcases were unable to accommodate. This new trend makes traveling easier and less heavy for consumers.
  • Impact on companies: This trend is forcing companies to adjust their previous standard suitcases to incorporate spinner wheels, which makes it a consumer-based trend. Moreover, there is an increasing number of consumers that want an easier way to carry their luggage and the flexibility of spinner wheels allows for this. As most spinner-wheeled suitcases are adapted from the previous standard suitcases, they are also TSA compliant, which makes them compliant with all airline regulations.
Part
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Part
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Category Trends: Mass Market Retail

Buy online, pick up in-store (BOPIS), making e-commerce shipping faster/e-commerce subscriptions, multi-channel, use of virtual assistants, and Luxury meets next-gen HENRY are some current trends impacting the mass market retail category in the United States.

BUY ONLINE, PICK UP IN-STORE (BOPIS)

  • BOPIS is been adopted by several large retailers, and this has continued to refine their approaches and develop new ideas for how stores should be designed and operation transformed around the concept of BOPIS.
  • BOPIS is currently being enhanced with other technology innovations, like driverless vehicles that could bring customers to stores for order pick-up.
  • Merchants, like apparel retailer rue21 and pet product's maven Petco, have adopted BOPIS, and by the end of 2018, it was becoming clear that retailer devotion to BOPIS paid off with increasing interest among customers.
  • According to GP Shopper report, last year suggested that more than two-thirds of more than 1,300 shoppers surveyed said they planned to use BOPIS services for holiday shopping needs. The survey found that some shoppers want to use mobile tools to ease and enhance their in-store experiences, as 36% said they wanted to use a retailer's mobile app, 35% said they wanted to use scan-and-go for faster checkout, 27% hoped to use visual search to find items and 26% aimed to use a mobile wish list.
  • Walmart, Home Depot, Target, and several other retailers have spent much of 2018 advancing their BOPIS approaches.

MAKING E-COMMERCE SHIPPING FASTER

  • In September 2018 the e-commerce sector expanded by 11.4% (Source 3).
  • A recent study found that the amount of time people are willing to wait for free shipping has dropped from 5.5 days in 2012 to 4.5 days on average.
  • Programs like Amazon Prime have made two-day shipping the standard, so cutting down on shipping time is vital for any e-commerce business looking to stay afloat.
  • Recently, buyers are also increasingly seeking shopping that is tailored to their preferences and delivered directly to their doors. The confluence of these trends has resulted in the emergence of subscription e-commerce, businesses that curate products and ship them to customers on a regular basis.
  • The retail sector has witnessed explosive expansion since 2010, growing from $57 million in sales to more than $2.6 billion by 2016. According to a report by McKinsey & Company, 15% of online consumers signed up for subscription services in 2017.

USE OF MULTI-CHANNEL

  • One of the interesting dichotomies of the current retail model is that despite their alarming closure rates, brick-and-mortar stores still play a key role in the sales process.
  • Instead of a single touchpoint for consumers, the trend in retail over the past few years has been to widen the net that brands used to catch leads and convert them.
  • BigCommerce’s 2018 Omni-Channel Retail Report found that only 11.8% of Gen-Z shops on Facebook, while nearly 25% of Baby Boomers shop on the social platform. Millennial, meanwhile, prefer to buy products they discover on Instagram and Snapchat.
  • This calls for deep integration across all channels, including websites, marketplaces, social media and brick-and-mortar.
  • "Multi-channel is vital for captivating consumers and keeping them engaged from first impressions to the eventual point of sale". Focusing on providing excellent service across sales channels will pay big dividends in the coming year.

USE OF VIRTUAL ASSISTANTS

  • For customers, having someone to help us choose the product that best suits our needs is a factor that adds great value to the brand. With the current technologies, we can transfer these assistants to the virtual world.
  • The improvement in the recommendations of personalized products contributes an incalculable value to the brand. Proof of this is the solution we developed for OneBookShelf, a leading company in the sale of digital entertainment content.
  • The virtual assistants are in the process of expansion, in fact, it is estimated annual growth of 11.6% until the year 2021.
  • More and more stores offer assistance in the form of chatbots or guided by a voice that provides valuable information to the person in front of the PC, smartphone or tablet. In a relationship of reciprocity, the Artificial Intelligence systems that direct these assistants are learning with the information received from the users' thanks to Machine Learning, perfecting their work algorithms.
  • For the retail entrepreneur, virtual assistants can help you automate data-driven business management operations to achieve optimal results. These tasks can range from adapting offers to certain groups, to managing smart email marketing campaigns or suggesting rewards to the best customers, among many others.

LUXURY MEETS NEXT-GEN HENRYS

  • This will be the year the luxury industry meets the HENRYs (high-earners-not-rich-yet). They are the leading edge of the millennial generation who will reach 38 years of age this year and hit their stride in terms of career and income.
  • Behind them come the Gen Y’s, the oldest of whom will turn 22 years old and start their careers in great demand in a full-employment economy.
  • The trendsetters in these two cohorts will be the most educated, most connected and those with the most money — HENRYs in the top 25 percentiles in income.
  • The young moneyed are in search of luxury brands that are aligned with their personal values and in tune with the digital way they prefer to engage with brands.
  • The luxury watch sector is reeling from their advance, as brands like Patek Philippe fall flat being positioned as a watch you don’t own, but take care of for future generations. Next-gen HENRYs, “don’t necessarily have this long-term vision,” explains Dina Khalifa, of the British School of Fashion.
  • They’re buying for now, not for future investment, so a digital watch is much cooler. Young people are after products that integrate tech, as opposed to just seeking out old-fashioned craftsmanship, Khalifa shares.

RESEARCH STRATEGY

We began our research by combing through media publications, and precompiled lists of current trends impacting the mass market retail segment in the United States. We utilize credible media magazines like Forbes, Retail Dive, and Entrepreneur. Our research team was able to filter valuable data points and identify the current trends impacting the mass market retail segment in the United States.
Part
10
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Part
10

LVMH: Advertising Analysis

LVMH's primary channels for advertising are print, digital and television. The company has started to put more emphasis on digital advertising, but still spends a sizeable amount on print and television advertising. LVMH recently used Snapchat to digitally advertise their products. The company spent $216.3 million on print advertising in 2017.

DIGITAL

  • LVMH has put more emphasis on digital advertising, as noted by their company executives, even as they step up strong marketing strategies for their products. Consumer data gathering has been made easy with technology and LVMH has been able to use this data to personalize their digital marketing efforts so that they can target and reach their customers.
  • LVMH has shifted its advertising from print to digital channels and is increasing their digital budget while cutting their print budget. Digital advertising for LVMH has taken the form of digital campaigns on social media and online advertisements. Advertisements have been featured on LVMH's social media platforms such as Snapchat which featured an advertisement by the company on 6/7/2019.

PRINT

  • High-end luxury brands such as LVMH have print as their highest ad spends. LVMH spent $216.3 million on print advertising, which is more than a half of its estimated total ad spend of $386.1 million in 2017 in the US. This figure was down by $15.2 million from the previous amount used by the company for print advertising.
  • LVMH shares reached a record high and they reported a year-on-year increase of 15% in its first quarter sales of 2017. This was attributed to the effort the company put in print advertising.

TELEVISION

  • LVMH Moet Hennessy Louis Vuitton SA split its 2018 ad spend of $100 million between digital, print and national television. The company's owned cognac brand Hennessy uses television advertising to market their products and recently used television to advertise their drink during the NBA finals.
  • Even though LVMH uses television as a channel for advertising, it doesn't have as much focus on it as it does in print and digital advertising. Television is therefore one of the primary channels for advertising LVMH uses based on its ad spend mix for 2018, which largely included print, digital and television.

Research Strategy:

  • To find the primary channels used by LVMH for advertising, we searched industry databases, news channels, publications, and reports, such as Wall Street Journal, CNBC, Business Insider, Adweek, Adage, Media Radar, Wired UK, The Fashion Law and Fashion United for information on the request. We were able to find data from the sources which allowed for an analysis of LVMH's primary channels for advertising. An extensive search for LVMH's primary channels for advertising brought up three channels as indicated in our findings.
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Part
11

Away Travel: Advertising Analysis

Away Travel utilizes print media, social media and availability through internet search as their primary channels for advertising.

AWAY TRAVEL — ADVERTISING ANALYSIS


PRINT


  • For print advertising, Away Travel publishes a quarterly magazine named "Here" where they share travel related stories that their audience/clientele may find interesting, driving traffic and attention to their products.
  • They use this method as a tool to develop their brand. Away Travel has described this as a "touchpoint for the Away brand" because it allows them to provide context to their mission and services.
  • This has been identified as one of Away Travel’s primary channels in advertising as they repeatedly promote their magazine as a means of increasing engagement with their company.

SOCIAL MEDIA


  • The company also partners with travel bloggers, and Instagram and YouTube influencers to gain more visibility.
  • This has been identified as one of Away Travel’s primary channels in advertising, the company attributing their growth as a travel brand to their social media marketing.

SEARCH


  • An analysis of the Away Travel website reveals that internet search accounts for about 44% of site visits, followed by direct traffic which accounts for about 34%, with social media traffic at about 14%.
  • The company not only advertises through their branded keywords, but also through the most relevant keywords of the industry, ‘luggage’ and ‘suitcase.’
  • An analysis of search results reveals that Away Travel’s internet search advertising is more aggressive than their competitors.
  • This has been identified as one of Away Travel’s primary channels in advertising because it has proven to be the top source of their site visits.

RESEARCH STRATEGY


Advertising channels on which Away Travel focuses financially were not found publicly available, and so research was based on their primary advertising channels according to their own reports, and through analysis of their website statistics. As a private company, they were found to be under no obligation to publicly report their financial information. Through self-published reports from the company, it was found that Away Travel primarily advertises through print and social media, and most of their website traffic comes from general internet searches.
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Part
12

Target: Advertising Analysis

Three primary channels that Target utilizes for advertising include print, television, and digital media. Based on Target's 2017 annual report, the majority of their ad spend was split between newspaper, digital, and broadcast advertisements.


TARGET'S PRIMARY CHANNELS

  • In 2017, Target spent an estimated $1.5 billion on advertising, of which the majority was split between newspaper ads, digital advertisements, and media broadcasts.
  • Below we have compiled some additional information on these three channels.

PRINT
TELEVISION
DIGITAL

Research Strategy:

In order to determine three primary channels that Target uses for advertising purposes, the research team began by leveraging the information located on ad campaign databases, marketing insight websites, as well as Target's own press releases and annual reports. This provided us with a thorough overview of the type of marketing strategies Target places great emphasis on as a retail store and how they diversify via different platforms. While a financial breakdown of the ad spend by channel was unavailable, Target's publicly available financial information, as well as reaction and impression metrics, suggest that the company's three primary focuses are increasingly on print, television, and digital advertising.
Sources
Sources

From Part 04
Quotes
  • "LVMH has benefited along with a handful of rivals such as Gucci-owner Kering from rebounding demand among Chinese customers in the past two years. "
  • "Other bright spots included wine and spirits, where revenue growth accelerated from one quarter to the next, though momentum in perfumes and cosmetics slowed"
Quotes
  • "Louis Vuitton's Q1 organic revenue grew 11% compared to Q1 2018; Fashion & Leather Goods was the fastest growing segment with a 15% increase."
Quotes
  • "At the Annual General Meeting on April 18, 2019, LVMH will propose a dividend of €6 per share, an increase of 20%. An interim dividend of €2 per share was paid on December 6 of last year. The balance of €4 per share will be paid on April 29, 2019."
Quotes
  • "Footwear, clothing and leather goods are the top categories of fakes, while most fake goods picked up at customs checks originated from Hong Kong and mainland China"
Quotes
  • "The Global Brand Counterfeiting Report 2018 estimates that the losses suffered due to global online counterfeiting has amounted to 323 Billion USD in the year 2017, with luxury brands incurring a loss of 30.3 billion dollars through internet sales."
Quotes
  • "“It was the increase in interest in customised watches,” says Jean-Claude Biver, non-executive chairman of the LVMH watchmaking division. “It’s also difficult for us to make customised watches when we have an organisation that is more adapted to making series [of watches] than individual pieces.”"
Quotes
  • "she’s become the first female designer with an original LVMH Moët Hennessy–Louis Vuitton SE brand. Secondly and thirdly, Rihanna can now boast that she’s the first woman of color and the first black woman to sit at the head of a large luxury fashion house."
Quotes
  • "Designer labels have long been status symbols for those keen to display their wealth. In the last decade, fashion houses such as Gucci, Fendi, and Louis Vuitton have sought to exploit their signature logos as style staples, emblazoning them across T-shirts and luggage and as all-over repeat prints on coats, suits and more."
Quotes
  • "Tourism is booming in Japan as large numbers of young Chinese women (certainly banking on the weak yen) have taken to visiting the country, making Tokyo an attractive alternative to Hong Kong. Add to this the $22.7 billion-plus that Japanese natives spend annually on luxury goods, and you have the world’s number two luxury market behind the United States, and “a strategic market for luxury,” as former chairman and chief executive of Christian Dior Couture Sidney Toledano (who now holds the title of Chairman and CEO of LVMH Fashion Group) put it referring to the opening of Ginza Six, the luxury mall, last spring."
From Part 08
Quotes
  • "Most of the airlines have luggage weight regulations enforcement, which prompts at the growing demand for lightweight carry-on travel bags."
Quotes
  • " “Transitioning from a cross body or tote lifestyle to a backpack is akin to going from traditional headphones to wireless Airpods -- now that’s hands-free freedom,” she said."
From Part 11
Quotes
  • "The team’s first order of business was to begin building a storyline via social media. You get one guess as to the platform they decided to focus on."
  • "In addition to leveraging Instagram to weave a story for its audience to follow, Away decided to do something that, oddly enough, was revolutionary within the luggage industry: Publish a magazine."
  • "With that in mind, Rubio and her team began developing Here, an in-house publication dedicated to showcasing stories of travel, adventure, and exploration, as told by the people who actually lived the experiences."
  • "To be sure, Away’s team didn’t go it alone. In addition to creating their own content to be presented on the brand’s Instagram page, Away partnered up with a few well-known travel bloggers and Instagrammers to help the company gain some visibility from way early on."
  • "Once Away began to grow a following, the team’s focus shifted onto engaging with these individuals in an authentic and celebratory manner. They did this by showcasing and promoting user-generated content featuring the brand’s products."
  • "According to Dash Hudson, Away generated more than 325 pieces of UGC in February 2017 alone, which led to nearly 4.5 million impressions via Instagram."
Quotes
  • "Samsonite has been around for over 100 years while Away was founded less than 4 years ago. They achieved this market share by building very strong word of mouth (fueled by their own PR efforts), social media and content marketing."
  • "About half of these referrals, about 30,000 visits/mo, come from an affiliate network. This indicates a strong affiliate program, fueled by reviews on YouTube & Instagram."
  • "I’ve looked at a wide variety of Away’s ads that pop up for branded keywords. All of them are pretty good. A strong focus on the brand name with some other brand elements like “A Better Way To Travel” or “For the Modern Traveler”."
  • "All ads make good use of all ad extensions I especially like that last price extension of the ad below. In its description text, it has “Fits on major airlines”, a concern that many buyers might have."
  • "On a monthly basis that is 1.25M. To get closer to that Away needs to achieve a very low customer acquisition cost. So in what follows, let’s assume they spend 20% of their profits on advertising. That means they make $8.3 for every dollar they put into ads. To hit this they would need to hit a conversion rate of 3.1%, which is high but possible."
Quotes
  • "We launched our podcast Airplane Mode and quarterly print magazine, Here because we weren’t seeing the types of stories we thought our audience might be interested in across more traditional outlets. "
  • "Both mediums act as another touchpoint for the Away brand by giving context around our broader mission, but they also serve as inspiration to travel and make even the most seemingly out-of-reach experiences feel more accessible."
  • "We’re seeing more brands move into print magazines, from the Wing in NYC to big active brands like Nike. It seems that small-scale publications work as a great branding tool in our increasingly visual culture. Also travelling is the one place that you are most likely to pick up a magazine to read on the plane."
  • "Social media is saturated with all kinds of brands, so in order to keep engagement high and provide something that rises above the noise, it’s key to present your community with new and exciting ideas and visuals. For us, that means content that inspires people to travel more while remaining true to our brand ethos."
  • "We work with some amazing people who love our products and, as a result, share their experience through unique content. They help us reach people and areas we might not have the internal bandwidth to target regularly. That said, it’s crucial to partner with influencers that fit our brand identity to be sure that content will be authentic—it’s so easy for a brand community to tell what’s forced or not authentic when it comes to content."