The last month has seen more diamonds of economic news than there are in Cullinan mine. While British retail remains patchy, UK and other European companies selling “luxury” have done phenomenally well on the global stage. They have reaped dividends of promotion in emerging economies, especially in the Asia-Pacific region, targeting High Net Worth Individuals or those aspiring to perceived luxury.
Translation plays no small part in this global success: research has shown that the majority of consumers will only buy from websites with information presented in their language. This effect becomes more pronounced the higher the value of the product or service. (see Can’t Read, Won’t Buy: Why Language Matters, Common Sense Advisory)
A few news snippets illustrate the trend:
Paul Smith smartens up profits
Paul Smith, the fashion designer famed for his smart suits and signature rainbow stripes, has notched up a 31 per cent increase in pre-tax profits…
Turnover increased 15 per cent to £171.6m, but international sales were the star performer, rising 16 per cent in Europe, and 15.5 per cent in the rest of the world. By contrast, UK sales rose by just over 7 per cent.
Bentley leads convoy for mini-recovery in UK car production
December PMI figures and Bentley’s 37% global sales rise bring a little new year cheer to European stockmarkets
The luxury carmaker Bentley has defied the economic gloom with a 37% surge in global sales, producing a sparkling set of figures for 2011, powered by rising sales to China and the United States. It has forecast strong growth this year.
Ferragamo takes a sexy step on the red carpet
Asia-Pacific accounts for 36 percent of Salvatore Ferragamo’s global sales from January to September 2011. Paul Cadman, Ferragamo’s regional chief executive officer for Asia Pacific, says “The biggest challenge we foresee is how we will be able to keep up with the demand for our products given our forecast for the region for 2012. Our China market alone grew by 50 percent from January to September of 2011 as compared to the same period in 2010. Growth is what we anticipate for the region with our expansion plans, especially in China.”
The Philippine Star
China boosts Rolls Royce sales
Rolls-Royce said sales in Asia-Pacific grew 47pc in 2011. China is now its largest market. Sales in Germany and Russia more than doubled. Torsten Müller-Ötvös, chief executive, said “Our business is in excellent shape. We are developing our dealer network, moving into new markets like South America”
China: number one for Rolls-Royce
Rolls-Roycerevealed that in 2011, for the first time ever, China over took the US as its biggest market. Arndt Ellinghorst, an analyst at Credit Suisse, pointed to South Korea, Turkey and South America as regions where demand was likely to expand rapidly. The proportion of sales across the luxury vehicle universe from “non-traditional” markets could grow to 60-70 per cent of total sales, he added.
Financial Times beyondbrics blog
This trend is not just present in exports but also in sales within the UK – to those who have travelled here.
Foreign tourists have boosted profits at top London store Harvey Nichols by 32 percent. Harrods saw a 39 percent rise, with Chinese visitors spending an average of £3,500 per visit. With an eye on this market, Burberry has spent £20m upgrading its London stores. Angela Ahrendts, Burberry’s chief executive explained to the Financial Times recently, “When Chinese consumers travel, they spend six times more than when they stay at home. Saying ‘I bought this in London’ adds further cachet.”
The effect extends beyond London too, at least as far as the Oxfordshire town Bicester – which boasts the only station in the UK with signs signs translated into Chinese and Arabic. The designer outlet centre Bicester Village is now the UK’s third-biggest tourist shopping destination after Harrods and Selfridges. Visitor numbers are expected to exceed 5.5m in 2012, with 40 percent of shoppers coming from outside of the EU and some two-thirds coming from outside the UK.
So, what conclusions should we draw from all this?
First, any brand that considers its products positioned at the premium or luxury end of the continuum should start taking emerging markets seriously. Of course, Arabic, Russian and Japanese remain key languages to be addressing consumers in but the list is expanding to include Chinese, Brazilian Portuguese and more.
Secondly, the “blank slate” of these markets provides an opportunity for brand transformation and hegemony – I wrote last year about wealthy Chinese tourists and Clarks shoes.
Finally, the internet is a cost effective place to start. Many companies get a shock when they see the number of non-English speakers among their existing visitors, never mind potential new ones. Isn’t it about time we started speaking to this global audience in their language?