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Date Submitted: 03/07/2013 02:58 AM
SUPPLY CHAIN COMPLEXITY IN THE
LUXURY GOODS INDUSTRY:
MEETING THE CHALLENGES TO
CONTINUED GROWTH
By Arrigo Berni
White Paper
15/4/2002
INTRODUCTION
Luxury goods companies are at a turning point
in their development. They have succeeded in
making luxury a broadly accepted lifestyle;
their products are demanded by a growing and
broader segment of the worldwide population;
luxury is penetrating even product categories
where offering intangible, status symbol
benefits would have appeared preposterous a
few years ago1. Consequently, the economic
results of the best performing luxury
companies have been spectacular in the last
decade, with double-digit sales growth2.
The recent softening of the worldwide
economy and the threat of a life-altering
coexistence with terrorism may seem to be the
biggest threats to the future of this industry.
And indeed, demand for luxury goods has
faltered, particularly for those brands that had
not yet achieved a solid positioning in the
market place. Yet, I believe that this is going
to prove just a blip in a long-term trend of
growth. The demography of population and
wealth are overwhelmingly in favor of
continued growth for the luxury industry.
However, there is evidence suggesting that
growth will be more cyclical in the future,
competition more intense and that all players
will face the challenge of exploding complexity.
The competencies that proved to be winning
factors in the last decade will not be enough to
meet these challenges and to guarantee
continued growth.
Meeting the complexity challenge, in particular,
will be more important than ever, as market
conditions become less favorable and less
forgiving. After years of strong growth, most
luxury goods companies have mastered the art
of developing, marketing and promoting their
brand. Now they will need to learn the science
of mastering the ever-growing complexity of
the business systems they have created. The
ability to...