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Title Korea CQ - Epilogue of ‘Future of luxury: Post-covid retail trends’ by Daniel Mayran, Chariman of Bluebell Korea
Posted by webmaster Hit 36 Date 2021.04.01

Dear Korea CQ members,

 

On March 9th, at the Kuwaiti Ambassador’s residence, Daniel Mayran, Chairman of Bluebell Korea, gave a special lecture on ‘Future of luxury: Post-covid retail trends’

 

 

H.E. Bader Mohammad AlAwadi, H.E. Philippe Lefort, H.E. Chafik Rachadi, H.E. Hazem Fahmy, Daniel Mayran, Christian Marcos, Erwan Vilfeu, Brian Harris, Haelyung Hwang, Myungja Kim, Youngha Go, Haewon Park, Hongsuh Park, Ryan Lee, James Park, Joon-mo Kwon, Boyoun Choi, Choi Jungwha, Didier Beltoise, and Crystal Park attended.




 


H.E. Ambassador Bader Mohammad AlAwadi warmly welcomed everyone, and in honor of International Women’s’ day which was the day before, March 8, he gifted beautiful flowers to all the women present. Afterwards we watched a video that showed the beauty of Kuwait, shared good news of our members, and enjoyed a delicious Kuwaiti dinner specially prepared by the Ambassador.

 

 



 

 

After a delicious meal, the lecture ‘Future of luxury: Post-covid retail trends’ by Daniel Mayra, Chairman of Bluebell Korea started.

 

Chairman Daniel Mayran is the founder of the Luxury Business Institute (LBI), and also the Vice-President at the French-Korean Chamber of Commerce and Industry (FKCCI). He was also the former Managing Director Travel Retail in Asia as well as Executive Marketing Vice-President of Air France.

 

Through the lecture, members learned about how COVID has impacted Korea’s luxury market, and how it is expected to change.

 

 


 

 

After the lecture, members asked many questions, leading to a lively Q&A session.

 

 




We would like to thank Chairman Danial Mayran who gave an insightful lecture for members, H.E. Ambassador Bader Mohammad AlAwadi for inviting members to his residence for this wonderful forum, and to Ms. Haewon Park for gifting Genic’s Celderma Undermasks for all participants. We would also like to express thanks to all members who attended despite their busy schedules, as well as Crystal Park for her interpretation help.

 

Thank you.

 

Korea CQ MeeJung Kim

 

For more pictures, please click the link below:

https://photos.app.goo.gl/V4FQXdHXgKAaCzA98



 

 

Future of Luxury post-covid retail trends” By Daniel Mayran, Chairman of Bluebell Korea

  

In the future, historical and economic accounts will describe a world ‘Before COVID’

 

During these first few months of the year, we are not interested in knowing how the world will ‘resume’ its old ways, but we urgently need to figure out how we will renew ourselves.

 

Another aspect of the consequences is the imbalance that the pandemic has created.

 

In the case of China, it has shown an industrial production surplus of 7.3% with, as its corollary, the failure of the global economy which finished 2020 with twenty trillion dollars of debt compared to what was recorded at the end of 2019.

 

The United States represent today 24% of the world economy, whereas it represented 40% a few decades ago.

 

This imbalance has certainly been accelerated by COVID and its mutants disrupting our daily life – economic balances in particular, and our consumption habits, especially in Asia.

 

Another consequence in consumption habits is the ban on foreign travel; especially in Duty Free shopping habits which represented 21 billion dollars in 2019 and which will have guided Korean consumers to buy from the Travel market.

 

As for luxury, it will also be subject to evolution, not only in terms of concept - by taking sustainability more and more into account - but also in terms of commercial strategies and in integrating new technologies.

 

Luxury is an exceptional product created by an exceptional designer and/or an exceptional craftsmanship that must be sold in an exceptional way if we start from this definition.

 

What could be the consequences of COVID 19 in the luxury market in Korea?

 

First, remember that without the quarantine requirement, we will have seen a very good level of consumption, especially in the luxury sector, since it is estimated that more than 30% of sales today are recorded in this sector.

 

In addition, I would like to remind you that Korea is one of the most connected countries, having created for several years relational habits to integrate digital and traditional face-to-face relations.

 

Nevertheless, the difficulties related to the global economic environment have and will have resulted in the decrease of traditional customers in the luxury market; which will inevitably lead to the well-known mechanism; less customers, but higher prices.

 

If we take into account the social structure of Korea and its maturity in the luxury culture, we can already anticipate that this sector will regain its original position; exceptional products for exceptional customers, but this time for customers with high purchasing power.

 

It is also worth noting that certain brands which do not belong to major groups have already filed for bankruptcy.

 

Another consequence would be that this price increase will force the brands to strengthen their commercial strategy, in particular with a marketing approach based on an e-commerce adapted to more select customers and a more sophisticated CRM (Customer Relationship Management) and also to the reinforcement of the quality of in-store service, both in terms of product knowledge and attention to the clients.

 

Finally, it should be noted that restructuring the luxury market will inevitably lead to the closing of points of sale in the very short term and eventually to reinforcing digital to the detriment of brick and mortar.

 

But this pandemic will also have two inevitable consequences:

 

One is a rise of sales in the ‘Premium sector,’ which will also undergo upheavals following the bankruptcy of some independent brands, and at the same time a strengthening of sales for those who have been able to resist and, in particular, by the transfer of certain customers who had access to the luxury sector.

 

The other one is the development of the so-called ‘Second Hand’ markets which are growing by more than 30% to reach 6 billion dollars in Korea. This market is supported by motivations, which are not only economic reasons but also by various implications such as loyalty to the brand, sustainability, the arrival of new customers in the market and the development of stores and new sites targeted to this market.

 

Going back to my definition of luxury, how it is an exceptional product created by an exceptional designer and/or an exceptional craftsmanship that must be sold in an exceptional way, how do we maintain an exceptional sale, both digitally and by welcoming privileged customers. It would most likely be the new challenge ahead of us, both in Korea and in the rest of the world.

 

 

 

 

 

 

 

Q&A

 

Q. I think the age of luxury consumers are getting younger. Is this true, and what will be the impact on the luxury business?

 

A. You are right, more younger customers coming to try to buy luxury, but for them ‘luxury’ is slightly different. This means we now have different areas of luxury. You could say that after 50, people are quite traditional – they buy fashion, accessories etc in luxury brands as before. For younger customers, they go for electronics and leisure. For example, there is the leisure brand ‘lululemon.’ Everyone knows it and many younger people like it. This brand may be not quite ‘luxury’ but it is becoming more than ‘premium.’ Connecting this with what I was saying before, younger people move probably more towards ‘premium’ brands than luxury.

 

 

Q. How much luxury goods is the mz-generation purchasing? Do they really have to power to purchase luxury goods?

 

A. If you take a look at the generation that is 20-30 today, they represent 17~18% of luxury sales. It is very impressive.

 

 

 

Q. Could you tell us about the issue of fake products?

 

A. A long time ago, when I started work in Korea, one of my priorities for about 5 years was to do with counterfeit products. I remember once I met with some friends for dinner, and I discussed counterfeit items with them, and I was very surprised because they started to talk about Samsung. Counterfeit items is becoming so big, not only in luxury, but with brands like Samsung too. Samsung is starting to have people who are entirely dedicated to try and check where counterfeit products are coming from.  I spent 5 years involved in counterfeit, and I can tell you that time to time, I could imagine a customer being shocked at how difficult it was to differentiate between a real and counterfeit product. I remember in LV, we had 2 people completely dedicated to checking counterfeit items, and one day, one of them came in with a LV bag, saying that it’s impossible for a regular customer to check if it is real or not.

 

This is becoming a real problem. In 1990, in LV, 4% was counterfeit, but today it’s more than 10%. Then again, in 1990, the production of LV was perhaps 100 times less than today.

 

Luxury brands are trying to eradicate this problem, but it’s impossible.

 

 

 

 

Q. Is it really truly the increase in expenditure in luxury, or could there be a substitution effect? For example, in Korea, overseas travel dropped sharply and so people could spend the same money or even less on luxury brands. Luxury sales will go up, but it may not be compensating for the reduction in tourism expenditure.

 

Also, even before COVID, there’s been the problem of inequality. With COVID this seems to have gotten worse, and we can see it in the industry too where some brands are thriving while some are going bankrupt.

 

 

A. This is not a phenomenon of COVID, but COVID was one influencer of it that made it accelerate. This is a cultural problem. Korea is becoming one of the key countries that’s leading fashion. The level of knowledge that Korean customers have is really impressive. They know all the brands very well and they can also compare prices as they know the price positioning. The fact is that culturally, Korea is about the make a difference in the products’ quality.

 

Another phenomenon is as follows. 20 years ago, we were in a society of consumption. 20 years ago, a lady had to have a Chanel bag, or LV bag, Dior bag etc. Today, people want the ‘last’ Channel bag, the ‘last’ LV bag, etc. We are moving from a society of consumption, to a society of ‘new line or products’ in consumption. There is a tendency to move, to go to some new area.

 

I don’t know if you heard, but Korea is preparing something total new in the Incheon area. A few years ago, Paradise City opened with a hotel and casino. By 2026, we will have 5 new projects in the Incheon area. One will open in 2023, named ‘Inspire Hotel, which will be 10 times bigger than Paradise City. The casino will be 3 times bigger than the one in Paradise City. Paradise city has 730 rooms, and Inspire will have 2100 rooms, and they will also have an area to welcome up to 14,000 people. In the next 5 years, more than 50,000 hotel rooms will be open in this area. This is because people are starting to consider staying a little longer in the country. Some day we will travel again, but in the future, business travel will decrease, but leisure travel will restart.

 

Also, another consequence is that people will want to take advantage of their own country, so the country will open some attractive area to push them towards to make them stay in the country. This is happening not only in Korea, but all around the world. France is also building lot of specific resorts as such.

 

 

 

 

Q. I’m in the mobile game industry, which is targeted for the mass market. The only way we can raise the price for our digital goods is to make them time limited sales, or give exceptional functions. 

How do you bring people to desire products in the luxury business, and also, in some small areas, luxury brands are collaborating with digital goods. It is working?

 

 

A. It depends on the brand. In general, they choose quite famous brands. One example is Fendi, and also recently Dior is doing a collaboration like that. I’m not sure if it really works with brand that don’t have such high recognition.

 

I’d like to give you the example of the brand Gentle Monster. Gentle Monster is already a successful brand everywhere, and we’ve worked with them in different countries. Why are they so successful? They are, after all, just glasses. The CEO is one of the early creative CEOs. What they did was, they started to join their products with art, which upgraded their brand from a regular eyeglasses maker, to something exceptional. To move your product to a better level, you must create a special environment. 

Another example is the premium brand Nespresso. Nespresso is just capsules of coffee and a machine. Nothing else. But, Nespresso today is a premium brand. Why? They are creating a special environment around the product. They are building an image of what it means to buy Nespresso. That the customer is buying something exceptional.

Try to look around and see what you could create in your environment. That is one of the keys to success.

In addition to this, Nespresso also invested a lot in the quality of service. When you go to a Nespresso store, you receive a specific quality of service that is different.

 

 

 

 

 

 

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