Why Has Luxury Companies In Britain Been Struggling?

London, England: there is little mention of the British economic industry, but the industry offers more jobs than the total three industries of the country's film and television music industry, occupying 8% of total exports, contributing more than 32 billion pounds to the British economy, paying more taxes than the Premier League, and growing by more than 10% per year.

This is the luxury industry.

Michael Ward, chairman of the luxury goods association, said: Despite the obvious advantages, the British luxury industry is also a paradox: apart from a few brands, luxury companies from the UK are struggling to grow into global giants and scale expansion.

Why luxury goods can be so outstanding in the UK? London is the preferred destination for wealthy local and international customers, hoping to enter the city's deep talent pool and rich brand heritage.

The flow of capital has made London a global financial capital, supporting the diversity of the university system of excellent art, fashion and design institutes to enlist the envy of the world.

Whatever standard of measurement is taken, Britain

The industry has achieved excellent results in the past five years.

New stars such as Emilia Wickstead, Orlebar Brown and Victoria Beckham emerge; mature brands such as Jimmy Choo, Alexander McQueen and so on continue to win impressive sales results at home and abroad, even in the background of slow growth in the UK's GDP and Europe's overall weakness.

We should be proud of these brands, their historical heritage, creativity, technology, quality, innovation, and their contribution to the economic and cultural soft power.

A recent McKinsey & Company study has brought us closer to the paradox.

To get a better understanding of this phenomenon, McKinsey analyzed the financial performance of more than 200 luxury brands in Britain and compared them with French, Italy and German brands.

McKinsey also investigates and interviews leading British luxury companies.

Excluding the larger luxury car industry, most of the brands in the report belong to the fashion industry, although brands like premium wines, spirits, cosmetics and high-end tableware are also included.

The final result of the report is astonishing.

With the expansion of the company's scale,

The luxury industry is beginning to lag behind its rivals across the Strait.

The report divides growth into four stages.

Companies in the first stage are below 20 million pounds and are usually led by highly charismatic founders.

There are about 200 to 250 such "future brands" in the UK, which are the same as the number of competing countries in the European continent (Italy, France and Germany).

The second stage (sales volume of 100 million pounds) of the number of British brands between 35 and 45, still can be

Or Italy is contending in numbers (though only half of France).

By the third stage (sales between 100 million and 500 million pounds), the number of luxury goods companies in the European continent began to surpass that in the UK, and British companies could not compete with them in the global market scale.

There are only 12 companies in the third stage in the United Kingdom, compared with 22 in Germany, 32 in Italy and 38 in France.

In the fourth stage, the company is a large global company with a revenue of more than 500 million pounds, and has the ability to concentrate on deepening customer participation.

But there are only 4 in the United Kingdom - 8 in Germany, 15 in Italy, and 17 in France.

How do British companies manage to break this "100 million pound barrier"? Some striking similarities have emerged.

The study points out five successful driving factors.

First, in the UK, we must "do things right".

Any short-lived domestic performance can not serve as a starting point for foreign expansion.

A stronger domestic market can achieve more strategic international expansion.

Luxury enterprises have a prominent feature: even small businesses can go international.

Interestingly, when the British luxury companies expand overseas, the United States and the Middle East often have the first ports opened by these companies.

In fact, 75% of respondents believe that the United States is the key market for growth in the next five years.

Two, develop symbolic products.

To a surprising extent, a successful company can get most of its sales from a single product sale.

35% of the companies surveyed accounted for 60% of their sales revenue.

But the trick is to make these iconic products the basis rather than rely on them to move forward.

Three, give full play to the leading position of British electricity supplier.

Despite the fact that the electricity supplier business is not large (only 5% to 10% of the surveyed brand sales), the UK has a prominent advantage in increasing its online luxury sales. The popularity rate of online luxury goods sales in the UK is the highest in the world, accounting for 11%, which is the sum of France and Italy online.

Four, exploring management and business talents complement the core talents of luxury companies.

Britain has a tight market for managerial talent, and small luxury companies often find it hard to attract and retain talent.

Five, use external investment at the right time to remove obstacles to the critical stage of growth.

However, it is also important to choose business partners wisely and not to absorb unnecessary external investment before preparing for growth.

In addition to these five successful driving factors, many of the respondents in the report also believe that the British luxury industry should loathe the risk aversion in culture, which requires: "in general, we need to show ambition and investment confidence in the future."

One chief executive mentioned.

Respondents also referred to the lack of a comparable model in the industry: "there are not many great examples of large-scale success in the UK luxury industry," another chief executive said. "With such an example, people will be very excited that they may succeed."

Overall, I think this study shows that the prospects for luxury brands in the UK are bright and have the opportunity to achieve additional business growth and become a global power.

Britain also has a unique competitive edge to build what we should build.

Government support can be obtained at all levels, such as the Walpole Association of luxury goods Association (Walpole) and other industry organizations and sponsors can also help companies improve their chances of success.

There is no doubt that the development of luxury goods companies in Britain is a great opportunity. If all stakeholders play their respective roles, this is obviously within reach.