Luxury brands must brush up service to succeed, expert says

Thu Oct 1, 2009 11:21am EDT
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By Miral Fahmy

SINGAPORE (Reuters Life!) - Creating a craving for that designer handbag or that trendy watch isn't enough to get customers to whip out their credit cards, but treating them well certainly can, an expert on luxury brands says.

Michel Phan of the Paris-based ESSEC Business School, which runs the world's only luxury brand management MBA program, says service -- online, in-store and after-sale -- is vital for luxury retailers in Asia.

Research shows affluent households are expected to spend just over $605 billion on discretionary items in 2015.

"Service is the weakest link in the luxury business model," explained Phan, assistant professor of marketing at ESSEC.

"I often tell retailers -- you have a beautiful product, a wonderful store, but when it comes to service, it's not on par, or its not even there," Phan, director of the MasterCard-ESSEC luxury brand management executive program, told Reuters.

Compared to Europe and the United States, many Asian economies have weathered the global financial crisis, driving several luxury retails to look eastwards for growth.

LVMH, the world's biggest luxury goods group which owns the Louis Vuitton brand especially popular in Asia, said China was the main contributor to emerging market sales, which make up about 30 percent of turnover.

Rival Richemont, the world's second largest luxury group in terms of sales and which includes the Cartier brand, also counts China as one of its main markets.   Continued...

<p>Sales people wait at Louis Vuitton Maison during the media preview as it opens at the Landmark in Central, a business district in Hong Kong December 8, 2005. REUTERS/Paul Yeung</p>