“The luxury industry is a huge opportunity. It is big, resilient and represented a staggering estimated 1.2 trillion euros in 2017. and there is an extensive ecosystem support that. There are opportunities for MBAs with not only the usually suspects – LVMH, Kering, Richemont – but with consultancies, investment banks and in private equity,” says Stefano Turconi, teaching fellow of strategy & entrepreneurship at London Business School and partner at boutique advisory firm Charles Thames.
Stefano is creator of the Luxury Strategy course at London Business School, a course structured around wealth creation and opportunity within the luxury ecosystem, which is increasingly attracting talent from top business schools. He recently sat with us to share his outlook on the sector.
What is exciting about the current luxury industry landscape?
“Luxury is one of the truly global industries, but it is also an industry of industries. The consumption is global and the production is localized. For example, Germany specializes in automotive engineering, Italy in fashion and France in personal luxury goods.
“Currently, there is a lot of excitement around new business models. We’ve seen the establishment of the “after market” with companies like The Real Real. Rent the Runway’s success evidences the trend of non-consumption. Digital players Net-a-Porter, Moda Operandi and Farfetch are also furthering the industry. That’s not to mention the potential entrance of Amazon.
“This is a sector prone to innovation. A flurry of technology changes has created new challenges and opened the doors for evolution, growth and new entrants. It raises important strategic questions for legacy companies to define their digital transformation journeys in order to adapt for the current retail environment and consumer. And it questions the impact new capabilities will have on subsectors. What does the ability to grow diamonds in a lab mean for the mining industry?”
How is the industry adapting its strategy to respond to these changes?
“Luxury is idiosyncratic. It remains design-centric with a strong reliance on creativity and intuition. Do you think Burberry has the time to deploy a team to conduct market research and analyze data on consumer color preferences in between each season? There is no time and today the industry demands leaders who are creative and business-minded. Angela Ahrendts, the former CEO of Burberry, mastered this.
“The positive price elasticity of goods is another unique characteristic that informs strategy. Last year, a Supreme collection fetched 1 million USD at auction in Paris. A pair of sneakers from adidas Human Race collaboration with Pharrell Williams and Chanel were selling for up to 25 thousand USD. Cost and price are totally unrelated.
“These characteristics were the genesis of the Luxury Strategy course at London Business School. You can’t apply traditional businesses curriculum to luxury. At the same time, approaches in luxury strategy can be applied to common problems elsewhere. We are trying to tease out the element of excellence. I think that is why this course has heralded such broad appeal from students.
Can you tell us more about the curriculum for the Luxury Strategy course?
The timeliness of the curriculum and the course materials reflects the impact of technology and geopolitical trends on the industry. We cover everything from the electrification of sports cars to building new markets. It’s all happening right now and a lot of the cases are open-ended. This makes for a very vibrant in-class discussion. We’re excited to bring the industry’s top executives into the class. This year, that includes the likes of Giorgia Longono, Global e-Commerce Marketing & CRM Director of Ray-Ban, Luxottica Group; Francesco Tronci, VP of Investments for Investindustrial; Claudia D’Arpizio, Partner, Global Consumer Products and Retail Practices and Leader Luxury Goods Vertical at Bain & Company; and more to fuel the conversation about strategy and the practical implementation of it.
About Stefano Turconi
Stefano Turconi is a Teaching Fellow of Strategy & Entrepreneurship at London Business School. He serves as an instructor in Executing Strategy for Results – an advanced program for senior executives – and was the director of the Active Learning Programme – a joint initiative of LBS and MIT and the Young President’s Organization (YPO). Stefano is a partner at Charles Thames, a boutique advisory firm assisting CEOs and top teams in formulating and executing strategy. During the past several years, he has worked closely with a multitude of C-suite executives, leading company-wide interventions to remove strategic bottlenecks – all with documented results and far-reaching impact. Stefano holds an MSc in General Management (with distinction) from LBS and an MSc in Engineering from Politecnica di Milano, and studied participant-centered learning methods at Harvard Business School. He has published a number of papers, case studies, and articles, which appeared on Business Strategy Review, Strategic Direction, and MIT Sloan Management Review.
Written by Kathryn McConnell
Kathryn is a MBA 2020 candidate at London Business School and member of the Walpole Programme in Luxury Management. She came to LBS from the US after several years of developing strategic marketing campaigns for multi-national organizations. Her work has ranged from international consumer product launches to corporate earnings strategy and has led to features in the world’s top publications, including The Guardian and Wall Street Journal. Kathryn is an experienced dressmaker and active in preserving the craft in her hometown of Philadelphia. Kathryn has a B.A. degree from the University of North Carolina at Chapel Hill.