Chanel and Armani's Retailing and Distribution Strategy - Essay Example

Retailing and distribution strategy - Analyse two luxury brands. CHANEL and ARMANI Contents Introduction 3 Discussion 4 Internationalisation strategyof Chanel 4 Internationalisation strategy of ARMANI 8 Conclusion 10 References 12 Introduction In this competitive global market environment it is very necessary for all the companies to continuously grow and expand their market presence so that they can increase their market share comparatively by a good percentage and also are able to capture most of the market share which is still been not explored. In the fashion industry as people of different countries are moving towards taking the branded products the opportunities for fashion companies are very huge in the global market. Every country has a different style of clothing based on their culture, rituals and followings that people of that particular country do follow from many ages. But with the increasing income level and also expenditures of the customers’ good branded companies try and move to other parts of the world to expand their business and also to increase their market share. In this report the two fashion brand giants Chanel and Armani have been selected for studying and understanding the internationalisation strategy of the two different companies. Both the companies have got their presence in not only in their parent nations but also in other parts of the world where they have expanded their business in a successful manner. The distribution channel and the marketing strategy followed by the companies while exploring new markets in the global market can be seen with the help of these two brands. It is very important to have a good distribution channel and also a strong marketing strategy for any company to become successful in the global market environment as the amount of competition is very high across the global market and every company is striving hard to move ahead and capture the maximum market share. Discussion Internationalisation strategy of Chanel Chanel is one of well-known fashion brand which is basically from Parisian fashion house. It was been founded by Gabrielle “Coco” Chanel and is highly recognised in specialisation for luxury goods and haute couture. Chanel has looked to come up with women’s pants, costume jewellery, fashionable dresses and simple suits. Its designs and creations of the dresses have remained same and consistent from many years without any change (Aaker, 2008, pp. 56-64). Chanel highly involves into designing, manufacturing and retailing of beautiful and fashionable dress items and also accessories. It was founded in 1909 and it has its headquarters in Neuilly Sur Seine in France. Chanel has around 200 boutiques spread across different parts of world. Though, Chanel is not that popular as it always has maintained a low profile in the market and doesn’t look to go through extensive promotions to promote its brand in the global market (Alexander and Docherty, 2009, pp. 123-127). Because of which the sales of the company has not increased so much and the profit margin for the company has remain low compared to other companies present in the same industry. Chanel is well aware of the changing trend of the fashion dresses among the youngsters and it has continuously looked to work towards attracting the young generation by retaining their old market group and marketing strategy. The company looks to open its own boutiques in different parts of different countries but that to in limited numbers as the company has only 2 boutiques in Singapore, because of this the company has not got that huge brand awareness in the global market when compared to other fashion brands and thus it lacks a lot of market share also in the global market (Bauer, 2009, pp. 34-38). Chanel only looks to launch luxury goods with no plans to enter into any other segments as they don’t want the image of the company getting declined by entering into cheaper and mid-size segments. The company also maintains a different strategy for its boutiques as it makes sure that the mystique of the company remains and the image of the company are not altered at any cost (Bruce, Moore and Birtwistle, 2004, pp. 234-237). The company looks to keep its classic items in every category of dress, jewelleries, perfumes and other accessories along with launching new and trendy products based on the season for which that particular product suits. Chanel has also come up with online marketing strategy allowing its customers to buy products sitting comfortably from their home. The company looks to showcase only the items which are not that high priced in their online store so that the customers don’t get a wrong idea about the product and also the company. The high price products are been showcased to the customers only on specially made requests by the customers. The boutiques and the stores are been maintained in a proper way keeping the vision and the objective of the company to not alter its image (Chernatony and MacDonald, 2003, pp. 67-75). The spacing in the stores is well maintained allowing the customers to easily move around and make their choice of their particular items. The fashionable dress materials and also the accessories are been showcased very carefully making sure that they are visible to the customers who visit their stores. The new items which are been launched as per the changing seasons and also with the changing locations are been showcased in different place in the boutiques so that they don’t cause any harm to the visibility of the classical items and also have their own visibility (Jacobs, 2009, pp. 87-95). The distribution channel for the company is been very tightly controlled and it also has different distribution channels for different items. For the business dress materials the company has its own manufacturing unit and also has its own boutiques across the world, these boutiques are been opened by the company itself and the ambiance of the boutiques are been maintained and planned in such a way that the company’s image remains the same and it doesn’t faces any problem (Hines and Bruce, 2008, pp. 96-104). The classical dress materials and also the seasonal creative dress are been distributed across to all the boutiques present in different locations and they are been displayed in a proper way. On the other hand the watches and jewelleries the company looks to have a different distribution channel as it has got authorized dealers for watches but in jewelleries business the distribution channel is only thought the retail stores and the boutiques owned by Chanel. Few of the items like the makeup, skincare products and also the fragrances are been also sold though the online website of the company but only in certain regions. But only in case of eyewear the company does not license its name in the market (Cervellon and Coudriet, 2013, pp. 869 – 884). Even with the increasing use of internet for marketing purpose the company has looked to prevent the sales of its products through the auction sites and also the wrong fraudulent sites by maintain a strong control over its distribution channel. This method of the company has allowed it to maintain its good image in the global market as a well-known and reliable brand. Chanel is one of the oldest brands in fashionable dress items and the company has grown in huge numbers over the past few years. The company has made strict efforts to make sure that the image of the company is not altered in any way (Kaperferer and Bastien, 2009, pp. 23-28). The company has built a good reputation globally across in various countries like Singapore, London, Tokyo, France, Milan, Paris and Beijing. But the company has not been able to capture a good percentage of market shares even after being so old because of its strategies that it has used for going global. The company looks to have its own stores and boutiques in different countries which are been built by the company on its own as a result of which the company is not able to open much stores and boutiques and thus the brand awareness of the company is very low in the global market. The company has not been able to increase its profit margin by good percentage because of the less visibility and awareness of their existing products. It also has less promotional activities for new products. For this reason the customers tend to move for the other brands and prefer taking products of other brands which are readily available in the market. Chanel communicates their messages to the customers in a proper way get more profit as the customers understand the value that the products can add to their life (Keller, 2003, pp. 49-54). The main designer of Chanel is Kaperferer who made so many changes in the product offerings of Chanel just after he joined the company. Chanel has been implementing brand endorsement strategies by launching their new offerings though celebrities and stars. The management pays more focus in marketing as the target audience of the brand is very nice premium segment of customers with higher disposable income level and luxuries lifestyle. According to Coco Chanel, Fashion is wide factor for human beings that not only exist in traditional, contemporary and designer dresses but it also involves in accessories like watches, jewelleries and many others. Taking this real thought into consideration, Couture houses always try to expand offerings beyond their famous items. To back up the above statement by real example it needs to be mentioned that Chanel is one of the premium fashion brands that had a strong move into designer watches business in 1987. Its competitors like Calvin Klein and Hugo Boss followed this diversification strategy of Chanel later. To have a strong presence and expand its luxurious watch business, Chanel bought Chatelain in 1993 which was a watch assembly plant located in the centre of the industry of Swiss watch. The company have high focus in this business and has increased the expertise in its Swiss Plant from 270 to 350 in 2011. It also established another plant in 2012 which has approximately double the capacity of production than the other one. According to Chief Executive of TAG Heuer, Stemphane Linder, Chanel has been enjoying huge success in its designer clothing and apparel business and it is also leading the market of luxurious Swiss watches than other fashion brands. According a survey report, Chanel bags are still the first choices of many ladies (Shotter, 2014). Internationalisation strategy of ARMANI The ARMANI group was been established in 1972 and it was been named as the Giorgio Armani Group. Currently Armani is one of the major fashion brands in the fashion industry and has got its presence in over 120 countries across the globe. It is owned and run by one of the best designer Giorgio Armani. It has not only gained respect as a brand in the global market but is also one of the highest valued brands in the fashion industry across the globe with a net value of around 3 billion Euros. Armani is well known among the brands which produces luxury clothing and apparels. It has in total of 6 brands and each brand has their own positioning, distribution, retail and marketing strategy (Mesher, 2010, pp. 45-52). The company has gained popularity in the global market through its superior quality and high quality of design, the relevant themes that the company uses for its products and also its policy to launch the latest trend products to attract the customers more and also by maintaining the aura of a luxury brand in the market and also in the mind of the customers across the global market. Armani has got its presence in all the major countries and also has created a strong awareness in the mind of the customers as a luxury brand with best quality toward which the customers can look up to prefer while buying a particular fashionable item in the category of dress or any other accessories as well (Okonowo, 2007, pp. 34-39). Armani has been able to achieve such great success because of its line of brands that it has under its parent name to see that the needs of each and every specific market is been met with its products. It has looked to meet the customer needs of all the markets where it looks to expand by providing products which can create value for the customers of that particular market in a good way (Miller and Mills, 2012, pp.41-51). This has helped the company to attract more and more customers and also capture a good market share in the global market in every place where it has looked to expand its presence. Armani looks to provide the customers the products at their own preference and also at the price they can afford with the help of the sub groups that the company has launched in various countries based on the market requirement of that particular market (Retail Design Institute and VMSD, 2011, pp. 27-32). Armani has looked to have a huge distribution channel and it looks to create its presence in the market in a huge way. The company looks to locate its stores in specific places which seem to get more customer visit than other places which helps them in increasing customer foot falls by good percentage and also thus help them in increasing their sales. Taking the example of the situation when the company was looking forward to explore the market of China, where customers where liking to prefer the premium and luxury goods even by paying high price, Armani was one of the first foreign company to explore such market (Tungate, 2009, pp. 56-64). There were around 11 million Chinese luxury brand customers in the country so Armani decided to open its store beside the historic “The Bund” in Shanghai in 2004 and also looked forward towards opening more 30 stores in the country in the major locations to attract more and more customers and also to increase the visibility of the company which will help the company to enhance its brand awareness in the mind of the customers (Tungate, 2009, pp. 236-242). Armani Group has a good range of wholesaling which accounts to around 53% of the total sales of the company. The company has got a very good distribution network with around 311 stores located across the 120 countries the company owns only 115 stores which are directly under the control of the company and rest all the stores have been given as merchandising (Fitzroy and Herbert, 2007, pp. 34-38). Though the company has maintained a good control over the merchandised stores as well and has made sure they work with their best efficiency making sure that the company gets the maximum sales and it helps in increasing the profit margin by increasing the number of sales for the company (Varley, 2005, pp. 34-39). The company also looks to penetrate the markets by entering through few of the best finest wear stores present in the particular city where the foot falls of the customers is relatively very high as a result of which the company also gets a good promotion and also is able to create a good brand image in the mind of the customers. The company was originally started in Singapore and it looked to move to global market for the first time by entering the market of UK, at that time the company didn’t looks to open its own store but instead it joined with the partners who already had their stores in UK and from there the company started to increase its brand awareness in UK. This way the company started its globalisation and moving towards exploring the global market. The company chose to explore the UK market first as the customers in UK preferred to go for more trendy and luxury branded fashionable products so that they can have a good status co in the society. This helped the company to gain a good market share in the country and also encouraged them to even explore other markets across the globe (Moore, Doherty, and Doyle, 2010, pp. 139-161). Thus the strong distribution network of the company has helped it to get huge benefit and market share compared to other luxury brands present in the same industry like Chanel and thus the distribution channel and its internationalisation strategy has provided a good competitive advantage to the company over the other competitors present in the global market in various locations in the fashion industry and also in this premium segment (Nobbs, Moore and Sheridan, 2012, pp. 920-934). Conclusion Looking at this essay where the internationalisation strategy of the two big brands in the fashion industry is been studied, it can be understood how the distribution network and also the way the company uses its internationalisation strategy to increase the market share is important for the company to make sure that they can achieve maximum success out of their strategy. In case of Chanel the company looks to have a strong control over its distribution network and looks to open all the stores and boutiques. These are owned by the company for majority of its products. For this reason Chanel is not able to open more stores in different location and it has very less popularity in the global market as they look to maintain a low profile. This factor also hampers the revenue growth and also it misses out on many opportunities where it can explore and increase its profit margin. On the other hand Armani has got a good market image and also good brand awareness because of the huge distribution channel that it has created by opening up so many stores in all the major locations and also in the major places where it can get good visibility of the customers and as a result attract more foot falls thus increasing the sales of the company by huge percentage. Thus the companies looking to go global and looking towards increasing its market share needs to have a good market strategy and also a good distribution network to create a good brand awareness and also for capturing maximum market share having a competitive edge over the competitors. References Aaker, D. 2008. Strategic Marketing Management. New York: Wylie. Alexander, N. and Docherty, A. M. 2009. International Retailing. London: Oxford Press. Bauer, L. 2009. Luxury Stores: Top of the World. Berlin: TeNeues. Bruce, M. Moore, C. and Birtwistle, G. 2004. Cases in International Retailing, A Case Study Approach. 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