Even though there are big questions about how the future of retail business, the French luxury goods giant LVMH is sure that it will be done mostly in physical stores despite the rise of online channels.
“We see the future being two things: being mostly retail stores, because the client experience in a retail store cannot be matched easily online. As of today, I mean, no one has found the sort of miracle formula that would enable clients to enjoy as much online,” said Jean Jacques Guiony, chief financial officer at LVMH, in an interview with a television channel
“The second point is also to enrich this experience with online content,” he added.
There has been a significant surge in online shopping since the emergence of the coronavirus pandemic, and the subsequent stay-at-home orders imposed around the world to curb the spread of the pandemic. That has also forced many retail companies to develop their online offerings quicker than otherwise they would have potentially done. This change in the retail industry has in turn raised the question about the need for retailing companies to operate expensive physical stores.
However, LVMH, one of the biggest luxury brands of the world believes that its online offering is just “a complement to the physical experience.”
Many of the customers who visit the stores of the company had visited the company’s website prior to setting foot in the stores and the products that they purchase at the stores could have been easily purchased online, Guiony said.
“They get a lot of information, but they come to the store because the store experience is something that cannot be matched on the internet,” he said.
There was a 17 per cent year on year drop in the revenues of LVMH in 2020. During the period, the business was not only impacted by the local containment and lockdown measures but also by the restrictions on international travel. Moet & Chadon, Marc Jacobs, Christian Dior and Bvlgari are the other brands that are owned by LVMH.
“I don’t know whether we can talk about roaring 20s … the analogy one century after makes me a little bit doubtful, but anyway, I don’t know whether we can talk about that. We can definitely talk about the fact that the business is doing well with most of the client base, be it in Europe, be it in Asia,” Guiony said. “All in all, frankly, we cannot complain.”
“The integration of Tiffany is not a six-month job, it’s something that will last for a number of quarters and the objective is not just to integrate, is to develop the business up to the level that we think the quality of the brand could generate, so it is a long-term job,” he added.
The stocks of the company have risen by 32.8 per cent so far this year.
(Adapted from CNBC.com)