JLC has opened an (really small) ephemeral store in Rue Saint Honoré to welcome its customers in the meantime. JLC found a very innovative and eye-catching way to inform customers and prospects about the existence of this ephemeral store. Rather than having a simple “billboard” on the front of their “old” store they chose to have a giant reproduction of one of their most complicated watches, the Reverso Gyrotourbillon 2 (see the video below for more information about this unique watch).

This replica is exquisite in every details and I could witness many people getting photographed in front of it. The giant clock, which tells the time, will stay here for ca. 5 months (until the renovation works are completed) and was realized by Athem, a well-known Paris-based agency communication agency.

My take:

A wonderful experience of how to turn an inconvenience into an experience!

I first saw this campaign on the Facebook page of a French marketing magazine for practitioners. This campaign generated very positive word-of-mouth but I found that it deserved criticism. Let me explain why.

There is a law in Europe that forbids so-called dumping. What it means is that you may not sell goods or services under their costs. This is to prevent unlawful competition. When I first saw a liter of wine sold for 0,07€ the question that came to my mind immediately was “how the hell can they sell to this price?”. You may not know it but producing a liter of wine costs a lot of money, especially when it’s good wine. Alone the costs associated to care of the vines (treatments, cuts, …) are around 1€ per bottle of 0,75L.When you add salaries, the price of the bottle, … you come usually in the 2-3€ range.

Therefore Carrefour loses money on the bottles they sell. How can it be?

In the past supermarkets invited the principle of “back margins”. Basically, because they couldn’t sell under the price they paid to their suppliers, they invoiced their suppliers for a series of services they never provided. Suppliers had no other choice than to accept if they wanted to keep selling through the supermarkets. It’s a typical example of high customer bargaining power.

A bill was passed to forbid these back margins in France but I’m not sure what the situation is in Italy. Although forbidden in France, bad practices have evolved. The suppliers are still the victims of it. The latest example I heard about was about “panel costs”. Carrefour suddenly informed its suppliers that it will invoice them 150€ to 200€ per year and per product for so-called “panel costs”, which should cover the costs of organizing panels with consumers to taste the suppliers’ products. The only problem is that suppliers have no choice but to accept and that Carrefour informed them that they would neither own the results, nor see them. Moreover, when you know that suppliers usually provide dozens of different products to supermarkets, the costs associated were pretty high and amounted to several thousands Euros.

My take:

This anniversary advertising campaign does NOT deserve our attention. It is just an outrage made to Carrefour’s suppliers which most probably subsidize, indirectly, this campaign through cutting in their revenues. Marketing must remain a discipline respectful of all stakeholders, including suppliers, and supermarkets –especially Carrefour- are not well known for that.

Keep my advice in mind; if something is too good to be real, dig deeper to understand what’s hidden behind. The reality may well disappoint you.

One can however wonder about the future of this sector. If for now Asia and the BRICS generally appear as a paradise for the luxury brands, there are some signs of slowdown that are probably no stranger to slower growth in China. We are indeed far from the double-digit growth that we used to know before 2008. To take the example of Swatch, China accounted for 39% of its turnover but the yearly growth ratios are down. From a 50% yearly growth Swatch was back in 2011 to 15%. Yet the Swiss brand has planned to open 100 new stores to meet its target of 10 billion Swiss francs revenues.

Opening new outlets seems therefore crucial, a little bit like in the Horeca (Hotels – Restaurants – Coffee shops) sector (also called CHR in France) where the location of outlets determines your growth factor. However, in contrast to the HoReCa / CHR which generate a recurring consumption, the luxury sector is dependent on other purchase frequencies. But loyalty is just as essential as in other sectors. Therefore I wonder about the long-term profitability of these outlets. May not they impair the profitability of other outlets? Indeed, 25% of sales of LVMH in France from foreign tourists may be asked whether we will not simply attend a travel purchases. If you want another striking example, did you know that up to 80% of the revenues of jewelry and horology stores in Paris are generated by tourists? French stores may well suffer …

My take :

In addition to the questions raised above it seems appropriate to recall what Bourdieu said about luxury. Bourdieu, as early as 1979, showed that one purpose of consumption was to distinguish itself and to seek identification with the lower social class in the “distance”.

However, mass consumption having been made ​​possible in Western Europe from the 1970s onwards, consumption in itself was no longer an element of identification. The social classes were no longer a representation of our place in society and the need arose to develop a person-centered approach. Brands then took over and assumed the role of differentiator.
In this race for identity, credit has enabled lower classes to buy their share of the dream and to move up. Like a rubber band that stretches and relaxes the gap between individuals narrows down only to better open up after; this race is endless because it is here that lies the rationale of luxury. You do not buy a Vuitton bag for your own pleasure but only for the displeasure of others, one might say.
In this social context the opening of new stores is a logical strategy for luxury brands. However I dare say that the segments of the population that should be targeted are not the richest but the “poorest” (actually the middle classes). My guess is that it is those very middle classes in search of identification that will make the future of luxury brands in Asia.

I love to let people analyze Bonne Maman’s packaging during our training sessions. It’s an easy example but it’s also a revealing one. Have look for instance at the example below. They took over the red-and-white checkered pattern from the jam jars and applied it to their biscuit line; the vintage style calligraphy was also taken over to make further use of the nostalgic levier. Last but not least, pay attention to the graphics. It’s not a photograph but rather a photographic composition that has been lavished to be aligned with the other “vintage” elements of the packaging.

Everything is very coherent and since I do like this example I was also astonished to see one of those elements taken over from the competition.

Look at what I discovered in a French supermarket recently. One can pretty much guess where the inspiration for this packaging was found. Yet, when you know what the genuine packaging looks like, you can also notice that this copy lacks the homogeneity of the Bonne Maman packaging.

My take :

It’s good to be inspired. Yet, if you decide to copy something, please make sure you understand why you copy it.

I recently fell in love with the new products display in Louis Vuitton’s store in Brussels. It’s simple, eye-catching, impacting and yet modern and complex enough to cope with Vuitton’s top tier positioning.

Unlike most stores there is only ONE product on display in each window.

Unlike most stores there is HOMOGENEITY between the windows.

Unlike most stores you can notice the ORIGINALITY.

Unlike most stores there is a STORY to be told.

My take:

The arrows are there to remember the times when Vuitton’s customers were adventurers exploring new territories and discovering new cultures and people. The adventure spirit is still present in each of the products and you can become an adventurer yourself, a discoverer of trends, when you choose a Vuitton product.

What is Lytro ? There is a very good explanation on the science behind Lytro on their website. Let me nevertheless explain the product with my own words. Until now you were taking 2D pictures; zooming in, zooming out, focusing on one point and taking the photo. Lytro is not a camera; it’s a new device that captures a 3D field of view and that gives the possibility to perform offline the zoom in and out, focus steps. What Lytro offers is actually to perform off-site all things that you had to do on-site until now. This is a very new, innovative and disruptive way of working.

This being said I’m very skeptical about Lytro’s chances of success on the market. Why is that? First of all because the resolution of the device is too low for the moment (1Megapixel) and insufficient for common users’ needs (for instance photo printing). Moreover the device’s price (between $399 and $499) if you compare it with cameras (which, in the consumer’s head, will be considered the point of comparison because there is no other reference available).

My take:

Besides the technical arguments mentioned above there are a few other points, anchored in the innovation theory as well as in the consumer behavior, that I think will drive Lytro down.

On the one hand, innovation theory tells us that first entrants with a disruptive technology do fail (see “The Innovator’s dilemma”, C. Christiansen). It is indeed very likely that this technology will be adopted by early adopters only given 1) its newness and 2) the needs it addresses. Lytro allows photography fans to play with a new medium and change their pictures as much as they want. But honestly, how many of us do spend time editing and retouching pictures. Few I guess. For most of us photographs are only a way to remember and no need arises to edit them.

On the other hand, given that the technology behind Lytro may well be of interest for advanced or professional users, my guess is that this technology will be taken over by other manufacturers which benefit of a real credibility among this segment of users: Canon and Nikon for instance. Video capabilities were integrated into photo cameras with success (a movie was recently shot using the Nikon D800!) and the next step may well be to take Lytro’s technology too.

Is there hope for Lytro? Yes there is. Lytro is fun and it must be kept like that. The needs of the professional segment are not the ones that should be addressed. If Lytro wants to survive it must make its technology available to the users who most need fun: mobile phone users. I’m not a scientist and I don’t know whether this is feasible, but if Lytro can partner with a manufacturer to include its technology into mobile phones, then it will be a huge success.

The parallel made by Jean-Pierre Robin is extremely interesting. He compares this Chinese “model” with the German industrial model that has been acclaimed by our European governments since the crisis started. Keep the following figure in mind: in Germany some 18% of the GDP comes from the industrial sector, compared with just more than 11% in France and 13% in Belgium. Although Germany has undergone “desindustrialization”, it is not as bad as in France.

According to J-P Robin, even if this model works well it remains non imitable. The peculiarities and the excellence of the German industrial model are based on a similar network of specialized small and medium companies (SMEs) which doesn’t exist in other countries. We may want to counter-argue that such a network also exist in other sectors in Italy, but the conditions are very different and the efficiency of the model was “killed” by 10 years of 0% growth under the Berlusconi era.

In conclusion if it seems that the German model cannot be reproduced elsewhere, I’m wondering what is left to come out of the crisis.

My take:

If you’d remember only one example of the German operational proximity, it should be this one. The Porsche plan in Leipzig (where the Cayenne and Panamera models are built) has only 60 minutes worth of stock as far as the assembly parts are concerned. Not bad at all.

Here’s another example I saw in Brussels which is not only original on its form but which also is  linked to the message displayed (it takes time to grow a patrimony).

The billboard was conceived for a private bank (Delen Bank) and includes real trees symbolizing the growth process.

My take :

Billboards are definitely “in” and this example is among the best I’ve seen. It’s original, beautiful and as neat and simple as one can expect from a private bank. We at IntoTheMinds would love to interview the guys who conceived this billboard.

What should you do in such a situation ? Why not producing a three-and-half-minute movie glorifying your brand and playing it on all channels after the evening news in 29 countries?

That’s what Cartier decided to do (it will cost the company between 5% and 10% of its overall communication budget!) and the result is amazing. The clip is called the Odyssey and premiered on TF1 on March 4^th around 8:45pm (between the evening news and the prime time movie). With a myriad references to the Cartier universe, the movie starts at Le Grand Palais in Paris where the Cartier panther will start her journey across Russia, China and India. The movie cost 4 million Euros and took 2 years to complete, with the same techniques used for a Hollywood blockbuster.

On the one hand Volkswagen became the world’s #2 car manufacturer and ambitions to become #1. The current #1, General Motors, which still sells more vehicles than VW but it has undergone a difficult crisis (which led the Detroit-based giant to bankruptcy) and its profitability is far away from VW records.

On the other hand the Swatch group reinforces its position as world’s #1 watch manufacturer and posted a double-digit revenue increase accompanied by a profitability increase. Never has a watchmaker earned so much money and Swatch already announced it was about to recruit 1000 more employees this year to sustain its growth.

Both companies are benefiting from the Asian growth, as well as from their positioning and brand image: “Made in Germany” vs. “Made in Switzerland”. Those two labels are the best you can expect in each product category (cars and watches respectively).

Both brands are very similar in terms of consumer behaviors: they both produce objects that allow the owner to show his/her status and social success to the outer world. Marketing and promotion techniques are therefore easily comparable.

Last but not least, the most striking common point I can find between the two groups regards their business models. At the time of Piëch Volkswagen went for segmentation and what I could call an horizontal integration. All types of consumers could find a vehicle : from affordable cars (Skoda, Lupo, Up) up to luxury super cars (Lamborghini, Bentley), even nuances among one and the same platform were available : VW was the reassuring quality brand, but you could also opt for a more sportive lifestyle with Seat or a less expensive one with Skoda.

Swatch did a two-way integration: it first started with vertical integration at a time when everyone was “disintegrating”. Swatch bought all its suppliers to control the whole supply chain and went so far as having a monopolistic situation. The genius of the late Hayek (who passed away last year) was to conduct an horizontal  integration at the same time. From the famous Swatch watches up to Breguet and Blancpain, through Omega and Flik Flak, all consumers will find the watch they are looking for.

My take:

A 10-year long strategic journey has brought both companies to transform their business model from mono-brand to multi-brands. They applied what one could call textbook marketing. Even Kotler would love it: you identify a profitable segment, develop a tailored offering and go to the market. That’s exactly what they did and today’s amazing figures are in great part the result of operational excellence: sharing components and platforms for VW, sharing components and movements for Swatch.

Yet the question remains how long this strategy will remain the best in existence. Growth in Asia is slowing down. Revenues from Asian sales are decreasing for Swatch, and as far as VW is concerned its inventory has never been so high (100,000 units, up from 50,000 units on the last 9 months).