LVMH looks to entice a captive audience on the ocean
Luxury titan LVMH has been working hard to reinvigorate its high-sea sales, modernising its approach to stay in line with what luxury cruisers want. That means embracing the trend towards experiences – if you want to sell Swiss watches, put on a seminar and teach people what to look for. If you hope to move high-end cosmetics, what about free tutorials? Free champagne and other deal-sweetening flourishes can turn a simple transaction into an event in-and-of itself. The way LVMH is accomplishing this retail revolution? Through Starboard Cruise Services – an operator of retail outlets aboard cruise ships that it acquired in 2000.
LVMH’s share price has risen by 9% so far this year
SOURCE: Yahoo Finance
Starboard’s president and CEO, Beth Neumann, describes the situation thusly: “People want to buy experiences, not just things. That’s a reality of how retail is changing in the U.S. and globally.” When it comes to the appeal of the high seas, she explains: “Happy guests on their dream vacation who are open to discovery and learning, it’s a retailer’s dream.” Add to that the fact that all merchandise is tax- and duty-free, and you have a seriously incentivised customer base.
Neumann’s passion for oceanic retail is understandable: Starboard started its life as a Miami-based duty-free shop, but today, it’s the world’s largest cruise ship retailer. It has “about 700 shops across 100 vessels,” and caters to the higher end of the market. For example, sales of goods priced at $1,000+ make up about half of the company’s revenues – despite the fact that less-than 2% of passengers buy these luxury products. That’s quite the evolution.
As the Millennial generation – and, increasingly, the other generations that it is influencing – continue to demand a greater experiential element in their retail, LVMH has found the perfect vehicle to deliver it.
Dominion holds LVMH in its Global Trends Luxury Fund.
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