What I Learnt From A Walk Down Orchard Road

 

When I was strolling along Orchard Road, Singapore with my friends, we noticed some of the luxury brand retailers like Louis Vuitton, Chanel, Tommy Hilfiger, Prada S.p.A. (HKG:1913) and Tiffany & Co. (NYSE:TIF). Most tend to notice the apparels and bags on display but due to occupational habit, I was drawn towards the other factors at play in the famed shopping district.

 

What Are Some Of These Factors That I Noticed From All These Luxury Brand Retailers?

 

Brand Equity:

Different brands command different level of status – “with great power comes great responsibility”. In this case, power translates to status and responsibility refers to price. Taking for instance the Chanel Boutique Store in Takashimaya, Singapore – when you have to await your turn by standing in line just to enter the store, you have to think that Chanel has built for themselves a decent moat. What this moat does would be to enable them to price their products at a premium as their products are deemed by retailers as a cut above the rest. With their trademark earrings selling at least S$300 a pair (intricate ones might cost double or more), I think they have to be doing something right.

An extreme example of brand power would be Harley-Davidson Inc (NYSE:HOG); when your consumers have a tattoo of your company on their backs I personally would think that your company has a decently loyal customer base!

 

Brands Under One House:

As mentioned in our earlier article, where BreadTalk Group Limited (SGX:5DA) had various brands under them operating in the same mall, the same can also be said for luxury retailers. There are various benefits and one would be that with such a sizable rental size, they might be able to enjoy more benefits when it comes to rental commitments.

 

Compagnie Financiere Richemont SA (VTX:CFR): The Richemont Group is one of the world’s top luxury goods company boosting brands like,

• Alfred Dunhill Limited
• Cartier
• Montblanc
• Piaget SA
• Shanghai Tang and many more!

 

Kering (EPA:KER): Previously Pinault-Printemps-Redoute (PPR) but many would know them better from their portfolio of brands comprising of,

• Gucci
• Saint Laurent Paris
• Bottega Veneta
• Puma and many others!

 

Value In Asia

So the next time when you go shopping, take a look at your surroundings and you may be able to get a feel of their operations – to see if what’s happening on the ground correlates with what’s reported by the company in question. Maybe the company might turn out to be a better investment compared to buying that bag on the shelf.

Instead of buying a ring, the guys can try to give their partners shares in Tiffany & Co instead…just kidding! That might not turn out well for most guys out there LOL!

 

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All views and opinions articulated in the article were expressed in Mun Hong’s personal capacity and do not in any way represent those of his employer and other related entities. Mun Hong does not own any shares in the companies mentioned above.

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