If you’ve been following business news lately, you might be pleasantly surprised that the stock market reached a post-recession record high yesterday, the highest since October 2007. Investors who have been “stocking” up on equities will probably see some great rewards from the risky moves they’ve made over the past few years. Many experts say that the strength of the stock market follows positive corporate earnings and profitability, a strengthening housing market, and the continued perception of the US as the best place to park money compared to global markets.
While the stock market has shown major signs of improvement, the economy still seems to be plugging along at a sluggish pace. Despite the recent good news, small businesses and large companies are still finding it difficult to navigate the challenging economic environment. Even the mighty retail giant Wal-Mart has seen its profits decline, thanks to lackluster consumer spending. A flurry of recent articles indicates that Wal Mart has been struggling to keep sales up and its shelves adequately stocked since the beginning of the year. Experts link the weakness in consumer spending to various factors, like the expiration of the payroll tax holiday and tax refunds arriving later in February this year than in prior years; hence less disposable income for consumers to shop with.
On the other hand, the luxury market has been pretty resilient during the recession and is still charging ahead for the most part. While consumer reports indicate that 2012 was a turning point for many luxury retailers that saw a decline in sales for the first time in many years (such as Burberry, Gucci and Tiffany), other high-end retailers implemented various strategies to maintain and even increase their market share. Companies like Prada, Hermes and LVMH focused on ultra-luxury rather than expansion, improved their technology and online presence, entered various emerging marketplaces –and saw sales continue to soar.
Small business owners and entrepreneurs who want to develop and expand their brands would be wise to adapt some of the successful practices of the luxury market. Simone Esposito is an expert and consultant who works with luxury and ultra-luxury international companies on branding and business development. He has worked with companies such as Thomas Pink, Loro Piana and Asprey of London, and has built a reputation as a forward-thinking consultant who anticipates market movements and trends and helps clients develop strategies to take advantage of industry shifts.
“The time is right for luxury brands to re-engage their customers, making sure to build a long-term loyalty,” urges Simone. “Companies must place the customer experience at the heart of their enterprise.”
Simone also insists that while some companies are doing a good job of adapting to new technologies which helps move sales along, they must continue to reinforce their offline presence as well– and this could ring true as well for small business owners and entrepreneurs. “I think that developing personal relationships with customers is something that all brands should aim for, ” he says. “Many prime brands (I am not only talking luxury here) have invested in upgrading their online presence in recent years forgetting to upgrade their offline, personal relationships. Unfortunately, according to the Luxury Institute, this translates only to 10-15% of luxury customers having a first-name relationship with a sales professional. It has been proven that customers who have a true human relationship with a brand generally buy way more from that brand, and loyalty is a direct and logic consequence.”
Simone insists that luxury companies emphasize customer service, and in today’s challenging economy, all companies would benefit from providing a positive and memorable customer experience. “A luxury brand offers luxury products, of course, but to attract and retain discriminating buyers, it must also offer luxury customer service. In fact, what sets a luxury brand apart from the crowd isn’t only price—it’s also the quality of the overall customer experience.”
Wal-mart and other large companies may find it more cumbersome to increase sales and swiftly take advantage of market upturns, but small companies and entrepreneurs are in a good position to follow the lead of the luxury market, and to innovate and implement smart strategies that can lead to growth.