When luxury creams premium price
By Pan Xiaoyi |
June 2, 2010, Wednesday
|
Print Edition
Print Edition
LUXURY skin-care company La Prairie, founded in 1978 in Switzerland, has become the world's most expensive name in the beauty industry, with some of its products even laced with pure gold.
It entered China in November 2005 with a store in Beijing. Its presence has expanded to 15 outlets in 10 cities, including Shanghai, Chengdu and Guangzhou.
Lynne Florio, president of La Prairie, had worked for the company for 20 years before she was tapped to manage International La Prairie. She has watched and helped direct the company's growth from stores in 15 countries to sales in 82. Florio led the company to launch several product mixes that include the gold, platinum, caviar and marine biology lines.
Florio, born in the United States, started her work career as a lending officer in a commercial bank, Chase Manhattan Bank, and went on to join Parfums Stern, a designer fragrance company, where she worked in marketing, finance and operations.
At the end of April, Florio paid a business trip to Asia and came to China for the very first time. During her four-day stay, she sat down with a reporter from Shanghai Daily at the PuLi Hotel & Spa to talk about her take on the Chinese cosmetics and luxury spending market.
Q: The luxury cosmetics industry was pretty hard hit by the financial crisis. How was your business performance last year in China? How did that compare with sales in developed markets?
A: China is an emerging growth market and was one of our best performing amid the difficulties in the world. It has grown every year since we launched the brand here because it is still new. We still have very limited distribution. We are still telling our story and inviting consumers to know about us.
Our business in the US was very hard hit and has undergone a really big change. In consumer purchasing, Europe was a little less hit.
Q: Why did La Prairie lift the price of its product lines last year while other luxury brands were cutting theirs? What was the strategy behind your decision?
A: We raised our prices, but we made great efforts to give more service. We provided facial services, sold in more convenient ways, and gave consumers samples and travel sizes. What happens in the luxury world is not only reflected in prices of products but also in services and experiences for customers. Value comes not just by price but accommodation as well. Experiences and better services are usually our strategy to weather a financial crisis.
Q: Does that work?
A: It works this year. We did some research in New York in the economic crisis and found out consumers just want the recognition of our brand. They stayed committed to us and they wanted us, as a company, to say thank you for being our customers. So we tried to keep them close to us even when they were not purchasing because we care about them, and I know they will come back. We did much more sampling, special gifts and special recognition. Recognition in tough times! That's what we do here and everywhere.
Q: Your products target up-market consumers. How are China's wealthy different from those you sell to in Europe or the US?
A: This is a growing emerging market. People have a new sense of money and luxury. The women here are more discerning. They would not accept second-best. The woman who wants good skin care thinks about what's best for her. China is a very sophisticated market where women really care about their skin and beauty. People want luxury and high performing products. I think there is a much higher standard and criteria for us.
Q: Some detractors argue that so-called "organic" or "natural" cosmetics are just an excuse to charge consumers more money. What do you say to them?
A: The whole natural and organic ways are what we should be conscious about. I don't think the "organic" and "natural" labels dictate price trends. I think they are separate. I don't know what other people do, but our philosophy is to give the best and be conscious about conserving the earth as much as possible.
Q: La Prairie has taken a slow approach to expansion in China. Do you intend to continue that strategy?
A: We don't look to expand until we are satisfied with the places we are in. Our expansion is not so slow. It is more a deliberate thing and customer-driven. We will be ready when the customers in new trading zones or open cities are ready to receive us.
Q: Will you enter new cities this year?
A: We will enter Wenzhou and Xi'an. Currently we have 15 stores in 10 cities.
Q: Does the price of your products make penetration into inland China unlikely any time soon?
A: That's always a dilemma. But we chose a certain positioning for our company when we started 30 years ago to offer the best products we could. We use the highest level of ingredients that work most effectively, and that costs money. Maybe we will have a smaller volume of people who are interested in that approach in certain places, but I think we can do well in places where people want the best in skin care and beauty.
Q: Will you develop products specifically for the Chinese market?
A: I don't know if I can say we have them only for Chinese consumers, but we do have some products that do well, regionally perform better in places like China, such as lighteners, whiteners and brighteners.
Q: How did your experiences affect your management style?
A: I am very lucky. The banking experience gave me a very good financial base, which always makes me conscious of ramifications and gives me a good base for valuating opportunities. Since I worked only for two companies that are growing, I was exposed to all areas of business, including distribution, strategic planning, marketing and sales. That gives me a sense of appreciation of what's important in decisions to pull the company together.
It entered China in November 2005 with a store in Beijing. Its presence has expanded to 15 outlets in 10 cities, including Shanghai, Chengdu and Guangzhou.
Lynne Florio, president of La Prairie, had worked for the company for 20 years before she was tapped to manage International La Prairie. She has watched and helped direct the company's growth from stores in 15 countries to sales in 82. Florio led the company to launch several product mixes that include the gold, platinum, caviar and marine biology lines.
Florio, born in the United States, started her work career as a lending officer in a commercial bank, Chase Manhattan Bank, and went on to join Parfums Stern, a designer fragrance company, where she worked in marketing, finance and operations.
At the end of April, Florio paid a business trip to Asia and came to China for the very first time. During her four-day stay, she sat down with a reporter from Shanghai Daily at the PuLi Hotel & Spa to talk about her take on the Chinese cosmetics and luxury spending market.
Q: The luxury cosmetics industry was pretty hard hit by the financial crisis. How was your business performance last year in China? How did that compare with sales in developed markets?
A: China is an emerging growth market and was one of our best performing amid the difficulties in the world. It has grown every year since we launched the brand here because it is still new. We still have very limited distribution. We are still telling our story and inviting consumers to know about us.
Our business in the US was very hard hit and has undergone a really big change. In consumer purchasing, Europe was a little less hit.
Q: Why did La Prairie lift the price of its product lines last year while other luxury brands were cutting theirs? What was the strategy behind your decision?
A: We raised our prices, but we made great efforts to give more service. We provided facial services, sold in more convenient ways, and gave consumers samples and travel sizes. What happens in the luxury world is not only reflected in prices of products but also in services and experiences for customers. Value comes not just by price but accommodation as well. Experiences and better services are usually our strategy to weather a financial crisis.
Q: Does that work?
A: It works this year. We did some research in New York in the economic crisis and found out consumers just want the recognition of our brand. They stayed committed to us and they wanted us, as a company, to say thank you for being our customers. So we tried to keep them close to us even when they were not purchasing because we care about them, and I know they will come back. We did much more sampling, special gifts and special recognition. Recognition in tough times! That's what we do here and everywhere.
Q: Your products target up-market consumers. How are China's wealthy different from those you sell to in Europe or the US?
A: This is a growing emerging market. People have a new sense of money and luxury. The women here are more discerning. They would not accept second-best. The woman who wants good skin care thinks about what's best for her. China is a very sophisticated market where women really care about their skin and beauty. People want luxury and high performing products. I think there is a much higher standard and criteria for us.
Q: Some detractors argue that so-called "organic" or "natural" cosmetics are just an excuse to charge consumers more money. What do you say to them?
A: The whole natural and organic ways are what we should be conscious about. I don't think the "organic" and "natural" labels dictate price trends. I think they are separate. I don't know what other people do, but our philosophy is to give the best and be conscious about conserving the earth as much as possible.
Q: La Prairie has taken a slow approach to expansion in China. Do you intend to continue that strategy?
A: We don't look to expand until we are satisfied with the places we are in. Our expansion is not so slow. It is more a deliberate thing and customer-driven. We will be ready when the customers in new trading zones or open cities are ready to receive us.
Q: Will you enter new cities this year?
A: We will enter Wenzhou and Xi'an. Currently we have 15 stores in 10 cities.
Q: Does the price of your products make penetration into inland China unlikely any time soon?
A: That's always a dilemma. But we chose a certain positioning for our company when we started 30 years ago to offer the best products we could. We use the highest level of ingredients that work most effectively, and that costs money. Maybe we will have a smaller volume of people who are interested in that approach in certain places, but I think we can do well in places where people want the best in skin care and beauty.
Q: Will you develop products specifically for the Chinese market?
A: I don't know if I can say we have them only for Chinese consumers, but we do have some products that do well, regionally perform better in places like China, such as lighteners, whiteners and brighteners.
Q: How did your experiences affect your management style?
A: I am very lucky. The banking experience gave me a very good financial base, which always makes me conscious of ramifications and gives me a good base for valuating opportunities. Since I worked only for two companies that are growing, I was exposed to all areas of business, including distribution, strategic planning, marketing and sales. That gives me a sense of appreciation of what's important in decisions to pull the company together.
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