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Moncler is a French-Italian apparel manufacturer and lifestyle brand founded in 1952 by René Ramillon which was initially dedicated to sporting garments for mountaineering however, most known for its down jackets and sportswear. it pursuing a differentiation strategy by focusing on an ultra-high end customers. The Company designs, produces and distributes clothing and accessories through their brand, Moncler. The company manufactures clothing collections for women, men and children and offers primarily sportswear, outerwear, knitwear and skiwear, including jackets, shoes, sweaters, among others. Moncler retails its products through approximately 122 stores, as well as through the wholesale distribution channel and it operates in approximately 66 countries, it is primary advantage is offering premium products using modern designs and handcrafted. The industry attractiveness is moderate to low because many of the industry forces are not favorable, despite the positive growth in revenue of the industry $267 million. Based on my analysis of Moncler, the following are its key challenges:1- single season product, and 2- high selling cost that prevent them from increasing their revenue and to be more aggressive in the industry.
One of the biggest challenges that is facing the company, is they only offer single season clothing which is winter. As we know the temperature of winter season has been raising all over the globe, and that represent a challenge for them, since 85 percent of Moncler’s annual sales comes from its jackets. Therefore, in order for them to be more competitive and continue to grow their business, they need to diversify their product by offering multi season clothing. Moncler should use its brand appeal and diversify into additional categories such as Athleisure luxury wear which is the fastest growing segment. given the weather trend, it must extend its production line by focusing more on Athleisure luxury outerwear. The athleisure category has shown promising growth over the past few years. According to a Morgan Stanley Research report last year, the US activewear market accounts for annual sales of US$97 billion. The report estimates that the industry could add more than 30 per cent growth in sales by 2020 in the US market, whereas Europe could expect 5 per cent average annual sales growth over the next five years.
The company saw strong growth across all its markets, particularly in Asia which accounts for around 40 percent of its revenue, and in the US, also grew at the same rate, helped by new store openings and good performance in its wholesale business, but since Moncler directly distributes its clothing through its direct boutiques and exclusive department located in luxury resorts and urban high street which is costly. The average rent in the heart of the big cities is about $2600 per a square foot, however, if moncler decrease the square footage and focusing more on selling online, it would reduce its selling expense. Their operation expense is 70 per cent of their total revenue and since the online global apparel market is valued at 3 trillion dollars, and moncler reached $8 M in sales in 2011. Therefore, it is an opportunity for moncler to connect with customers, and grow revenue streams sell more with reduced expense, and strengthen their position in the market.
With even a few of the recommendations above, moncler can improve its positioning within the industry and be known for its products. Given its large footprint, it is important for moncler to diversify its product line to generate more revenue and sustain the competition in luxury goods.
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