Family disagreements, seeking to go public, transforming with broken arms, fighting competition... Under the brilliant crystal light, Swarovski will have a lot of problems in the future.
Swarovski, with black swan pendants as a classic, encountered the "black swan" incident at the age of 125.
Recently, a media report of "closing 3,000 stores and laying off 6,000 employees" brought the Austrian crystal giant Swarovski into the limelight of public opinion. The next day, Swarovski issued a document to clarify that Swarovski will only reduce the global network of 3,000 stores.
Although the Oolong incident has come to an end for the time being, in 2020 when we are accustomed to "closing stores, laying off employees, and falling giants", the century-old family crystal company Swarovski will usher in brand power, marketing power and channel power. A big test.
Family divergence, seeking to go public, transforming with broken arms, fighting competition... Under the bright crystal light, Swarovski will face many problems in the future.
125-year-old Swarovski encounters "black swan"
According to Bloomberg News, due to the epidemic and the restructuring plan, the Austrian crystal accessories brand Swarovski Group's revenue will be hit hard this year. It is expected to drop by one-third to 2 billion euros. At the same time, it will lay off 6,000 employees and close 3,000 boutiques.
As soon as the news came out, rushed to the hot search on Weibo. In just a few hours, the reading surpassed 200 million.
Negative news about the brand often triggers widespread complaints from netizens. The topic comment area is full of voices such as "The cut is good, but the price is too high", "The quality is not good", and "Man-made crystals are not as valuable as real gold and silver." At the same time, after seeing the "scripts" of too many giants falling into the altar, netizens' empathy has gradually increased. Many netizens said that "foreign companies are really difficult, and it is difficult for all walks of life" and "this year. Too many corporate brands are suffering. I hope the epidemic will pass sooner."...
The public opinion continued to ferment, and Swarovski quickly issued a clarification that the CEO only mentioned that Swarovski will reduce the global network of 3,000 stores in an interview with Bloomberg, that is, close a small number of physical stores that are not in line with the new strategy.
The Oolong store closure incident has temporarily come to an end, but several signals conveyed by CEO Robert Buchbauer in the report are worth paying attention to.
First of all, Swarovski's long-standing "civilian" positioning is about to change. Robert said that Swarovski must understand the principle of "Less is more" instead of providing all products for all consumers. In the future, it will adjust its business focus and focus on unique and high-quality products.
Secondly, as a century-old family business, Swarovski, which has never "bow" to capital, may step into the capital market. "In order to better cope with the difficulties, the family behind Swarovski intends to give up part of the equity and list on the stock exchange in the short term or seek strategic partners," Robert said. "This is very painful for everyone, but we have to implement it for a few years. Measures that should have been taken before."
Generally speaking, luxury family businesses will strive to maintain their independence, but in recent years, many companies have moved towards capital. For example, the jewelry company Bulgari has been acquired by the LVMH group for more than a century, and the high-end down jacket brands Moncler, Canada Goose, and the Italian silk and leather brand Salvatore Ferragamo have all been listed.
Also worthy of fun, there are also the scenes of members of the Swarovski family openly "muting each other". According to data, about 200 members of the Swarovski family own shares in the company. Regarding the CEO's remarks, family member Paul Swarovski advertised through Bloomberg that high-end crystal products still have great potential in the global market. Swarovski's top priority is to find ways to "awaken" consumers, rather than closing stores and laying off employees.
The fierce internal conflicts exposed Swarovski’s "not a day's cold" business problems.
Judging from the financial reports in recent years, Swarovski has been in a bottleneck period. From 2014 to 2016, Swarovski's revenue was 3.05 billion euros, 3.37 billion euros and 3.36 billion euros, respectively, and the growth trend showed a slow trend.
Since 2020, global luxury goods have been severely hit by the epidemic, and demand in the Asian and American markets has fallen, and Swarovski’s first quarter sales have fallen sharply. In fact, Swarovski’s recent personnel changes are also quite frequent. In March 2020, Swarovski announced a reorganization plan. Markus Langes-Swarovski, a family heir who served for 18 years, retired from the executive board and no longer in charge of the company's operations; in May, Swarovski appointed Giovanna Battaglia Engelbert as the first company-wide creative director; In June, the company carried out large-scale layoffs of more than 600 people worldwide, and many departments and management were subject to fluctuations.
According to the Austrian News Agency, Swarovski also plans to merge its jewellery, home accessories and Swarovski Crystal World, which is located in the Austrian headquarters, and other businesses.
The glory and embarrassment of a century-old family business
Swarovski, which has been brilliant for a century, was once a disruptor in the jewelry industry.
In 1982, the glass cutter Daniel Swarovski invented the world's first electronic gem cutter. Through this self-developed machine, Daniel has greatly improved the speed and accuracy of crystal cutting while ensuring the quality of the crystal.
Three years later, with the vision of "creating diamonds suitable for everyone", Daniel set up his own door and founded a high-quality man-made man-made for raw cutting materials in a small town called Wattens in the foothills of the Alps. The crystal factory is now the crystal manufacturing giant Swarovski.
There is an old saying in China that "wealth is not more than three generations". It is difficult to fight for wealth. Swarovski has been operating by five generations of the family for more than 100 years, relying on high-purity man-made crystals, advanced cutting technology and excellent Original design has gradually become one of the most well-known jewelry brands in the world.
Swarovski is also the darling of the fashion industry. Well-known designers such as Coco Chanel, Christian Dior and many Hollywood designers have all snapped up Swarovski crystals. The legendary Hollywood actress Marilyn Monroe once wore a translucent dress full of Swarovski crystals, and sang a birthday song for Kennedy. Audrey Hepburn sings crazy in "Breakfast at Tiffany's." Looking at the Swarovski crystals in the shop window, it has become a classic Hollywood film and television scene. The ruby slippers in "The Wizard of Oz" are also decorated with Swarovski crystals.
It is worth mentioning that Swarovski is not a single crystal manufacturer. As early as during the First World War, there was a severe shortage of grinding tools for crystal production. Swarovski conducted two years of research and experimentation, developed a crystal grinding method and registered it as the Tyrolit brand. In 1935, Daniel's son William developed the Habicht, Swarovski's first binoculars. Swarovski established the high-precision optical instrument brand Optik in 1949. Today, its product range also includes rifle scopes, telescopes and optoelectronic devices.
According to data, Swarovski’s three main businesses are crystal business, grinding products Tyrolit and optical instrument brand Optik. Among them, the most famous crystal business is the main source of revenue. In 2019, the Swarovski Group had annual sales of 3.5 billion euros, and the annual sales of the crystal business accounted for 2.7 billion euros.
Under the business model of a family business, Swarovski has been splendid for 125 years. This model allows Swarovski's crystal craftsmanship and business philosophy to maintain good inheritance, but on the other hand, in the new direction and new business expansion, this model seems to have brought numerous obstacles to the brand's vitality.
It is undeniable that Swarovski is excellent in "product power" and "marketing power". Under the positioning of "luxury products that can be bought for $100", Swarovski relies on celebrity sales, agile new speed and high-end event scenes to frequently "show up", which not only brushes up the brand's sense of existence, but also It appears in the celebrity's couture dresses and the shopping carts of ordinary consumers without violating the harmony, which almost perfectly achieves the balance between "high-end" and "civilian".
But this can only make Swarovski active in the low-end market of mass luxury goods. Compared with mid-to-high-end brands, Swarovski's brand stickiness and customer loyalty are obviously insufficient, and its loose crystal wholesale business has also invisibly affected the brand. value. According to Bloomberg's analysis, Swarovski's transformation may mean the withdrawal of wholesale business, because cheaper crystal products from Egypt and China have greatly reduced Swarovski's profits.
At the same time, the market for crystal-like light luxury jewelry is becoming more and more crowded.
Similar fashion accessories brands such as Pandora, which has become popular in the Chinese market in the past two or three years, and APM, a light luxury jewelry brand from Monaco, have further compressed Swarovski's market share.
Regardless of the brand's own dilemma, or the general environment of the luxury industry, Swarovski's situation seems to be worrying. The Boston Consulting Group reports statistics that in 2020, the international luxury goods market has been hit hard by the epidemic, and the global fashion industry has fallen as much as 29% to 37%.
The epidemic in 2020 is more like a big test of the brand power, marketing power and channel power of many traditional giants. The short-term consumption downturn will be restored with the departure of the black swan, but for traditional luxury brands such as Swarovski, how to deal with the changes in the consumer market in the post-epidemic era is a more critical test.
