Luxury giants such as LVMH and Gucci have been taking over the luxury goods market as larger scale brands in a way that is leaving the smaller companies wondering how to survive. The trend now is bigger scales yield more advantages of scales.
The fact is this, these companies have realised that the bigger they are,the better business moves for them and the more they can dominate and have under their control smaller luxury brands, the stronger they become, that is advantages of scales.
How this is made possible and made easier and how this invariably aids their profit rise and business success can be explained through the rise of digital technology and its influence on trading and market. Due to the increase in online transit thanks to technological development big scaled luxury brands have moved and expanded their horizons to a new and more profitable target the online markets.
And as it is known that the bigger the company the bigger the purse, such luxury giants and brands can spend much more on hiring the best to handle their online markets and attain social media dominance. The big financial capability enjoyed allows for such brands to develop and improve their e-commerce as they can internally develop and maintain control over their brand image, prices and customer data without having to incite external cost.
Again, a bigger and more developed e-commerce base and outreach means that their social media reach is bigger and higher, leading to a bigger clientele and a wider range of outreach and customer type unlike the small scaled brands that have shorter outreach.
While most small scaled and less prominent luxury brands struggle with trying to grapple and make do with their offline clientele through securing good locations for their stores, the vast online market and connection platform created and developed by many of these luxury giants has enabled them to use their physical stores as more of pick up stores or average fronts for those who might require a more physical and touchable market to dabble with.
Now with technology at their fingertips, most luxury giants are going after more and more brands to add to their scales and make their outreach in the luxury market even bigger than before.