OCTOBER 10, 2011
ROBERT SIMONS MICHAEL MAHONEY
Raleigh & Rosse: Measures to Motivate Exceptional Service
Grasping the iconic “golden horseshoe” door handle, CEO Linda Watkins strode into Raleigh & Rosse’s Palm Springs, California, store and surveyed the sales floor. Ambient lighting was subdued while hidden halogen ceiling lamps artfully spotlighted merchandise and signage. Display cases made from polished exotic woods projected visual warmth and sophistication. A harpist played Mozart crisply in the background. It was just over a week into January 2010, and the store, swept clean of holiday decorations, had bright spring colors on display. Watkins noticed many sales associates ...view middle of the document...
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The luxury goods industry is rooted in Europe, where craftsmen organized in small workshops created unique pieces for royal patrons. Most workshops were family owned, with skills and traditions passed down through generations. Historically, luxury goods distribution in the United States was limited; if a wealthy customer wanted to buy a Dior gown, she would be invited to Paris to attend the semi-annual showing of the collection, where she would choose her designs and then be custom fitted for her one-of-a-kind purchase. Luxury goods distribution in the United States began to change after World War II. Couture houses licensed designs to high-end department stores, which opened up a new middle market for luxury apparel. The luxury goods market experienced a dramatic shift in the 1980s when luggage producer Louis Vuitton listed on the New York and Paris Stock Exchanges, acquired champagne producer Veuve Clicquot and the legendary fashion firm House of Givenchy, and merged with vintner/distiller Moet-Hennessy, creating a global luxury powerhouse. Louis Vuitton also disrupted traditional luxury distribution channels by creating its own retail outlets and buying out its distributors in the U.S. Many other European fashion groups followed suit in establishing their own U.S. retail networks. From 1995 to 2007, worldwide luxury goods industry revenue more than doubled. The global recession of 2008–2009 slammed the industry; Bain & Company estimated global industry revenues in 2009 at $214 billion, down 8% from the prior year and down 10% from the industry revenue peak in 2007. Europe and the Americas represented 68% of revenues in 2009. The United States was the largest single luxury goods market at $57 billion, with New York City alone generating revenues of $12.5 billion. In 2009, the luxury goods market was roughly split into four equal categories: apparel (27% of revenues), accessories such as handbags, leather goods, silk scarves (24%), perfume and cosmetics (24%), and “hard luxury goods” such as jewelry and watches (19%). Nearly two-thirds of industry revenues were controlled by 35 brands, including Giorgio Armani, Chanel, Gucci, Hermes, Prada, Rolex, and Louis Vuitton Moet Hennessy.
Raleigh and Rosse (R&R) was a privately held specialty retailer of luxury goods,...