Luxury in Russia: The Comeback

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1 Luxury Goods Luxury in Russia: The Comeback 9 DECEMBER 2016 AT 06:22* Luca Solca Melania Grippo Guido Lucarelli Contactlab Marco Pozzi Francesca Borgonovo Teodora Boshnyakova WHY YOU SHOULD READ THIS REPORT Russian consumers drove much of the growth in the luxury market during the past two decades. Since then, sanctions, weak oil prices and the rouble s collapse have derailed Russia's economy and sent luxury spending into the buffers. Today consumer confidence is picking up, unemployment ticking down and residential construction is in positive territory. A changing diplomatic climate could bring the end of sanctions. Russia s revival could power the luxury market in Closing the digital luxury gap could make Russia a growth driver of the sector for even longer. As the luxury train pulls back into Moscow, we find several Italian and hard luxury brands in the 1st class seats. Hop aboard our Christmas Special to learn more. * Date and time (London Time) on which the investment recommendation was finalised. It may differ from the date and time of broad dissemination on the website.see Appendix (on p81) for Analyst Certification, Important Disclosures and Non-US Research Analyst disclosures.

2 Exane BNP Paribas Luca Solca (+44) Melania Grippo (+39) Guido Lucarelli (+39) Contactlab Marco Pozzi (+39) Francesca Borgonovo (+39) Teodora Boshnyakova (+39)

3 LUXURY GOODS Luxury in Russia: The Comeback 9 DECEMBER 2016 Luca Solca (+44) luca.solca@exanebnpparibas.com Melania Grippo (+39) melania.grippo@exanebnpparibas.com Guido Lucarelli (+39) guido.lucarelli@exanebnpparibas.com Specialist sales David Tovar (+44) Contactlab Marco Pozzi (+39) marco.pozzi@contactlab.com Francesca Borgonovo (+39) Teodora Boshnyakova (+39) Russians consumption of luxury has declined sharply in the past three years... Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop). but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a New Yalta between Presidents Trump and Putin, and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery. A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on China. With close to one-third of the market, low double-digit growth in Chinese spend alone could quickly bring >3% growth for the sector in A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario. Brunello Cucinelli, Swatch and Prada in the front row to benefit from the Russian comeback Brunello Cucinelli, Swatch and Prada have the largest number of Russian stores as a percentage of their networks. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail among publicly-traded companies. Many private Italian brands also have strong roots in Russia. A Russian comeback would also benefit hard luxury. Digital luxury has a long way to go in Russia Digital performance in Russia is c.20% behind the USA in strategic reach and c.40% in digital customer experience when we apply our Digital Competitive Map methodology.

4 Contents Executive Summary 3 Russian Luxury Goods Market Overview 4 Country Macro Overview 10 Store network analysis 18 Digital Competitive Map Russia 24 Methodology, detailed tables and figures 29 Methodology 29 Strategic Reach in Russia 33 Digital Experience for Russian customers 46 Luxury Stores in Russia 71 Appendix: 80 About the collaboration with Contactlab 80 Contactlab presentation 80 Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 2

5 Executive Summary Luxury in Russia: The Comeback Russians consumption of luxury has declined sharply in the past three years... Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop). but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a New Yalta between Presidents Trump and Putin and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery. The data we have collected with Contactlab point to Russian luxury spend moving up strongly in the most recent quarter with the prospect of closing 2016 up by 5 10%. A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on China. With close to one-third of the market, low double-digit growth in Chinese spend alone continuing the trend seen in of the last couple of months could quickly bring >3% growth for the sector in A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario. Brunello Cucinelli, Swatch and Prada would be in the front row to benefit from the Russian comeback Brunello Cucinelli has the largest number of Russian stores as a percentage of its total network, followed by Swatch and Prada. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail among publicly-traded companies. Many private Italian brands, such as Ermenegildo Zegna, Valentino and Dolce & Gabbana, have strong roots in Russia. Similarly, Italy is ahead of all other European markets in terms of Russian tourist outbound preference. A Russian comeback would also benefit hard luxury, especially such brands as Ulysses Nardin, Breguet, Van Cleef & Arpels. Digital luxury has a long way to go in Russia Digital performance in Russia is c.20% behind the USA in strategic reach and c.40% in digital customer experience when we apply our Digital Competitive Map methodology. Dolce & Gabbana, Burberry, Balenciaga, Valentino and Armani are in the top 5 on strategic reach ; Ralph Lauren, Michael Kors, Tory Burch, Saint Laurent and Hugo Boss are in the bottom 5. Burberry, Louis Vuitton, Loro Piana, Armani and Cartier are in the top 5 on digital customer experience ; Tory Burch, Michael Kors, Ralph Lauren, Salvatore Ferragamo and Coach are in the bottom 5. Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 3

6 Russian Luxury Goods Market Overview Russians consumption of luxury has declined sharply in the past three years... Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop). Figure 1: Russians luxury consumption has declined sharply Russia s personal luxury goods market since 2010 (EUR, bn) % 7% 6% 5% 4% 3% 2% 1% 0% Russian Luxury Goods Market (LHS) Russians as % of tot luxury spend (RHS) Source: Altagamma/Bain, Exane BNP Paribas estimates Figure 2: Oil prices, the rouble s collapse and economic sanctions have more than halved luxury spend from the peak (1/2) RUB vs major currencies Source: Datastream Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 RUB/USD RUB/GBP RUB/EUR Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 4

7 Figure 3: Oil prices, the rouble s collapse and economic sanctions have more than halved luxury spend from the peak (2/2) Crude Oil-Brent Cur. Month FOB US$/BBL Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Source: Datastream Figure 4: Russian clients shopping shift from foreign to domestic Russian clients luxury shopping split Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 5

8 Figure 5: Luxury shopping in Russia is attractive for Asian customers due to a c.10-20% price differential Price index by region l/l products (Global average = 100%) 130% 120% 110% 100% 100% 102% 109% 112% 119% 119% 90% 80% 70% 76% 81% 81% 60% 50% UK France Italy Russia USA Hong Kong South Korea China Japan Note: The data above includes a comparison of identical products available in all regions. From our brand coverage, this covers: Armani, Balenciaga, Brioni, Brunello Cucinelli, Burberry, Dunhill and Louis Vuitton which are the brands operating a direct online channel in the full list of markets above and the sample size is 5,779 unique products available in all markets. Prices as at 25 October Source: BenchMarque by Deloitte Figure 6: Example online prices on TSUM lower than in Milan, Dubai and London Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 6

9 Figure 7: Tax-free bill should further promote tourist shopping Analysis Figure 8: Russian luxury clients are very valuable due to yearly spending c.60% higher than worldwide average In-Store Client Yearly Spending (EUR, 2016) Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 7

10 Figure 9: In-store revenues in Russia from clients known by name (registered and digitally contactable) is close to the global average (c.75%) Client Segmentation by Level of Engagement (% Retail Revenues, 2015) Worldwide Russia Anonymous 27% Registered 50% Anonymous 26% Registered 51% Digitally contactable 23% Digitally contactable 23% Analysis Figure 10: Ecommerce penetration in luxury goods is still trailing in Russia Ecommerce penetration for monobrand in Luxury Goods (% retail sales, Russia, ) 8% 7% 6% 5% 4% 3% 2% 1% 0% Worldwide Russia Ecommerce penetration 2014 Ecommerce penetration 2015 Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 8

11 Figure 11: Foreign shopping by Russian luxury clients is recovering after the 2015 slump. Positive exit from 2016 and positive outlook for 2017 Russian Foreign Shopping variation (%, Italy) Analysis, Premier Tax Free Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 9

12 Country Macro Overview but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a New Yalta between Presidents Trump and Putin and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery. The data we have collected with Contactlab point to Russian luxury spend moving up strongly in the most recent quarter with the prospect of closing 2016 up by 5-10%. Figure 12: A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough Consumer confidence index Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 10

13 Figure 13: A number of macroeconomic indicators are pointing north again: unemployment is reducing Unemployment rate (as % of total economically active population) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Datastream Figure 14: A number of macroeconomic indicators are pointing north again: car sales growth is rebounding Car and LCV sales y/y % chg (3MMA) 80% 60% 40% 20% 0% (20%) (40%) (60%) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 11

14 Figure 15: A number of macroeconomic indicators are pointing north again: residential construction growth is already in positive territory New residential space constructed (y/y % chg) 40% 30% 20% 10% 0% (10%) (20%) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Datastream Figure 16: GDP at constant prices (RUBm) Base year= ,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, GDP constant prices % growth 30% 25% 20% 15% 10% 5% 0% -5% -10% Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 12

15 Figure 17: y/y % growth GDP (constant prices) (2.0) (4.0) (6.0) Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Datastream Figure 18: Russian population (m) NB consolidates Crimea. Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 13

16 Figure 19: Balance of payments (USD bn) Exports Imports Source: Datastream Figure 20: 10 years government bond yield (%) Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 14

17 Figure 21: Household and Government consumption Household consumption (RUB bn) Government consumption (RUB bn) % % % 6% 4% 2% 0% -2% -4% -6% -8% -10% % 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% Household consumption expenditure -12% % chg Government consumption expenditures -2.0% % chg Source: Datastream Figure 22: CPI index Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q % 16% 14% 12% 10% 8% 6% 4% 2% 0% CPI % chg y/y Source: Datastream Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 15

18 A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on the Chinese. With close to one-third of the market, low double-digit growth in Chinese spend alone continuing the trend seen in the last couple of months could quickly bring >3% growth for the sector in A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario. Figure 23: A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 Russian luxury goods market (EUR bn) E 20% 15% 10% 5% 0% (5%) (10%) (15%) (20%) (25%) (30%) Russian Luxury Goods Market (LHS) Russians as % of tot luxury spend (RHS) Source: Altagamma/Bain, Contactlab estimates Figure 24: With close to one-third of the market, low double-digit growth in Chinese spend, as in the most recent months, could alone quickly bring >3% growth for the sector in 2017 (1/2) Luxury goods market growth by nationality (EUR bn) % CAGR 4% CAGR 5% CAGR 200 1% CAGR 5% CAGR -4% CAGR 15% of total growth % of total growth 24% of total growth -13% of total growth 72% of total growth European American Japanese Chinese Other 2016 Source: Bain/Altagamma Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 16

19 Figure 25: With close to one-third of the market, low double-digit growth in Chinese spend, as in the most recent months, could alone quickly bring >3% growth for the sector in 2017 (2/2) Luxury market growth by nationality (EUR bn) e European American Japanese Chinese Other Source: Bain/Altagamma Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 17

20 Store network analysis Brunello Cucinelli, Swatch and Prada would be in the front row to benefit from the Russian comeback Brunello Cucinelli has the largest number of Russian stores as a percentage of its total network, followed by Swatch and Prada. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail among publicly-traded companies. Many private Italian brands, such as Ermenegildo Zegna, Valentino and Dolce & Gabbana, have strong roots in Russia. Similarly, Italy stands ahead of all other European markets in terms of Russian tourist outbound preference. A Russian comeback would also benefit hard luxury, especially such brands as Ulysses Nardin, Breguet, Van Cleef & Arpels. Figure 26: Prada, LVMH and Kering would be in the front row to benefit from the Russian comeback Group exposure to Russia (% of stores) 6% 5% 4% 3% 2% 1% 0% Russian stores (% of tot) Avg NB. Swatch includes Breguet, Blancpain and Omega; Richemont includes Lancel, Vacheron Constantain, Vancleef & Arpels, Piaget Chloé, Cartier, Officine Panerai, IWC Jaeger-Le Coutre, Montblanc; Prada includes Prada and Miu Miu; LVMH includes Zenith, Loro Piana, Celine, Bulgari, Louis Vuitton and Givenchy; Kering includes Ulysse Nardin, Alexander McQueen, Saint Laurent, Gucci and Bottega Veneta; Tod s includes Tod s brand only. Source: Re-Analytics (Data as at 30 September 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 18

21 Figure 27: Among publicly-traded groups, Loro Piana, Brioni, Alexander McQueen, Céline, and Saint Laurent are the brands most exposed to physical retail in Russia % Russian stores on total stores 14% 12% 10% 8% 6% 4% 2% 0% Ulysse Nardin Breguet Zenith Loro Piana Brunello Cucinelli Alexander McQ Valentino Swatch Zegna Louboutin Lancel Vacheron Constantin Dolce & Gabbana Celine Prada Giorgio Armani Blancpain Van Cleef & Arpels Harry Winston Miu Miu Piaget Omega Saint Laurent Hugo Boss Chloé Cartier Gucci Versace Michael Kors Bulgari Officine Panerai Louis Vuitton Tod's IWC Ferragamo Jaeger-Le Coultre Bottega Veneta Montblanc Burberry Givenchy Moncler Hermes Tiffany Russian stores Avg Source: Re-Analytics, Company store locator, Exane BNP Paribas estimates (Data as at 30 September 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 19

22 Figure 28: Private Italian brands like Ermenegildo Zegna, Valentino and Dolce & Gabbana have strong roots in Russia Russian stores detail Group Brand Russian stores Total % of tot stores Kering Ulysse Nardin % Swatch Breguet % LVMH Zenith % LVMH Loro Piana % Brunello Cucinelli Brunello Cucinelli % Kering Alexander McQ % - Valentino % Swatch Swatch 105 2, % - Zegna % - Louboutin % Richemont Lancel % Richemont Vacheron Constantin % - Dolce & Gabbana % LVMH Celine % Prada Prada % - Giorgio Armani % Swatch Blancpain % Richemont Van Cleef & Arpels % Swatch Harry Winston % Prada Miu Miu % Richemont Piaget % Swatch Omega % Kering Saint Laurent % Hugo Boss Hugo Boss 20 1, % Richemont Chloé % Richemont Cartier % Kering Gucci % - Versace % - Michael Kors % LVMH Bulgari % Richemont Officine Panerai % LVMH Louis Vuitton % TOD'S Tod's % Richemont IWC % Ferragamo Ferragamo % Richemont Jaeger-Le Coultre % Kering Bottega Veneta % Richemont Montblanc % Burberry Burberry % LVMH Givenchy % Moncler Moncler % Hermès Hermes % - Tiffany % Total , % Source: RE-Analytics, Company store locator, Exane BNP Paribas estimates (Data as at 30 September 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 20

23 Figure 29: Italy is ahead of all other European markets in terms of Russian outbound tourist preference % Russian consumers on European Tax Free spend (9m 2016) 14% 0% 12% 10% 8% 6% 4% 2% -5% -10% -15% -20% -25% 0% Europe Italy Germany France % share (LHS) y/y % chg (RHS) -30% Source: GlobalBlue Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 21

24 Figure 30: A Russian comeback would benefit hard luxury too, especially when we consider brands such as Ulysses Nardin, Breguet, Van Cleef & Arpels (1/2) Exposure to Russia by brand Group Second-hand watch market Group / Brand Volume Value Kering 5% 4.9% Ulysse Nardin 8% 5.8% Girard Perregaux 3% 3.0% JeanRichard - 1.1% Boucheron 1% 1.0% Gucci - - Puma - - Pomellato - - Swatch Group 1% 2.6% Harry Winston 10% 7.9% Breguet 7% 4.6% Jaquet-Droz 4% 2.1% Blancpain 2% 1.1% Glashütte Original - 0.8% Balmain 1% 0.6% Rado 1% 0.5% Omega 1% - Longines 1% - Hamilton - - Tissot - - Certina - - Mido - - ck Calvin Klein - - Swatch - - LVMH 1% 1.4% Zenith 5% 5.5% Chaumet 3% 4.2% Louis Vuitton 3% 3.3% Hublot 2% 1.7% Dior 1% 0.9% Bulgari 1% 0.5% TAG Heuer - - Fendi - - Richemont 1% 1.3% Van Cleef & Arpels 12% 27.9% Vacheron Constantin 3% 1.8% Roger Dubuis 3% 1.7% Panerai 1% 1.5% Jaeger-LeCoultre 1% 1.4% A. Lange & Söhne 2% 1.4% IWC 1% 0.9% Piaget 1% 0.7% Cartier 1% 0.5% Alfred Dunhill - - Baume & Mercier - - Montblanc - - Source: Re-Analytics, Specialist watch websites (Data as at 31 July 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 22

25 Figure 31: A Russian comeback would benefit hard luxury too, especially when we consider brands such as Ulysses Nardin, Breguet, Van Cleef & Arpels (2/2) Top 10 brands exposed to Russia second-hand watch market 30% 25% 20% 15% 10% 5% 0% Source: Re-Analytics, Specialist watch websites (Data as at 31 July 2016) Figure 32: Yearly Swiss Watch Exports to Russia (CHF m) % % % % 150 0% % 50-40% % Swiss Watch Exports (LHS) y/y % chg (RHS) Source: FHS, Exane BNP Paribas estimates Figure 33: Quarterly Swiss watch exports to Russia (CHF m) 80 30% 70 20% 60 10% % -10% -20% -30% -40% 10-50% 0-60% 1Q Q Q Q Q Q Q Q Q Q Q 2016 Swiss Watch Exports (LHS) y/y % chg (RHS) Source: FHS, Exane BNP Paribas estimates Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 23

26 Digital Competitive Map Russia Digital luxury has a long way to go in Russia Digital performance in Russia is c.20% behind the USA in strategic reach and c.40% in digital customer experience when we apply our Digital Competitive Map methodology. Dolce & Gabbana, Burberry, Balenciaga, Valentino and Armani are in the top 5 on strategic reach ; Ralph Lauren, Michael Kors, Tory Burch, Saint Laurent and Hugo Boss are in the bottom 5. Burberry, Louis Vuitton, Loro Piana, Armani and Cartier are in the top 5 on digital customer experience ; Tory Burch, Michael Kors, Ralph Lauren, Salvatore Ferragamo and Coach are in the bottom 5. Figure 34: Digital Competitive Map in Russia overall showing lower criteria exploitation vs. USA (1/2) Digital Competitive Map - Russia vs USA (FW15) 60% 53% 56% 55% 50% 40% 30% 42% 30% 33% 20% 10% 0% Strategic Reach Digital Customer Experience Total panel Russia (November 16) USA (FW15 Score) Source: Exane BNP Paribas, Contactlab Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 24

27 Figure 35: Digital Competitive Map in Russia overall showing lower criteria exploitation vs. USA (2/2) Digital Competitive Map Russia (November 2016) Digital Competitive Map Russia Axes Competitive Map Score Score Over Maximum Potential % Strategic Reach in Russia % Digital Experience for Russian Customers % Total Panel 2,546 33% Digital Competitive Map Russia Categories Competitive Map Score Score Over Maximum Potential % Russia Digital Strategy % Customer Engagement Strategy for Russian Customers % Customer Engagement Experience for Russian Customers % "Made In" on Russia/Intl. Websites % Website Experience on Russia/Intl. Websites % Cross-Channel Experience for Russian Customers % Ecommerce Experience on Russia/Intl. Websites % Total Panel 2,546 33% Analysis Figure 36: Display Visualization and Website Localization performing very well, while criteria related to Personal Services, Cross-Channel and Online Delivery performing particularly poorly Digital Competitive Map Russia (November 2016) Digital Competitive Map Russia Criteria Competitive Map Score Score Over Maximum Potential % Display Visualization on Russia/Intl. Websites % Russia Website Localization % Share on Russia/Intl. Websites 99 60% Product Presentation on Russia/Intl. Websites % Store Finder % Customer Engagement Strategy for Russian Customer % Proficiency for Russian Customers % "Made In" on Russia/Intl. Websites % Product Selection Support on Russia/Intl. Websites % Ecommerce to Russia % Online Shopping on Russia/Intl. Websites % Basic Customer Service on Russia/Intl. Websites 55 21% Apps for Russian Customers 40 20% Personal Services on Russia/Intl. Websites 67 11% Cross-Channel Services In Russia 28 5% Delivery Options in Russia 19 4% Total Panel 2,546 33% Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 25

28 Figure 37: Burberry significantly leading on the Digital Customer Experience axis, Dolce & Gabbana leader on the Strategic Reach axis in Russia Digital Competitive Map Russia (November 2016) Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 26

29 Figure 38: Beyond local players TSUM and Alena Akhmadullina, only six monobrands plus Yoox have at the same time localized URLs, Ecommerce to Russia and Newsletters in Russian WEBSITE URL LOCALIZATION ECOMMERCE TO RUSSIA RUSSIA COUNTRY SELECTION FOR NEWSLETTER Brand Website URL Localization Brand Ship to Russia Brand language Armani Premium RU Armani YES Armani RU Balenciaga Runner-Up RU Balenciaga YES Balenciaga RU Bottega Veneta High-End WW Bottega Veneta NO Bottega Veneta EN Brunello Cucinelli High-End RU Brunello Cucinelli YES Brunello Cucinelli RU Bulgari Jeweller RU-IT / RU-US Bulgari NO Bulgari RU Burberry Mega-Brand RU Burberry YES Burberry RU Cartier Jeweller RU Cartier NO Cartier RU Céline High-End WW Céline NO Céline EN Chanel High-End RU Chanel NO Chanel RU Coach Premium WW Coach NO Coach EN Dior High-End RU Dior NO Dior RU Dolce&Gabbana Runner-Up RU Dolce&Gabbana YES Dolce&Gabbana EN Fendi Runner-Up RU Fendi NO Fendi RU Ferragamo Runner-Up No WW Ferragamo NO Ferragamo EN Givenchy Runner-Up WW Givenchy YES (IOS APP) Givenchy EN Gucci Mega-Brand WW Gucci NO Gucci EN Hermès High-End RU (Editorial focus, only scarf products) Hermès NO Hermès RU Hugo Boss Premium WW Hugo Boss NO Hugo Boss no NL for Russia Loro Piana High-End WW Loro Piana YES Loro Piana EN Louis Vuitton Mega-Brand RU Louis Vuitton Only phone orders Louis Vuitton RU Michael Kors Premium USA Michael Kors NO Michael Kors EN Moncler Premium RU Moncler YES Moncler RU Prada Mega-Brand WW Prada NO Prada EN Ralph Lauren Premium USA (RU only Magazine) Ralph Lauren NO Ralph Lauren EN Ray-Ban Mega-Brand RU Ray-Ban NO Ray-Ban no received Saint Laurent High-End WW Saint Laurent NO Saint Laurent no NL for Russia Swatch Premium RU Swatch NO Swatch RU Tiffany Jeweller RU Tiffany NO Tiffany no NL for Russia Tod's Runner-Up RU Tod's NO Tod's RU Tory Burch Premium USA Tory Burch NO Tory Burch EN Valentino High-End RU Valentino YES Valentino RU Zegna Mega-Brand RU Zegna NO Zegna RU Alena Akhmadullina Runner-Up (Local) RU Alena Akhmadullina YES Alena Akhmadullina RU TSUM Department Store RU TSUM YES TSUM RU Net-A-Porter Full-Price E-Tailer WW Net-A-Porter YES Net-A-Porter EN LuisaviaRoma Full-Price E-Tailer WW LuisaviaRoma YES LuisaviaRoma RU Mytheresa Full-Price E-Tailer WW Mytheresa YES Mytheresa EN YOOX End-of-Season E-Tailer RU YOOX YES YOOX RU Analysis RU (Russian URL) Yes Russian WW English No (No website / Other countries URL) No No NL for Russia Figure 39: Brands with Ecommerce in Russia via monobrand store or via Department Store TSUM Digital Competitive Map Russia Ecommerce vs. Russia Website Brands (November 2016) ECOMMERCE MONOBRAND & ONLINE DEPT. STORE TSUM ECOMMERCE MONOBRAND ONLY ECOMMERCE ONLINE DEPT. STORE TSUM ONLY Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 27

30 Figure 40: Apart Balenciaga, LVMH Brands better positioned than Kering Brands on the Digital Competitive Map Russia Digital Competitive Map Russia LVMH vs. Kering Brands (November 2016) LVMH Kering Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 28

31 Methodology, detailed tables and figures Methodology Figure 41: Methodology Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 29

32 Figure 42: Exane Panel of 32 monobrands, plus local luxury player Alena Akhmadullina, TSUM Dept. Store and 4 International E-Tailers PANEL Brand Bulgari Cartier Tiffany Bottega Veneta Brunello Cucinelli Céline Chanel Dior Hermès Loro Piana Saint Laurent Valentino Balenciaga Dolce & Gabbana Fendi Ferragamo Givenchy Tod's Alena Akhmadullina Burberry Gucci Louis Vuitton Prada Ray-Ban Zegna Armani Coach Hugo Boss Michael Kors Moncler Ralph Lauren Swatch Tory Burch Category Jeweller Jeweller Jeweller High-End High-End High-End High-End High-End High-End High-End High-End High-End Runner-Up Runner-Up Runner-Up Runner-Up Runner-Up Runner-Up Runner-Up Mega-Brand Mega-Brand Mega-Brand Mega-Brand Mega-Brand Mega-Brand Premium Premium Premium Premium Premium Premium Premium Premium TSUM Net-A-Porter LuisaviaRoma Mytheresa YOOX Department Store Full-Price E-Tailer Full-Price E-Tailer Full-Price E-Tailer End-of-Season E-Tailer Source: Exane BNP Paribas Figure 43: Local player: Alena Akhmadullina Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 30

33 Figure 44: Alena Akhmadullina website Figure 45: TSUM (local luxury department store) website Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 31

34 Figure 46: DCM in Russia criteria Main differences vs DCM Jan-16 Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 32

35 Strategic Reach in Russia Figure 47: Dolce & Gabbana is leader on the Strategic Reach axis in Russia, followed by Burberry and Balenciaga Strategic Reach in Russia Overall Brand Ranking (Russia, November 2016) STRATEGIC REACH AXIS IN RUSSIA - RANKINGS Brands Score Ranking RUSSIAN WEBSITE LOCALIZATION ECOMMERCE TO RUSSIA MADE IN ON RUSSIAN WEBSITES CUSTOMER ENGAGEMENT STRATEGY FOR RUSSIAN CUSTOMERS Dolce&Gabbana Burberry Balenciaga Valentino Armani Moncler Alena Akhmadullina Fendi Brunello Cucinelli Zegna Loro Piana Louis Vuitton Tod's Givenchy Cartier Gucci Dior Chanel Swatch Bottega Veneta Hermès Bulgari Ray Ban Tiffany Prada Céline Coach Ferragamo Hugo Boss Saint Laurent Tory Burch Michael Kors Ralph Lauren Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 33

36 Figure 48: Russia Website Localization: 19 Monobrands, including new panel entries Ray-Ban/Swatch and local players Alena Akhmadullina, plus TSUM and YOOX offering Russia websites Strategic Reach Russian Website Localization (Russia, November 2016) RUSSIA WEBSITE LOCALIZATION Brand Ranking Desktop Website URL Localization (RU) Mobile Website URL Localization (RU) Armani 1 RU RU Balenciaga 1 RU RU Brunello Cucinelli 1 RU RU Burberry 1 RU RU Cartier 1 RU RU Chanel 1 RU RU Dior 1 RU RU Dolce&Gabbana 1 RU RU Fendi 1 RU RU Louis Vuitton 1 RU RU Moncler 1 RU RU Ray-Ban 1 RU RU Swatch 1 RU RU Tiffany 1 RU RU Tod's 1 RU RU Valentino 1 RU RU Zegna 1 RU RU Alena Akhmadullina 1 RU RU Hermès 1 RU (Editorial focus, only scarf products) RU (Editorial focus, only scarf products) Bulgari 20 RU-IT / RU-US RU-IT / RU-US Bottega Veneta 21 WW WW Céline 21 WW WW Coach 21 WW WW Givenchy 21 WW WW Gucci 21 WW WW Hugo Boss 21 WW WW Loro Piana 21 WW WW Prada 21 WW WW Saint Laurent 21 WW WW Tory Burch 30 No WW No WW Ferragamo 31 No WW No WW Michael Kors 31 No WW No WW Ralph Lauren 31 No WW (RU only Magazine) No WW (RU only Magazine) TSUM RU RU Net-A-Porter WW WW LuisaviaRoma WW WW Mytheresa WW WW YOOX RU RU Analysis RU (Russian URL) WW No (No website / Other countries URL) RU (Russian URL) WW No (No mobile website / Other countries URL) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 34

37 Figure 49: Fendi just launched its website in Russian Figure 50: Tiffany is the only US brand with a localized website Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 35

38 Figure 51: A customized homepage for Russia: the Louis Vuitton example Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 36

39 Figure 52: Ten monobrands, most powered by YNAP, and Burberry / Dolce & Gabbana / Loro Piana / Alena Akhmadullina, and all major international E-Tailers sell online to Russia. More than half of the panel have a significant online offer on TSUM Department Store Strategic Reach Ecommerce to Russia (Russia, November 2016) ECOMMERCE TO RUSSIA Brand Ranking Powered By Ship to Russia % E-Commerce Categories Online sales via TSUM dept. Store Armani 1 YNAP YES 93% Good offer Balenciaga 1 YNAP YES 100% Good offer Burberry 1 YES 100% Good offer Moncler 1 YNAP YES 100% Good offer Valentino 1 YNAP YES 85% Good offer Brunello Cucinelli 6 YNAP YES 100% NO Dolce&Gabbana 6 The Level Group YES 62% Good offer Loro Piana 6 YES 100% NO Alena Akhmadullina 6 YES 100% NO Givenchy 10 YNAP YES (IOS APP) 73% Good offer Bottega Veneta 11 YNAP NO no RU ecommerce Good offer Dior 11 NO no RU ecommerce Good offer Fendi 11 NO no RU ecommerce Good offer Gucci 11 NO no RU ecommerce Good offer Hugo Boss 11 NO no RU ecommerce Good offer Michael Kors 11 NO no RU ecommerce Good offer Ralph Lauren 11 NO no RU ecommerce Good offer Ray-Ban 11 NO no RU ecommerce Good offer Saint Laurent 11 YNAP NO no RU ecommerce Good offer Tod's 11 Italian Touch NO no RU ecommerce Good offer Tory Burch 11 NO no RU ecommerce Good offer Zegna 11 NO no RU ecommerce Good offer Cartier 23 NO no RU ecommerce Limited (30 cosmetics) Coach 23 NO no RU ecommerce Limited (below 10 items) Ferragamo 23 NO no RU ecommerce Limited (30 shoes) Prada 23 NO no RU ecommerce Limited (50 eyewear) Tiffany 23 NO no RU ecommerce Limited (10 eyewear) Bulgari 28 NO no RU ecommerce NO Céline 28 NO no ecommerce NO Chanel 28 NO no RU ecommerce NO Hermès 28 NO no RU ecommerce 5 Apple iwatch bands Louis Vuitton 28 Only phone orders no RU ecommerce NO Swatch 28 NO no RU ecommerce NO TSUM YES n.a. n.a. Net-A-Porter YNAP YES n.a. n.a. LuisaviaRoma YES n.a. n.a. Mytheresa YES n.a. n.a. YOOX YNAP YES n.a. n.a. Yes Above 85% Yes (only App) Between 50% and 85% Good offer (more than 50 items, multi category) Limited offer (below 50 items, mono category) No Below 50% No Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 37

40 Figure 53: Alena Akhmadullina s online offer meets Russian customers taste and with significant price points (the example of fur coats, priced between 6,000 and 20,000) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 38

41 Figure 54: Presence on TSUM online store: the example of Gucci Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 39

42 Figure 55: 11 Brands fully disclosing Made in on web. Strangely Brunello Cucinelli, Saint Laurent and Dior do not disclose Made in, but do so on US websites Strategic Reach Made in on Russian / international websites (Russia, November 2016) "MADE IN" ON RUSSIA/INTL. WEBSITES Brand Ranking "Made In" Disclosure on Web Product Pages Produced in Heritage Countries once Declared Balenciaga 1 Systematically Very high Bottega Veneta 1 Systematically Very high Dolce&Gabbana 1 Systematically Very high Fendi 1 Systematically Very high Givenchy 1 Systematically Very high Gucci 1 Systematically Very high Loro Piana 1 Systematically Very high Tod's 1 Systematically Very high Valentino 1 Systematically Very high Louis Vuitton 10 Partial (RTW, Watches) Very high Zegna 10 Partial (Shoes, Bags, Coats) Very high Armani 12 Systematically Partial Burberry 12 Systematically Partial Brunello Cucinelli 14 NO ( vs Yes in US) n.a. Bulgari 14 NO n.a. Cartier 14 NO n.a. Céline 14 NO n.a. Chanel 14 NO n.a. Coach 14 NO n.a. Dior 14 NO (vs partially in US) n.a. Hermès 14 NO n.a. Hugo Boss 14 NO n.a. Moncler 14 NO n.a. Prada 14 NO n.a. Ray Ban 14 NO n.a. Saint Laurent 14 NO ( vs Yes in US) n.a. Swatch 14 Rarely n.a. (Very high) Tiffany 14 Rarely (only watches) n.a. (Very high) Alena Akhmadullina 14 NO n.a. Ferragamo 14 no RU/ int website n.a. Michael Kors 14 no RU/ int website n.a. Ralph Lauren 14 no RU/ int website n.a. Tory Burch 14 no RU/ int website n.a. TSUM Systematically n.a. Net-A-Porter n.a. n.a. LuisaviaRoma n.a. n.a. Mytheresa n.a. n.a. YOOX n.a. n.a. Analysis Systematically mentioned (above 80% of Web Product Pages) Partial (mentioned only on same relevant product categories) Never / Rarely mentioned: below 20% of Web Product Pages Very high: above 85% production declared in Heritage country on Web Product Page Partial: between 35% and 85% production declared in Heritage country on Web Product Page Marginal: below 35% production declared in Heritage country on Web Product Page. Or n.a. Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 40

43 Figure 56: Made in disclosure on Product pages is particularly relevant for Russian customers Fashion & Luxury Customers declaring relevance of made in disclosure (%) 90% 80% 70% 60% 73% 80% 50% 40% 30% 20% 10% 0% 39% WW Customers Extremely + Very Important 47% Russian Customers Extremely + Very + Quite Important European (+) Digital Behaviour Study 2016 Figure 57: Noticeably TSUM has a strict policy about Made in disclosure The example of Moncler Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 41

44 Figure 58: Dolce & Gabbana lead, followed by Burberry, Alena Akhmadullina and Moncler Strategic Reach Russian Customer Engagement Strategy (Russia, November 2016) CUSTOMER ENGAGEMENT STRATEGY FOR RUSSIAN CUSTOMERS Brand Rank Currency Web Language Social media in Russian (FB, Twitter, Instagram) Russian Social media Language Weekly Frequency (Russia) Sep - Nov 2016 Dolce&Gabbana 1 RUB RU RU (Twitter/FB) VK EN 0,7 Burberry 2 RUB RU RU (Twitter) NO RU 1.0 Alena Akhmadullina 2 RUB RU RU (Twitter/FB) NO RU 0.5 Moncler 4 RUB RU NO NO RU 1.0 Cartier 5 RUB RU NO NO RU 0.5 Louis Vuitton 5 RUB RU NO NO RU 0.6 Balenciaga 7 EUR RU NO NO RU 0,7 Armani 8 RUB RU NO NO RU 2,2 Chanel 8 No prices RU NO NO RU 0.8 Fendi 8 No prices RU NO NO RU 0.8 Swatch 8 No prices RU NO VK RU 0.6 Zegna 8 No prices RU NO NO RU 0.8 Dior 13 No prices RU NO NO RU 0.4 Brunello Cucinelli 14 EUR RU NO NO RU 0.1 Bulgari 14 EUR RU NO NO RU 0.2 Valentino 14 EUR RU NO NO RU 0.1 Hermès 17 No prices RU NO NO RU Welcome only Tod's 18 No prices EN/(RU) NO NO RU 1.1 Ferragamo 19 no RU/ int website no RU/ int website NO NO EN 1.0 Gucci 19 No prices EN NO NO EN 0.9 Prada 19 No prices EN NO NO EN 0,7 Ray-Ban 22 No prices RU NO NO no received no received Tiffany 22 No prices RU NO NO no NL for Russia n.a. Céline 24 EUR EN NO NO EN Welcome only Givenchy 24 GBP EN NO NO EN 0.1 Loro Piana 24 EUR EN NO NO EN Welcome only Bottega Veneta 27 No prices EN NO NO EN Welcome only Coach 27 No prices EN NO NO EN Welcome only Michael Kors 27 no RU/Intl. web no RU/Intl. web NO NO EN 6.0 Ralph Lauren 27 no RU/Intl. web no RU/Intl. web NO NO EN 2.7 Tory Burch 27 no RU/Intl. web no RU/Intl. web NO NO EN 2.7 Hugo Boss 32 No prices EN NO NO no NL for Russia n.a. Saint Laurent 32 No prices EN NO NO no NL for Russia n.a. TSUM RUB RU RU (Twitter/FB/Instagram) NO RU 3.1 Net-A-Porter GBP EN NO NO EN 6.0 LuisaviaRoma RUB RU NO NO RU 6.5 Mytheresa EUR EN NO NO EN 7.5 YOOX RUB RU NO NO RU 4.0 RUB (Russian currency) Russian At least 2 social media in Russian Yes Russian Between 0.7 and 1.3 s per week EUR / USD / GBP Mixed Russian-English One social media in Russian English Between 0.3 and 0.7 or between 1.3 and 2.0 s per week No prices English No No No Russia country Less than 0.3 s per week or option for more than 2.0 s per week newsletter Analysis Figure 59: Fendi has only recently introduced s in Russian Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 42

45 Figure 60: Burberry Russian account on Twitter Figure 61: TSUM Russian account on Instagram Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 43

46 Figure 62: Dolce & Gabbana social media localization on VK Figure 63: Dolce & Gabbana official page on VK Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 44

47 Figure 64: Swatch social media localization on VK Figure 65: Swatch official page on VK Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 45

48 Digital Experience for Russian customers Figure 66: Burberry has a significant lead on the Digital Customer Experience axis, in particular for Personal and Cross-Channel Services, followed by Louis Vuitton and Loro Piana Digital Experience Axis Overall Brand Ranking (Russia, November 2016) DIGITAL CUSTOMER EXPERIENCE AXIS FOR RUSSIAN CUSTOMERS - RANKINGS DISPLAY BASIC PERSONAL STORE FINDER CROSS- VISUALIZATION PRODUCT CUSTOMER ONLINE SHOPPING SHARE ON APPS FOR PRODUCT SERVICES ON DELIVERY OPTIONS (RUSSIAN OR CHANNEL PROFICIENCY FOR Brand Score Ranking ON SELECTION SERVICE ON ON RUSSIA/INTL. RUSSIA/WW RUSSIAN PRESENTATION RUSSIA/INTL. IN RUSSIA INTERNATIONAL SERVICES IN RUSSIAN RUSSIA/INTL. SUPPORT RUSSIA/INTL. WEBSITES WEBSITES CUSTOMERS WEBSITES WEBSITES) RUSSIA CUSTOMERS WEBSITES WEBSITES Burberry Louis Vuitton Loro Piana Armani Cartier Fendi Moncler Dolce&Gabbana Valentino Brunello Cucinelli Givenchy Alena Akhmadullina Balenciaga Swatch Tiffany Dior Bulgari Gucci Chanel Zegna Tod's Hugo Boss Prada Hermès Bottega Veneta Saint Laurent Ray-Ban Céline Coach Ferragamo Ralph Lauren Michael Kors Tory Burch Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 46

49 Figure 67: Half the panel achieving full score, finally all brands have a mobile adapted website Digital Experience Axis Display Visualization on Russia/Intl. Websites (Russia, November 2016) DISPLAY VISUALIZATION ON RUSSIA/INTL. WEBSITES Brands Rank Flash Plug-In Required for Videos Minimum Desktop Width Mobile adapted website Bottega Veneta 1 NO 768px YES Bulgari 1 NO 768px YES Burberry 1 NO 768px YES Céline 1 NO 768px YES Coach 1 NO 768px YES Dolce&Gabbana 1 NO 768px YES Fendi 1 NO 768px YES Givenchy 1 NO 768px YES Gucci 1 NO 768px YES Hugo Boss 1 NO 768px YES Louis Vuitton 1 NO 768px YES (ios and Android App) Moncler 1 NO 768px YES Saint Laurent 1 NO 768px YES Swatch 1 NO 768px YES Tod's 1 NO 768px YES Valentino 1 NO 768px YES Zegna 1 NO 768px YES Alena Akhmadullina 1 NO 768px YES Balenciaga 19 NO 1024px YES Brunello Cucinelli 19 NO 1024px YES Cartier 19 NO 980px YES Hermès 19 NO 1030px YES Loro Piana 19 NO 840px YES Ray-Ban 19 NO 980px YES Tiffany 19 NO 1024px YES Chanel 26 Optional (video) 768px YES Prada 26 Optional (video) 768px YES Armani 28 Optional (video) 970px YES Dior 28 Optional (video) 980px YES Ferragamo 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Not required Visible also on old Netbooks Yes adapted Required for videos Required for website visualization Visible on most devices Not visible on old Notebook 15" without horizontal scrolling Partially adapted (some horizontal scrolling, only some pages) Not adapted Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 47

50 Figure 68: Cartier desktop and mobile adapted websites Figure 69: Alena Akhmadullina desktop and mobile adapted websites Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 48

51 Figure 70: Only seven brands integrate product pages with videos Digital Experience Axis Product Presentation on Russia/Intl. Websites (Russia, November 2016) Brands Rank Video with worn Pictures from different products angles Zoom on Details Model measures Balenciaga 1 YES (selected products) YES YES YES Burberry 1 YES (selected products) YES YES YES Loro Piana 1 YES (selected products) YES YES (mouseover) NO Swatch 1 YES (selected products) YES (selected products) YES (selected products) n.a (no RTW) Dior 5 YES (selected products) YES YES NO Tiffany 5 YES (selected products) YES YES n.a (no RTW) Valentino 5 NO YES YES (mouseover) YES Zegna 5 NO YES YES (mouseover) YES Armani 9 NO YES YES YES Brunello Cucinelli 9 NO YES YES YES Bulgari 9 YES (selected products) NO YES (mouseover) n.a (no RTW) Dolce&Gabbana 9 NO YES YES YES Fendi 9 NO YES YES YES Givenchy 9 NO YES YES YES Gucci 9 NO YES YES YES Bottega Veneta 16 NO YES YES NO Cartier 16 NO YES YES n.a (no RTW) Chanel 16 NO YES YES NO Coach 16 NO YES YES NO Hugo Boss 16 NO YES NO YES Louis Vuitton 16 NO YES YES NO Moncler 16 NO YES YES NO Prada 16 NO YES YES n.a (no RTW on Web) Saint Laurent 16 NO YES YES n.a (RTW not worn) Tod's 16 NO YES YES NO Alena Akhmadullina 16 NO YES YES NO Céline 27 NO NO YES NO Ray-Ban 27 NO NO YES n.a (no RTW) Hermès 29 NO NO NO NO Ferragamo 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Analysis PRODUCT PRESENTATION ON RUSSIA/INTL. WEBSITES Offered Offered Offered with mouseover Offered Offered with click Not offered Not offered Not offered Not offered Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 49

52 Figure 71: Louis Vuitton is in the overall lead, followed closely by Cartier, Fendi, Loro Piana and Moncler. Shop by occasion exploited by jewellers only Digital Experience Axis Product Selection Support on Russia/Intl. Websites (Russia, November 2016) Brands Rank Wishlist Recently viewed PRODUCT SELECTION SUPPORT ON RUSSIA/INTL. WEBSITES You might also like (same product category) Match with, Complete the Look Shop by Look Shop by Occasion Size guide Louis Vuitton 1 YES YES YES YES YES NO YES Cartier 2 YES NO YES YES n.a. YES (e.g. bridal, engagement) YES Fendi 2 YES YES YES YES NO NO YES Loro Piana 2 YES NO YES YES YES NO YES Moncler 2 YES NO YES YES YES NO YES Brunello Cucinelli 6 YES NO NO YES YES NO YES Bulgari 6 YES NO YES YES n.a. YES (e.g. bridal) NO Burberry 6 YES NO YES YES NO NO YES Dolce&Gabbana 6 YES YES NO YES NO NO YES Tiffany 10 YES YES YES NO n.a. YES (e.g. engagement, wedding) NO Armani 11 YES NO NO NO YES NO YES Chanel 11 YES NO YES NO YES NO NO Givenchy 11 NO NO NO YES Discover the look NO YES Balenciaga 14 YES NO NO NO NO NO YES Swatch 14 YES NO YES n.a. n.a. NO NO Tod's 14 YES NO NO NO NO NO YES Coach 17 NO YES NO NO NO NO YES Dior 17 NO YES YES NO NO NO NO Hugo Boss 17 NO YES NO NO NO NO YES Ray-Ban 17 NO YES YES n.a. n.a. NO NO Saint Laurent 17 NO YES NO NO NO NO YES Alena Akhmadullina 17 NO NO NO YES NO NO NO Hermès 23 YES (scarves) NO YES (scarves) NO NO NO NO Bottega Veneta 24 NO NO NO NO YES NO NO Céline 24 NO NO NO NO YES NO NO Gucci 24 NO YES NO NO NO NO NO Prada 24 NO NO NO NO NO NO YES Valentino 28 NO NO NO NO NO NO NO Zegna 28 NO NO NO NO NO NO NO Ferragamo 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Analysis Offered Offered Offered Offered Offered Offered Offered Partial Not offered Not offered Not offered Not offered Not offered Not offered Not offered Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 50

53 Figure 72: Dolce & Gabbana has introduced Match with in its new redesigned website Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 51

54 Figure 73: Burberry, Cartier, LV and Tiffany offer phone and assistance in Russian. Major mega-brands like Chanel, Gucci, Hermès, Prada do not offer any specific customer service to Russian clients Digital Experience Axis Basic Customer Service on Russia/Intl. Websites (Russia, November 2016) BASIC CUSTOMER SERVICE ON RUSSIAN/INTL. WEBSITES* Brands Rank Online Chat Phone Assistance Assistance Burberry 1 Not active RU RU Cartier 1 NO RU RU Louis Vuitton 1 Not active RU RU Tiffany 1 NO RU RU Bottega Veneta 5 EN EN (IT number) RU Dior 6 EN EN (FR number) EN Fendi 6 NO EN (IT number) RU Loro Piana 6 EN EN (IT number) EN Armani 9 NO NO RU Bulgari 9 NO NO RU Dolce&Gabbana 9 NO NO RU Swatch 9 NO EN (CH number) EN Tod's 9 NO NO RU Valentino 9 NO NO RU Zegna 9 NO NO RU Céline 16 NO NO EN Coach 16 NO NO EN Givenchy 16 NO NO EN Hugo Boss 16 NO NO EN Balenciaga 20 NO NO Not active Brunello Cucinelli 20 NO NO Not active Moncler 20 NO NO Not active Chanel 20 NO NO NO Gucci 20 NO NO NO Hermès 20 NO NO NO Prada 20 NO NO NO Ray-Ban 20 NO NO NO Saint Laurent 20 NO NO NO Alena Akhmadullina 20 NO NO NO Ferragamo 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website *Product availability, delivery, payment Offered in Russian Offered in Russian Offered in Russian Offered in English Offered in English Offered in English Not Offered Not Active Not Offered Not Offered Not Active Analysis Figure 74: Louis Vuitton s complete customer service: phone, and chat (not yet active) in Russian Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 52

55 Figure 75: Cartier offering phone and assistance in Russian. Specific stores selected as competence centre (generic and diamonds specific) Figure 76: Burberry also offers a Call me back service Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 53

56 Figure 77: Cartier, Burberry, Louis Vuitton, Tiffany and Zegna offer an effective Style Advisory in Russian. Cartier, Armani and Dior offer Book an Appointment in store Digital Experience Axis Personal Services on Russia/Intl. Websites (Russia, November 2016) PERSONAL SERVICES ON RUSSIAN/INTL. WEBSITES Brands Rank Style Advisor: Online Style Advisor: Phone Style Advisor: Book an Appointment Chat* Assistance* Assistance* in Russian Stores Make to Order Burberry 1 Not active RU RU extra effort NO Bespoke RTW, Accessories (online); monogramming scarves & perfumes (online) Cartier 1 NO RU NO YES After Service - jewellery engraving/polishing/resizing/restoration/pairing (offline) Armani 3 NO NO Refer to store YES (made to measure) Made-to-measure (offline) Louis Vuitton 4 Not active RU NO NO Initials on leather goods by stamping or printing (online); make-to-order shoes (offline) Dior 5 No reply EN (refer to store for RU) EN YES NO Loro Piana 6 EN NO NO NO Made To Measure Services: suits/jackets, Shirts, Men's Knitwear, Ties Tiffany 7 NO RU NO NO NO Zegna 7 NO NO RU extra effort NO NO Bottega Veneta 9 EN NO No reply NO NO Bulgari 9 NO NO Refer to store NO NO Dolce & Gabbana 9 NO NO Refer to store NO NO Fendi 9 NO EN (refer to store for RU) No reply NO NO Tod's 9 NO NO Refer to store NO NO Valentino 9 NO NO Refer to store NO NO Balenciaga 15 NO NO Not active No stores in Russia NO Brunello Cucinelli 15 NO NO Not active NO NO Céline 15 NO NO NO NO NO Chanel 15 NO NO NO NO NO Coach 15 NO NO NO No stores in Russia NO Givenchy 15 NO NO No reply NO NO Gucci 15 NO NO NO NO NO Hermès 15 NO NO NO NO NO Hugo Boss 15 NO NO NO NO NO Moncler 15 NO NO Not active NO NO Prada 15 NO NO NO NO NO RayBan 15 NO NO NO No monobrand stores NO Saint Laurent 15 NO NO NO NO NO Swatch 15 NO NO NO NO NO Alena Akhmadullina 15 NO NO NO NO NO Ferragamo 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Offered in Russian Offered in Russian Offered in Russian Offered at Russian stores Products on Russian website / stores Offered in English Offered in English/ Refer to store for RU Offered in English/ Refer to store Initials on Russian website / stores Not Offered/ No Reply/ Not Active Not Offered Not Offered/ No Reply/ Not Active Not Offered at Russian stores Not Offered at Russian stores Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 54

57 Figure 78: Burberry extra effort in Style Advisory via Digital Experience Axis Personal Services on Russia/Intl. Websites (Russia, November 2016) Figure 79: Zegna extra effort in Style Advisory via Digital Experience Axis Personal Services on Russia/Intl. Websites (Russia, November 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 55

58 Figure 80: Dior offers Book an Appointment Digital Experience Axis Personal Services on Russia/Intl. Websites (Russia, November 2016) Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 56

59 Figure 81: As expected, Russian brand Alena Akhmadullina is leading Digital Experience Axis Online Shopping on Russian / International websites (Russia, November 2016) Brands Ranking Video in homepage without slowing down Purchasing Process Shop evidence on Russian Homepage ONLINE SHOPPING ON RUSSIAN/INTL. WEBSITES Minimum clicks to shopping bag E-commerce mobile Price Evidence Cash on delivery Bank transfer Wallet payment Alena Akhmadullina 1 NO HIGH 3 YES YES YES YES NO Loro Piana 2 YES (animation) HIGH 3 YES YES NO YES NO Dolce&Gabbana 3 NO HIGH 3 YES YES NO NO Qiwi Balenciaga 4 NO HIGH 3 YES YES (mouseover) NO NO NO Burberry 4 YES HIGH 3 YES YES NO NO NO Moncler 6 NO HIGH 3 YES YES NO NO NO Valentino 6 NO HIGH 3 YES YES NO NO NO Givenchy 8 YES HIGH 3 YES (IOS APP) YES (only app) NO NO PayPal Armani 9 NO HIGH 4.00 YES YES NO NO NO Brunello Cucinelli 9 NO HIGH 4.00 YES YES NO NO NO Bulgari 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES (mouseover) no Russia ecommerce no Russia ecommerce no Russia ecommerce Cartier 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES (mouseover) no Russia ecommerce no Russia ecommerce no Russia ecommerce Chanel 11 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerce Fendi 11 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerce Céline 15 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerce Coach 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Gucci 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Hugo Boss 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Louis Vuitton 15 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerce Prada 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Saint Laurent 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Tiffany 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Bottega Veneta 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Dior 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Hermès 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Ray-Ban 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Swatch 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Tod's 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Zegna 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Ferragamo 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Partial screen video, not interfering on Homepage Shop button or E-store button 2-3 click Via Web Yes displayed on product page and on category page with mouseover Offered Offered Offered No video on Homepage Shopping bag 4-5 clicks Only via App Yes displayed on product page and/or on category page without mouseover Full screen video and always interfering (skip) on Homepage No E-commerce evidence More than 5 clicks Not feasible Not displayed Not offered Not offered Not offered Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 57

60 Figure 82: Cash on Delivery widely adopted in the Russian online market E-Money 5% Card on Delivery 4% Other 2% Offline/Prepaid 10% Credit Card 10% Cash 69% Source: Payvision Global Card Processing Figure 83: Alena Akhmadullina player offering Cash on Delivery and Bank Transfer options Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 58

61 Figure 84: Loro Piana only international brand offering Bank Transfer option Figure 85: Dolce & Gabbana adopting Russian paying system Qiwi wallet Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 59

62 Figure 86: Burberry standing out offering both Free Shipping and Express Delivery Digital Experience Axis Delivery options on Russian / International websites (Russia, November 2016) DELIVERY OPTIONS IN RUSSIA Brands Rank Free shipping (Standard) Express Delivery Same/Next Day Delivery Saturday Delivery Burberry 1 YES 3-5 DAYS NO NO Givenchy 2 NO (20 GBP) 2-3 DAYS NO NO Alena Akhmadullina 2 NO (350 RUB) 1-2 DAYS NO NO Balenciaga 4 YES NO (Standard 2/3 weeks) NO NO Brunello Cucinelli 4 YES NO (Standard 2/3 weeks) NO NO Dolce&Gabbana 4 NO (1800 RUB) 6-9 DAYS NO NO Loro Piana 4 NO 3-5 days + customs NO NO Armani 8 NO (1000 RUB) NO (Standard 2/3 weeks) NO NO Moncler 8 NO (1000 RUB) NO (Standard 2/3 weeks) NO NO Valentino 8 NO (20 EUR) NO (Standard 2/3 weeks) NO NO Bottega Veneta 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Bulgari 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Cartier 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Céline 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Chanel 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Coach 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Dior 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Fendi 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Ferragamo 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Gucci 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Hermès 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Hugo Boss 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Louis Vuitton 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Michael Kors 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Prada 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Ralph Lauren 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ray-Ban 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Saint Laurent 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Swatch 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Tiffany 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Tod's 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Tory Burch 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Zegna 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce Analysis Free with no Ticket limits Offered Min 3 days Same day Offered Free above Ticket threshold Offered other Next day Always paid Not offered Not offering Not offered Figure 87: Uncertainty in custom clearance timing affects delivery performance to Russia The example of Loro Piana Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 60

63 Figure 88: Russian customers consider Saturday delivery important Fashion & Luxury Customers declaring Relevance of Saturday Delivery (%) 80% 70% 71% 76% 60% 50% 40% 42% 50% 30% 20% 10% 0% WW Customers Extremely + Very Important Russian Customers Extremely + Very + Quite Important European (+) Digital Behaviour Study 2016 Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 61

64 Figure 89: Store Finder Fendi, Louis Vuitton and Zegna leading, closely followed by Cartier Digital Experience Axis Store Finder (Russia, November 2016) Brands Rank Identification on Homepage Visibility Store Search Ask for Client Localization on Desktop STORE FINDER FOR RUSSIA Ask for Client Localization on Mobile Store Segmentation Details Map Print Photo boutique Phone number Opening day/hours to Store Referral in store Fendi 1 Store locator MEDIUM Automatic YES YES Products / Gender YES NO NO YES YES YES NO Louis Vuitton 1 Stores HIGH Manually prompted YES YES Products / Gender YES NO Specific photo YES YES NO NO Zegna 1 Store locator HIGH Manually prompted NO YES NO YES NO NO YES YES YES Store Manager Cartier 4 Find a boutique MEDIUM Manually prompted YES YES Service / Products YES NO Generic photo YES YES YES NO Hermès 5 Our boutique HIGH Manually prompted YES YES NO YES NO Generic drawing YES YES NO NO Hugo Boss 5 Store Locator MEDIUM Manually prompted YES YES Brand / Gender / Made to measure YES NO Generic photo YES YES YES NO Loro Piana 5 Stores HIGH Manually prompted NO NO Products / Gender YES NO Specific drawing YES YES NO Store Manager Valentino 5 Nearest Boutique HIGH Automatic NO NO Products / Gender YES NO Specific photo YES YES NO NO Swatch 9 Where to buy HIGH Automatic NO NO NO YES YES NO YES YES YES NO Burberry 10 Store locator HIGH Automatic NO YES NO YES NO NO YES YES NO NO Dior 10 Stores LOW Manually prompted NO YES Products / Gender YES YES NO YES YES YES NO Gucci 10 Store locator MEDIUM Manually prompted YES YES Products / Gender YES NO Generic photo YES YES NO NO Bulgari 13 Store locator MEDIUM Manually prompted YES YES Products YES NO NO YES YES NO NO Armani 14 Stores MEDIUM Manually prompted YES YES Brand / Gender YES NO NO YES NO NO NO Tiffany 14 Stores HIGH Manually prompted NO NO NO YES YES NO YES YES YES NO Chanel 16 Store locator LOW Manually prompted YES NO Products YES YES NO YES YES YES NO Moncler 16 Boutiques HIGH Manually prompted NO NO Gender YES NO NO YES NO YES NO Bottega Veneta 18 Store locator LOW Automatic YES YES NO YES NO NO YES NO NO NO Brunello Cucinelli 18 Boutique locator LOW Manually prompted NO NO NO YES YES Specific photo YES YES NO NO Prada 18 Store locator MEDIUM Manually prompted YES NO Products / Gender YES NO NO YES YES NO NO Tod's 18 Stores HIGH Manually prompted NO NO NO YES NO NO YES YES YES NO Ferragamo 22 Store locator HIGH Manually prompted NO NO Gender YES YES NO YES NO NO NO Saint Laurent 22 Store locator MEDIUM Manually prompted NO YES Gender NO NO NO YES YES NO NO Givenchy 24 Stores HIGH Manually prompted NO NO Products / Gender YES YES NO NO NO NO NO Ralph Lauren 24 Store locator MEDIUM Manually prompted NO NO Products / Gender YES NO NO YES YES NO NO Ray-Ban* 24 Store locator MEDIUM Manually prompted YES NO NO YES NO NO YES NO NO NO Dolce&Gabbana 27 Store locator LOW Manually prompted NO YES NO YES NO Moscow (Stand alone YES oursuare, Google NO NO Céline 28 Stores MEDIUM Manually prompted NO NO NO YES NO NO YES YES NO NO Michael Kors 28 Store locator MEDIUM Manually prompted NO NO NO YES NO NO YES YES NO NO Alena Akhmadullina 28 Boutique MEDIUM Full list 25 shops n.a. n.a. NO NO NO NO YES YES YES NO Balenciaga 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rustores in Runo stores in Russiao stores in Russio stores in Russia no stores in Russi no stores in Russia Coach 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rustores in Runo stores in Russiao stores in Russio stores in Russia no stores in Russi no stores in Russia Tory Burch 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rustores in Runo stores in Russiao stores in Russio stores in Russia no stores in Russi no stores in Russia *for Ray-Ban considered multibrand stores signaled in Store Locator "Luxury Goods" naming Minimum personalization namining "Mass Market" naming High: no scrolling, large font, specific banner Medium: no scrolling, no drop down menu, small font Low: scrolling, drop down menu, footer Automatic Requested Requested Two criteria One criteria Shows Map Manually prompted Not requested Not requested No criteria No map Allow map printing No map printing Specific Store picture Specifict Store picture for selected locations No picture or generic photo Phone Number available No Phone Number not available Opening Hours available (excluding SIS locations) Selected stores (excluding SIS locations) Opening Hours not mentioned (excluding SIS locations) to Store possible to Store not possible Contact provided No contact Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 62

65 Figure 90: Best practice Store finder visibility in Valentino homepage ( Find the nearest boutique ) Figure 91: Very clear store segmentation in Dior (gender/product category) Figure 92: Specific boutique picture for Dolce & Gabbana and Brunello Cucinelli Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 63

66 Figure 93: Social integration with Google Places and Foursquare in Dolce & Gabbana store details Figure 94: Zegna introducing store manager referral Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 64

67 Figure 95: Cross-channel services seem much neglected by most brands. Only Burberry and Fendi show In-Store availability Digital Experience Axis Cross Channel Services in Russia, November 2016 CROSS CHANNEL SERVICES IN RUSSIA Brands Rank In Store Availability Collect in Store Return in Store Product exchange Burberry 1 YES NO NO YES (only in-store) Fendi 2 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce Armani 3 NO NO NO Yes (online) Brunello Cucinelli 3 NO NO NO YES (online) Dolce&Gabbana 3 NO NO NO YES (online) Givenchy 3 NO NO NO YES (online) Loro Piana 3 NO NO NO YES (online) No size color exchange Moncler 3 NO NO NO YES (online) Alena Akhmadullina 3 NO NO NO YES (online) Balenciaga 3 No stores in Russia No stores in Russia No stores in Russia Yes (online) Valentino 11 NO NO NO NO Bottega Veneta 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Bulgari 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Cartier 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Céline 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Chanel 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Dior 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Gucci 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Hermès 11 Check via phone no Russia ecommerce no Russia ecommerce no Russia ecommerce Hugo Boss 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Louis Vuitton 11 Check via phone no Russia ecommerce no Russia ecommerce no Russia ecommerce Prada 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Ralph Lauren 11 NO no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ray-Ban 11 No monobrand stores no Russia ecommerce no Russia ecommerce no Russia ecommerce Saint Laurent 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Swatch 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Tiffany 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Tod's 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Zegna 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce Coach 11 No stores in Russia No stores in Russia No stores in Russia no Russia ecommerce Ferragamo 11 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 11 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 11 No stores in Russia No stores in Russia No stores in Russia no Russia/Intl. website Analysis Broadly offered Broadly offered Broadly offered Offered in selected stores only Offered in selected stores only Offered in selected stores only Offered online & in-store, or only instore Offered only online Not offered Not offered Not offered Not offered Figure 96: Burberry offers both in-store availability and exchange in store Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 65

68 Figure 97: Fendi has just introduced in-store availability Figure 98: Armani leads in Proficiency with Russian customers, followed by Fendi, Ferragamo Digital Experience Axis Proficiency for Russian Customers (Russia, November 2016) Brands Rank Mobile Responsive Video or Gif Male / Female Segmentation Navigation Bar Link between Product on and Web Landing Page Number of Social Bookmarks on Armani 1 YES Sometimes Sometimes Always Mixed Product/Category 7 Fendi 2 YES Sometimes Never Always Mixed Product/Category 10 Ferragamo 2 YES Sometimes Never Always Mixed Product/Category 6 Gucci 4 NO Sometimes Frequent Always Product Page 5 Ralph Lauren 4 YES Never Never Always Product Page 7 Balenciaga 6 YES Never Sometimes Always Category Page 3 Chanel 6 YES Frequent Never Never Product Page 5 Moncler 6 NO Never Frequent Always Mixed Product/Category 5 Cartier 9 YES Sometimes Sometimes Never Category Page 5 Dior 9 YES Sometimes Never Never Mixed Product/Category 5 Louis Vuitton 9 YES Never Never Always Category Page 7 Prada 9 YES Sometimes Sometimes Never Category Page 4 Swatch 9 YES Never Never Never Product Page 6 Burberry 14 YES Sometimes Never Never Category Page 6 Tod's 14 NO Sporadic Frequent Always Category Page 5 Michael Kors 16 NO Sometimes Never Always Mixed Product/Category 5 Tory Burch 16 NO Frequent Never Always Category Page 7 Zegna 16 YES Sometimes Never Never Category Page 3 Dolce&Gabbana 19 NO Sometimes Never Frequent Category Page 5 Valentino 19 NO Never Sometimes Never Category Page 8 Givenchy 21 YES Never Never Never No products on s received 4 Alena Akhmadullina 22 NO Never Never Sometimes Category Page 5 Bulgari 23 NO Never Never Never Category Page 4 Brunello Cucinelli 24 NO Never Never Never Category Page 0 Bottega Veneta 25 Céline 25 Coach 25 Loro Piana 25 Hermès 25 Ray-Ban 25 Hugo Boss 25 Saint Laurent 25 Tiffany 25 PROFICIENCY FOR RUSSIAN CUSTOMERS n.a. (welcome only) n.a. (welcome only) n.a. (welcome only) n.a. (welcome only) n.a. (welcome only) No received No NL Russia option No NL Russia option No NL Russia option Responsive Frequent (above 20% of s) Frequent (above 35% of s) Always / Frequent (above 80%) Landing on Web specific Product Page or Mixed Product- Category Page 6 or more bookmarks Sometimes (between 5% and 20% of s) Sometimes (below 35% of s) Sometimes (below 80%) Landing on Category Page 1 to 5 bookmarks Analysis Not responsive Never / Sporadic (below 5% of s) Never Never Landing on Home Page No bookmarks Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 66

69 Figure 99: Armani, Ferragamo, Zegna now embracing the mobile responsive layout for s The Example of Armani Figure 100: Fendi now includes 10 social bookmarks in s Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 67

70 Figure 101: Louis Vuitton s local content on Figure 102: Swatch s local content on Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 68

71 Figure 103: 10 brands achieve full score for Sharing on Product Page Digital Experience Axis Share on Russia/Intl. Websites (Russia, November 2016) PRODUCT PAGE SHARE ON RUSSIA/INTL. WEBSITES Brands Rank Facebook Pinterest Twitter Forward Brunello Cucinelli 1 YES YES YES YES Céline 1 YES YES YES YES Coach 1 YES YES YES YES Dolce&Gabbana 1 YES YES YES YES Fendi 1 YES YES YES YES Hermès 1 YES YES YES YES Hugo Boss 1 YES YES YES YES Louis Vuitton 1 YES YES YES YES Saint Laurent 1 YES YES YES YES Tiffany 1 YES YES YES YES Chanel 11 YES NO YES YES Moncler 11 YES NO YES YES Swatch 11 YES NO YES YES Armani 14 YES YES YES NO Balenciaga 14 YES YES YES NO Bottega Veneta 14 YES YES YES NO Bulgari 14 YES YES YES NO Burberry 14 YES YES YES NO Gucci 14 YES YES YES NO Loro Piana 14 YES NO NO YES Prada 14 YES YES YES NO Ray-Ban 14 YES YES YES NO Valentino 14 YES YES YES NO Alena Akhmadullina 14 YES YES YES NO Tod's 25 YES YES NO NO Cartier 25 YES NO YES NO Dior 27 NO NO NO NO Givenchy 27 NO NO NO NO Zegna 27 NO NO NO NO Ferragamo 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Michael Kors 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Ralph Lauren 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Tory Burch 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website Yes Yes Yes Yes Analysis No No No No Figure 104: Ray-Ban Product Page share on Facebook, Twitter, Google + and Pinterest Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 69

72 Figure 105: Louis Vuitton, Valentino and Moncler alone offer apps in Russian language Digital Customer Experience Proficiency Apps for Russian Customers (Russia, November 2016) Analysis APPS FOR RUSSIAN CUSTOMERS Brands Rank ios Apps Android Apps Apps signaled on Russia/Intl. websites Louis Vuitton 1 RU RU YES Valentino 1 RU RU YES Moncler 3 RU RU NO Cartier 4 EN EN YES Fendi 4 EN EN YES Gucci 4 EN EN YES Ray-Ban 4 EN EN YES Givenchy 8 EN (commerce) NO YES Armani 9 EN EN NO Chanel 9 EN EN NO Dior 9 EN EN NO Hermès 9 EN EN NO Swatch 9 EN EN NO Tiffany 9 EN EN NO Tory Burch 9 EN EN no Russia/Intl. website Balenciaga 15 EN NO NO Bulgari 15 EN NO NO Coach 15 EN NO NO Loro Piana 15 EN (commerce) NO NO Ralph Lauren 15 EN NO no Russia/Intl. website Bottega Veneta 20 NO NO n.a. Brunello Cucinelli 20 NO NO n.a. Burberry 20 NO NO n.a. Céline 20 NO NO n.a. Dolce&Gabbana 20 NO NO n.a. Ferragamo 20 NO NO no Russia/Intl. website Hugo Boss 20 NO NO n.a. Michael Kors 20 NO NO no Russia/Intl. website Prada 20 NO NO n.a. Saint Laurent 20 NO NO n.a. Tod's 20 NO NO n.a. Zegna 20 NO NO n.a. Alena Akhmadullina 20 NO NO n.a. Positive Offered in Russian Offered in Russian Plus Offered in English Offered in English Signaled on local website Signaled on international website Negative Not offered Not offered Not signaled Figure 106: Valentino app in Russian, signalled on website Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 70

73 Luxury Stores in Russia Figure 107: There are 16 cities with monobrand stand-alone stores and 24 minor cities with monobrand stores inside Shopping Centres Cities with at least one monobrand stand-alone store NB. Store analysis regarding the 33 Monobrand stores in our Panel. Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 71

74 Figure 108: In Russia there are 272 Monobrand physical stores in 111 locations Russia, November 2016 City Stand-Alone Monobrand SIS Department Store Luxury Mall Shopping Centers Airport Moscow Downtown Kapitoly shopping centre TSUM Bravikha Luxury Village Metropolis Sheremetyevo Intl. Airport New Abat Ave GUM Gallery Vremena Goda Evropeysky Shopping Mall Vnukovo Intl. Airport Kutuzovsky Prospect Crocus City Mall Leninsky Ave Bolshaya Sadovaya st. Moscow Atrium Mall Kuntsevo Plaza Olympic Village Vegas Mall Himeney Lotte Plaza Shopping Mall Belaya Dacha Valday shopping mall Troyka shopping centre Veska Shopping centre MEGA Khimki Color Universal Store Druzhba shopping Mall total locations 1 3 TOTAL Locations Semyanov shopping mall total locations Downtown North River Neva DLT Petrovskiy Passazh Lev Tolostoi Shopping Mall Raduga Shopping Mall St. Petersburg Downtown South River Neva Babochka gallery Evropolis Grand Palace Mall Shopping center Academ park St. Petersburg Intl. Airport % Nevsky 125 City Mall Galeria Shopping Mall AU PONT ROUGE total locations Downtown Pokrovsky Passage Mall Shopping Mall Pokrovsky Passage, Airport Koltsovo Ekaterinburg MEGA, % Limerance Mall Greenwich Shopping centre total locations Rostov-on-Don Downtown Astor Plaza Mall Horizont Shopping Mall, Intermoda MEGA Rostov 5 8 3% total locations Sochi Downtown Moremoll, Morvokzal Shopping mall Airport Sochi 4 6 2% total locations Plaza Mall, Nizhny Novgorod Downtown Podium Luxury Store Sedmoe Nebo, 5 7 3% L.P. Fashion Gallery total locations Koltso Shopping mall, Kazan Downtown MEGA, 4 6 2% VIP Gallery TOTAL Store % Stores % Ufa Downtown 1 3 1% total locations 1 Chelyabinsk Downtown 1 2 total locations 1 Samara Downtown MEGA 2 6 2% total locations 1 1 Krasnodar Downtown City Center Krasnodar Airport total locations Perm Downtown Almaz Shopping Mall 2 3 total locations 1 1 Krasnoiarsk Downtown Krasnoyarsk Planet Mall 2 3 1% total locations 1 1 Bryansk Downtown 1 1 total locations 1 Shopping center Forum Saratov Saratov Downtown Shopping mall Aurora Saratov 3 3 1% total locations 1 2 Omsk Downtown 1 1 0% total locations 1 Other Cities (24) Tula Paradiz Shopping center Voronezh Galeria shopping Center Alimpik Astrakhan Orange Balakovo City Mall Negorod Shopping Mall Amurskaya Yarmarka Blagoveshensk Talisman Izhevsk Lapland, Promenade Mall, Spring Street (3 in Kemerovo) Lipetsk Europe Mall Shopping center Red square Novorossiysk Orel Shopping center Grinn Penza Passage Mall Shopping MAll Pyatigorsk Shopping center Junona Smolensk Park House Shopping center Tolyatti Shopping center, Shopping Mall Passage (2 in Tomsk) Tjumen Shopping center (2 stores) Tver Shopping center Rubin Ulyanovsk Shopping center Akvamoll Vladikavkaz Shopping Mall Shopping Mall Voroshilovsky Volograd MEGA Novosibirsk Caramel Irkutsk Tolmachevo Novosibirsk 1% 3 4 1% 1% 0% % total locations 25 1 TOTAL Locations TOTAL Stores % Stores 35% 18% 13% 31% 4% Note: Store analysis regarding the 33 Brands in the Exane BNP Paribas Panel Source: Exane BNP Paribas, Contactlab Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 72

75 Figure 109: Most brands have stores in Moscow and St. Petersburg. Only Premium brands Swatch/Armani/Hugo Boss and Zegna in second tier cities. Swatch present also in minor cities Number of Monobrand Stores by City (Russia, November 2016) Brands Moscow St. Petersburg Ekaterinburg Rostov-on-Don Nizhny Novogorod Sochi Kazan Samara Krasnodar Ufa Perm Krasnoiarsk Saratov Chelyabinsk Bryansk Omsk Other Cities Total Brand Stores Swatch Premium Armani Premium Hugo Boss Premium Zegna Mega-Brand Michael Kors Premium Dolce&Gabbana Runner-Up Gucci Mega-Brand Valentino High-End Loro Piana High-End Louis Vuitton Mega-Brand Prada Mega-Brand Brunello Cucinelli High-End Bulgari Jeweller Chanel High-End Ferragamo Runner-Up Ralph Lauren Premium Burberry Mega-Brand 5 5 Cartier Jeweller Céline High-End Bottega Veneta High-End Dior High-End Alena Akhmadullina Runner-Up Fendi Runner-Up Saint Laurent High-End 3 3 Tod's Runner-Up 3 3 Hermès High-End 2 2 Givenchy Runner-Up 1 1 Moncler Premium 1 1 Tiffany Jeweller 1 1 Balenciaga Coach Runner-Up Premium Ray Ban Mega-Brand Tory Burch Premium Total Stores Analysis Figure 110: Most stand-alone stores and TSUM and GUM luxury department stores are located in downtown Moscow Moscow, November 2016 Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 73

76 Figure 111: Flagship stores on Tretyakovskiy Proyezd in Moscow Moscow, November 2016 Analysis Figure 112: Hermès and Louis Vuitton Flagship Stores on Stoleshnikov Lane in Moscow. Both brands have made a local effort by writing the brand name in Russian Moscow, November 2016 Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 74

77 Figure 113: TSUM and GUM luxury department stores in Moscow Moscow, November 2016 Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 75

78 Figure 114: Most Panel brands with presence in TSUM and GUM luxury department stores in Moscow and St. Petersburg DLT Russia, November 2016 Brand TSUM (Moscow) GUM (Moscow) DLT (St. Petersburg) Armani Balenciaga NO Bottega Veneta NO Brunello Cucinelli NO NO Bulgari NO Burberry Cartier NO NO Céline NO Chanel NO Coach NO NO Dior Dolce&Gabbana NO Fendi NO Ferragamo NO NO Givenchy NO Gucci Hermès Hugo Boss Loro Piana NO NO Louis Vuitton NO Michael Kors NO Moncler NO Prada NO Ralph Lauren NO Ray Ban NO Saint Laurent NO Swatch NO NO Tiffany NO Tod's NO Tory Burch NO Valentino NO Zegna NO Alena Akhmadullina NO NO NO Total Brands presence Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 76

79 Figure 115: Salvatore Ferragamo store inside GUM Moscow Moscow, November 2016 Figure 116: DLT luxury department store in St. Petersburg Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 77

80 Figure 117: Three major luxury malls located in the west Moscow area Moscow, November 2016 Figure 118: Panel presence in the three major luxury malls located around Moscow Moscow, November 2016 Brand Bravikha Luxury Village Vremena Goda Crocus City Mall Armani NO Balenciaga NO NO NO Bottega Veneta NO NO Brunello Cucinelli NO Bulgari NO NO Burberry NO Cartier NO NO Céline NO NO Chanel NO Coach NO NO NO Dior NO NO NO Dolce&Gabbana NO NO Fendi NO NO NO Ferragamo NO NO Givenchy NO NO Gucci NO NO Hermès NO NO NO Hugo Boss NO NO NO Loro Piana NO NO Louis Vuitton NO NO NO Michael Kors NO NO NO Moncler NO NO NO Prada NO Ralph Lauren NO NO Ray Ban NO NO NO Saint Laurent NO NO Swatch NO NO Tiffany NO NO Tod's NO NO Tory Burch NO NO NO Valentino NO Zegna NO NO Alena Akhmadullina NO NO NO Total Brands Presence Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 78

81 Figure 119: Gucci Store inside Bravikha Luxury Village Analysis Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 79

82 Appendix: About the collaboration with Contactlab Exane has worked in collaboration with Contactlab on this report and the sections provided by Contactlab are clearly highlighted. The contributors from Contactlab are Marco Pozzi, Francesca Borgonovo and Teodora Boshnyakova. Contributors from Contactlab are not Research analysts and are not FCA or AMF registered. They have only shared their expertise on clearly delineated sections of the report and did not have access to the full report or its conclusions prior to publication. Contactlab presentation Contactlab provides the leading engagement marketing platform for commerce-focused companies and fashion & luxury brands to develop successfully digital communication programs that enable personalized marketing to unlock demand and build lasting customer preferences. Founded in 1998, Contactlab is led by its founder Massimo Fubini, an internet industry veteran and opinion leader in the marketing field since Thanks to our own enabling PaaS technology and to the experience of our navigated professionals, we enable brands to achieve a deeper understanding of customers, to deliver uniquely relevant messages at every touchpoint of the customer journey and to measure performances with real-time dashboards that display all the relevant data. Our enterprise-grade platform is built with the highest security level, reliability, management, scalability. Our solutions enable brands to gain insights into the context of each customer and deepen the retail experience by delivering highly individualized digital contact plans across channels based on events, preferences and product lifecycle. Today, we work with more than 1000 clients in different industries across the world and serve most of the world-class brands in the Luxury and Fashion sectors Disclosures All stock-specific commentary and recommendations in this report are solely based on Exane Research. Contactlab Contactlab does not make investment recommendations, in this report or otherwise, and nothing in this report should be interpreted as an opinion by Contactlab either on market forecasts or on the prospects of specific companies. This report and all of its content are strictly confidential. It may not be circulated or otherwise reproduced in whole or in part. The analyses set out in the Report are the result of the aggregation of public materials and data coming from a sample of industry players. Use of this report by any person for whatever purpose should not, and does not, absolve such third party from using due diligence and care in verifying the report s contents. Any use which a person makes of this document, or any reliance on it, or decisions to be made based on it, are the responsibility of such person. Contactlab, its affiliates and representatives accept no duty of care or liability of any kind whatsoever to any person, and no responsibility for damages, if any, suffered by any person as the result of decision made, or not made, or actions taken, or not taken, based on this document.. Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 80

83 DISCLOSURE APPENDIX Analyst Certification We, Melania Grippo, Guido Lucarelli, Luca Solca, (authors of or contributors to the report) hereby certify that all of the views expressed in this report accurately reflect our personal view(s) about the company or companies and securities discussed in this report. No part of our compensation was, is, or will be, directly, or indirectly, related to the specific recommendations or views expressed in this research report. Non-US Research Analyst Disclosure The research analysts named below were involved in preparing this research report. Research analysts at Exane Limited and Exane SA are not associated persons of Exane Inc. and thus are not registered or qualified in the U.S. as research analysts with the Financial Industry Regulatory Authority (FINRA) or the New York Stock Exchange (NYSE). These non-u.s. analysts are not subject to the NASD Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Melania Grippo Exane SA Guido Lucarelli Exane SA Luca Solca Exane SA Exane SA is regulated by the Autorité des Marchés Financiers (AMF) in France, Exane Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and Exane Inc. is regulated by FINRA and the U.S. Securities and Exchange Commission in the United States. Research Analyst Compensation The research analyst(s) responsible for the preparation of this report receive(s) compensation based upon various factors including overall firm revenues, which may include investment banking activities. Disclosure of the report to the company/ies Companies NONE Disclosures 1 Sections of this report, with the research summary, target price and rating removed, have been presented to the subject company/ies prior to its distribution, for the sole purpose of verifying the accuracy of factual statements. 2 Following the presentation of sections of this report to this subject company, some conclusions were amended. Commitment to transparency on potential conflicts of interest: BNP Paribas While BNP Paribas ( BNPP ) holds a material ownership interest in the various Exane entities, Exane and BNPP have entered into an agreement to maintain the independence of Exane's research reports from BNPP. These research reports are published under the brand name Exane BNP Paribas. Nevertheless, for the sake of transparency, we separately identify potential conflicts of interest with BNPP regarding the company/(ies) covered by this research document. The latest company-specific disclosures, valuation methodologies and investment case risks for all other companies covered by this document are available on Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 81

84 All Exane research documents are available to all clients simultaneously on the Exane website ( Most published research is also available via third-party aggregators such as Bloomberg, Thomson Reuters, Factset and Capital IQ. Exane is not responsible for the redistribution of research by third-party aggregators. Important notice: Please refer to our complete disclosure notice and conflict of interest policy available on This research is produced by one or more of EXANE SA, EXANE Limited and Exane Inc (collectively referred to as EXANE"). EXANE SA is authorized by the Autorité de Contrôle Prudentiel et de Résolution and regulated by the Autorité des Marchés Financiers ("AMF"). EXANE Limited is authorized and regulated by the Financial Conduct Authority ( FCA ). Exane Inc is registered and regulated by the Financial Industry Regulatory Authority ("FINRA"). In accordance with the requirements of Financial Conduct Authority COBS R and associated guidance, of article of the AMF Règlement Général, and of FINRA Rule 2241, Exane s policy for managing conflicts of interest in relation to investment research is published on Exane s web site (cube.exane.com). Exane also follows the guidelines described in the code of conduct of the Association Francaise des Entreprises d'investissement ("AFEI") on managing conflicts of interest in the field of investment research. This code of conduct is available on Exane s web site ( This research is solely for the private information of the recipients. All information contained in this research report has been compiled from sources believed to be reliable. However, no representation or warranty, express or implied, is made with respect to the completeness or accuracy of its contents, and it is not to be relied upon as such. Opinions contained in this research report represent Exane's current opinions on the date of the report only. Exane is not soliciting an action based upon it, and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. While Exane endeavours to update its research reports from time to time, there may be legal and/or other reasons why Exane cannot do so and, accordingly, Exane disclaims any obligation to do so. This report is provided solely for the information of professional investors who are expected to make their own investment decisions without undue reliance on this report and Exane accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report may not be reproduced, distributed or published by any recipient for any purpose. Any United States person wishing to obtain further information or to effect a transaction in any security discussed in this report should do so only through Exane Inc., which has distributed this report in the United States and, subject to the above, accepts responsibility for its contents. BNP PARIBAS has acquired an interest in VERNER INVESTISSEMENTS the parent company of EXANE. VERNER INVESTISSEMENTS is controlled by the management of EXANE. BNP PARIBAS s voting rights as a shareholder of VERNER INVESTISSEMENTS will be limited to 40% of overall voting rights of VERNER INVESTISSEMENTS.

85 EXANE BNP PARIBAS LONDON Exane Limited 1 Hanover Street London W1S 1YZ UK Tel: (+44) Fax: (+44) PARIS Exane S.A. 6 Rue Ménars Paris France Tel: (+33) Fax: (+33) FRANKFURT Branch of Exane S.A. Europa-Allee 12, 3rd floor Frankfurt Germany Tel: (+49) Fax: (+49) GENEVA Branch of Exane S.A. Rue du Rhône Geneva Switzerland Tel: (+41) Fax: (+41) MADRID Branch of Exane S.A. Calle Génova, 27 7th Floor Madrid Spain Tel: (+34) Fax: (+34) MILAN Branch of Exane S.A. Via dei Bossi Milan Italy Tel: (+39) Fax: (+39) NEW YORK Exane Inc. 640 Fifth Avenue 15th Floor New York, NY USA Tel: (+1) Fax: (+1) SINGAPORE Branch of Exane Limited 20 Collyer Quay #07-02 Tung Centre Singapore Tel: (+65) Fax: (+65) STOCKHOLM Branch of Exane Limited Nybrokajen Stockholm Sweden Tel: (+46) Fax: (+46) CONTACTLAB MILAN Contactlab Italy, S.p.A Via Natale Battaglia, Milan Italy Tel: (+39) Fax: (+39) PARIS Contactlab France, Sarl 12 rue du Helder Paris France Tel: (+33) Fax: (+33) MUNICH Contactlab Deutschland, GmbH Landwehrstrasse Munich Germany Tel: (+49) Fax: (+49)

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