At Bottega Veneta – a popular luxury leather goods brand – sales dropped 10% in Asia Pacific. This was not only an expensive problem, but it also threatened their position as a perceived leader in the luxury market. The company tried to improve the sales process and team incentives, without success. This is where Hoptech intervened. 

Kering, the multinational corporation that owns Bottega Veneta, was keen on looking for ways to address this sales decline. This is where Hoptech came into the picture. We used data science methods to compare Bottega Veneta with Kering’s two other brands: Gucci and Yves Saint Laurent, which are Kering’s two other leading luxury brands.

By digging into the data and watching the market closely, Hoptech found the real culprit: competition. Other players - Gucci and Saint Laurent - had changed their product lines to answer the needs of generation Y. Bottega Veneta’s products were simply going out of style.

Sales Trends Comparison between Gucci and Bottega Veneta

To understand the patterns in sales trends and generate forecasts, Hoptech used linear regression and forecasting by leveraging on historical data from all stores in the APAC region.

The 2019 to 2021 prediction follows the trend for Gucci where there is an increase in sales during the first quarter, a certain stagnation in the second and third quarters, then again, a surge in sales in the last quarter.

However, for Bottega Veneta, increases in sales are determined to be seasonal with significant peaks at the end of the year.

It was also found that there was no correlation between the size of the store and total sales. Bottega Veneta had stores that had floor areas between 10,000 square feet and 2,500 square feet. This disparity in store sizes had no effect on revenue, but it’s important to consider that location was not part of the graph.

Analyzing Customer Behaviour

 Using historical data, we can determine which age group or which gender is responsible for the bulk of sales. This information can give marketers invaluable insight into what their communication plans should look like to be able to target a certain gender or age group. Also, we can see which group of products are generating more revenue. For these situations, cluster analysis, or clustering, is most often used since we need to group a set of objects(cluster) to derive insights.

Hoptech saw that men tend to buy more at the end of the year. This can be useful information to supply chain and marketing teams to better address this since it’s predicted that this trend is going to continue.

Another intriguing insight is that Saint Laurent is selling more Ready To Wear products than Gucci and Bottega Veneta. This gives Bottega Veneta an opportunity to leverage this and explore innovations in terms of Ready To Wear items to be able to tap that market.

Another important finding is the clear sales driver among these 3 groups of customers:

• Cluster 1: one time or first-time shopper

• Cluster 2: regular shoppers, usually most of these customers can be categorized as loyal

• Cluster 3: wealthy customers or retail shop owners

By using cluster analysis, Hoptech found that among these, regular customers/loyal shoppers generate more sales than first-time shoppers or wealthy customers. This is a signal to the CRM team to bank heavily on customer satisfaction and retention.

 Product Preferences and Trends

The majority of Bottega Veneta’s sales from 2017 to 2018 were coming from customers that are between 30 to 39 years old, while Saint Laurent is raking in sales from customers with a 24 to 34 age range. This is a wake-up call to the brand that it needs to be relevant again and they need to create brand awareness directed towards Generation Y to stay ahead of the game.

In terms of product preference, the analysis also showed that the largest sales drivers for Bottega Veneta are their handbags, and a notable second are men’s carriers. Location-wise, Japan and China are shown to have the biggest sales revenues in the APAC region.

The Bottom Line

We recommended that Bottega Veneta cut its losses on the outdated product lines and focus its energy on innovation. They need to keep up with the trends of the younger generation. Bottega Veneta credits Hoptech with opening new markets potentially worth upwards of 10 million euros.