Luxury Under Pressure - Crisis Management and Communication Strategies in Response to Industry Challenges: The Richemont Case Study

The luxury sector is often under intense pressure during crises, making it crucial to respond promptly and implement strategies that maintain stakeholder confidence and protect brand prestige. Crises, which can be triggered by both internal and external factors, must be handled effectively for companies to remain resilient, especially in an increasingly interconnected market. This study analyses Richemont's crisis management strategies, focusing specifically on the failed agreement between Yoox Net-a-Porter (YNAP) and Farfetch. This particular case was selected due to its significance not only to Richemont but also to the wider luxury industry. By examining this case, valuable insights can be gained about crisis management, especially in the context of digital innovation. The central aim of this thesis is to explore how Richemont succeeded in maintaining its market position despite the challenges it faced. The collapse of major digital businesses has raised questions regarding the luxury industry’s ability to adapt to the global shift towards e-commerce. In Richemont’s case, its investments in YNAP and Farfetch resulted in significant financial losses, leading to a crisis of confidence in its digital strategy. However, despite these setbacks, the group managed to recover. Thus, this research investigates how luxury companies, using Richemont as an example, can navigate through crises. More specifically, it aims to: - Analyze Richemont’s approach to crisis management, focusing on the failure of the YNAP and Farfetch deals. - Evaluate the effectiveness of the company’s crisis communication in preserving its reputation and stakeholder trust. - Understand how Richemont was able to maintain its market position despite these significant challenges. - Provide valuable insights for other luxury brands on how to respond to crises. The methodology for this study includes a qualitative analysis of the Richemont case, alongside a review of existing literature on crisis management and communication strategies. Additionally, the structure of the dissertation is organized into four chapters. Chapter 1 provides an introduction to crises and crisis management, explaining how crises develop and outlining strategies to minimize their impact on an organization’s performance. Chapter 2 focuses on crisis communication, highlighting how companies can manage their public image during difficult times. Chapter 3 explores how luxury brands handle crises, presenting case studies of companies that had to deal with various challenges. Finally, Chapter 4 delves into the Richemont case in detail, beginning with a look at the company’s history before analyzing how its strategic decisions allowed it to recover from the failures of the YNAP and Farfetch deals. To sum up, this thesis provides important lessons for luxury brands preparing to face future crises. The key findings underline the importance of proactive management, the ability to anticipate critical situations, and the value of transparent, strategic communication. Ultimately, it can be said that a company’s resilience it's measured by its ability to turn crises into opportunities for growth and long-term success.