Reading bank

Unit 2
1 Before you read, look at the words in bold in the article. Match them with their
definitions (1–7). Use a dictionary if necessary.
1 the knowledge or skill necessary to do something know-how
2 designed for or used by people who have a lot of money upmarket
3 an agreement to become business partners tie-up
4 when the value of the money of a country goes up and down Currency fluctuations
5 think that something is less big or important than it is underestimated
6 show the truth about something bad expose
7 make something less strong or effective little by little undermined

2 Complete the article with the connectors in the box.

as well as for instance however such as

(2) (4) (3) (1)
3 Read the article and number these topics in the order they are mentioned.
a the start of an alternative form of trade in luxury goods in China 6
b a forecast of the growth of online sales 3
c the influence of social media on price awareness 5
d how some companies have tried to adapt to the changes 4
e a list of the changes that have affected the luxury business 2
f two online fashion retailers striking a major deal 1
f-e-b-d-c-a
4 Decide if these statements are true (T) or false (F).
1 Net-a-Porter and Yoox’s combined annual sales will reach €13 million. F
2 The luxury industry had not predicted that so many people would be expert at using
social media to check prices around the world. T
3 People have different views about how the luxury industry should adapt to the changes
caused by the digital age. T
4 Some luxury brands sponsor artists and museums. T
5 Chinese consumers are aware that Western companies’ special pricing policy is good for
them. F
6 Some luxury companies are thinking of opening more new stores in Asia. T

5 Check your answers to Exercise 4. Correct the false statements. 1. 13 million → 1.3 billion
5. good → not fair
6 Find words and phrases in the article which mean the same as the following.
1 set up, established (Section A) founded
2 income from business activities (Section B) revenue
3 make something continue without changing (Section B) preserve
4 information you get by someone telling you (Section C) word of mouth
5 make a problem or subject easy to notice so that people pay attention to it (Section D) highlight
6 think about an idea or a plan again in order to change it (Section D) rethink

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 Reading bank

Technological revolution in the luxury industry

A The internet changed the buying habits of the rich. A clear sign of the changes to the luxury industry
in the digital age came from the tie-up between the two online fashion retailers Net-a-Porter and
Italy’s Yoox.
This major deal made Federico Marchetti, the entrepreneur who founded Yoox, Chief Executive of
5 an online business with annual sales of €1.3 billion and 2 million customers.
The tie-up showed how the luxury industry would change in the future. Traditionally, luxury
companies had avoided the internet because they thought the web’s democratisation of shopping
undermined their exclusive, upmarket values.
B But luxury brands underestimated several factors, 1 such as : how the internet
10 changed the habits of the rich; the rise of the Chinese as significant online shoppers; the increasing
digital know-how of the general public, who use social media to compare prices; falling advertising
revenue at fashion magazines; 2 as well as the fact that, through smart devices, the
internet can be present everywhere. All indicated that the industry needed to change rapidly.
Luca Solca, Managing Director and Head of Luxury Goods Research at Exane BNP Paribas, an
15 investment company, says that by 2020 online sales combined with digitally driven in-store sales –
when customers have used the internet for research before they visit a store – will represent 50 percent
of sales. Mr Solca says that if luxury brands want to survive and be successful, they need to keep up to
date with changing digital technologies and practices.
Not all people agree about how to adapt to the constantly changing consumer environment.
20 Groups such as Prada and Louis Vuitton, 3 however , have tried to preserve brand
value by opening contemporary art museums in cultural centres such as Milan, Paris and Venice.
Prada has also sponsored women directors at the Venice Film Festival.
C It is in the matter of pricing that the dramatic effect of social media and the internet is most
noticeable. The internet has made it totally clear to consumers that the same handbag is on sale in
25 Beijing for a higher price than in Paris. Through social media, people can expose pricing policies in
a click.
Erwan Rambourg, Luxury Analyst at HSBC, says: ‘Blogs, forums, word of mouth and travel are
spreading knowledge of brands and what consumers should pay for them. This will probably force
Brand Managers to stop thinking that they can charge Asian consumers more.’
30 ‘4 for instance , Chinese consumers already know that they pay more and feel that
Western companies are not fair to them,’ says a Business Consultant based in Shanghai.
The price gap has also caused a special kind of trade in luxury goods in China – the daigou industry –
where the Chinese buy luxury goods outside China to resell at home, often on the internet.
D Currency fluctuations, the challenge of the internet and of attracting tourist shoppers highlight the
35 need for companies to rethink some of the main elements of their strategies.
For example, some luxury companies which have spent millions of euros on opening new outlets in
Asia in recent years are asking themselves whether they now need to reduce their physical networks
and focus more on the internet.

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