Luxury Goods Market in 2016
-
Upload
euromonitor-international -
Category
Business
-
view
11.711 -
download
0
Transcript of Luxury Goods Market in 2016
LUXURY GOODS MARKET IN 2016
SHIFTING LANDSCAPES AND THE IMPACT OF DIGITAL INNOVATION
INDUSTRY OVERVIEW
LUXURY GOODS MARKET OVERVIEW
DEMOGRAPHIC SHIFTS
INNOVATION
ABOUT OUR RESEARCH
© Euromonitor International
3
Luxury Goods Industry Overview
INDUSTRY OVERVIEW
© Euromonitor International
4
Luxury Goods Forecast Growth
INDUSTRY OVERVIEW
© Euromonitor International
5
Top 10 Company Ranking
1. LVMH Moët Hennessy Louis Vuitton SA
2. Richemont SA, Cie Financière
3. Kering SA
4. Ralph Lauren Corp
5. Swatch Group Ltd, The
6. Chanel SA
7. Michael Kors Holdings Ltd
8. Hugo Boss AG
9. Prada SpA
10. Rolex SA
Top 10 Brand Ranking
1. Louis Vuitton
2. Ralph Lauren
3. Cartier
4. Chanel
5. Gucci
6. Michael Kors
7. Hugo Boss
8. Coach
9. Tiffany & Co
10. Burberry
Top Global Players Ranking by Value Sales (rsp) in 2014
INDUSTRY OVERVIEW
INDUSTRY OVERVIEW
LUXURY GOODS INDUSTRY OVERVIEW
DEMOGRAPHIC SHIFTS
INNOVATION
ABOUT OUR RESEARCH
© Euromonitor International
7
Luxury Goods Sales in Excess of US$317 Billion and Growing
LUXURY GOODS INDUSTRY OVERVIEW
0
1
2
3
4
5
6
-
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Rea
l Gro
wth
%
Rea
l val
ue
sale
s U
S$ B
n
Global Luxury Good Sales and Real Growth 2010-2020 US$ Billion
Real value sales US$ (fixed exchange rate) Real growth %
2015 was another challenging year for the personal luxury goods industry
Deflation, geopolitical instability, fluctuating currencies and mixed results from some of the world’s
leading luxury goods brands and retailers were just few of the hurdles to overcome
Sales of luxury goods nevertheless managed to exceed US$317 billion worldwide
Moving forward we expect the next five years to pose further challenges creating more risks but
opportunities are aplenty
© Euromonitor International
8
Luxury Goods to Witness more Geographic Shifts
LUXURY GOODS INDUSTRY OVERVIEW
0
5
10
15
20
25
30
35
40
0
20
40
60
80
100
120
140
Val
ue
sale
s U
S$ b
n
Luxury Goods Sales by Region Real US$ billion 2015/2020 and % Growth
2015 2020 % real growth 2015-20
Europe- Western Europe remains the largest region but growth is dwarfed by Middle East and Africa- Eurozone holding back regional performance- Political instability is similarly taking its toll on Eastern Europe
Asia Pacific- Asia Pacific performance held back by lacklustre sales in China and Hong Kong- Fluctuating currencies, political instability and slowing economies are shifting spend to the West
The Americas- North America’s outlook remains positive as consumers continue to spend- There'll be a notable rise in luxury spending in Latin America despite Brazil’s economic slowdown
© Euromonitor International
9
India 8
Malaysia 12
Indonesia 9
Thailand 7
Canada* 6
South Korea 6
UAE 6
Mexico 6
Turkey * 5
Poland 5
Ukraine** -24
Russia -5
Hong Kong** 3.4
Argentina** 0.9
Switzerland 0.9
China** 1.1
Singapore 1.3
Italy 1.6
Germany 1.6
Brazil 1.7
To
p 1
0 G
row
th M
ark
ets
Bo
ttom
10
Gro
wth
Ma
rke
ts
China Focus of Luxury Goods Investment, but for How Much Longer?
LUXURY GOODS INDUSTRY OVERVIEW
Winners and Losers 2015Luxury Goods Sales Contribution by Leading Markets 2015
USA
Japan
China
France
Italy
Rest of World
The luxury goods industry remains highly concentrated with top 5 markets making up over 50% of all
global sales.
Although the world’s major developed markets have all been key engines of demand, mainland China has
rapidly become the focus of investment. China is now the world’s 3rd biggest market after US and Japan.
However, cracks have started to appear in China’s growth story - which in turn is opening up many
opportunities for geographic expansion with brands increasingly looking for new growth markets.
China was on course to overtake Japan to be world’s 2nd biggest market by 2019 but its slowing growth
trajectory means it will now remain at number 3.
* In bottom 10 in 2010 **In top 10 in 2010
© Euromonitor International
10
Asia Pacific no Longer a Safe Haven of Growth for Luxury Goods
LUXURY GOODS INDUSTRY OVERVIEW
-20
-10
0
10
20
30
40
50
China Hong Kong Japan India
% v
alu
e gr
ow
th
Asia Pacific Growth in Key Affected Markets Luxury Goods 2010-12 vs. 2013-15
Value growth 2010-12 Value growth 2013-15
• Hong Kong protest and social unrest affects footfall
• Luxury real estate unaffordable
• Japan tax-rise further dampens consumer confidence
• Short-lived spend from Chinese
• Government-led ban on luxury gifting
• Weakening economy• Currency devaluation
External Factors Impacting Asia Pacific Luxury Goods Market
© Euromonitor International
11
Wealthy Chinese tourists in particular have been key
drivers of global luxury goods spend for more than
a decade.
While China has been instrumental in driving this
trend, the same can be said for the wealthy tourist
from Russia and the Middle East shopping for luxury
goods in Western Europe or, indeed, the wealthy
Brazilian shopping for luxury in North America.
The tide is turning, however, thanks to currency
fluctuations, economic headwinds and political unrest,
with the future of the wealthy tourist looking rocky.
The implications of a cull on tourist spend could be
hugely detrimental for key developed markets such
as the US, France, Italy, Spain and Switzerland, where
sales of foreign luxury spend is estimated at upwards
of 40%.
The impact on the luxury industry’s geographical sales
mix will most certainly be felt in the short to medium
term - potentially triggering another shift in global
revenue power in the short to medium term.
13
Reliance on Well-Heeled Tourists in Developed Markets Continue
0% 20% 40% 60% 80% 100%
France
Germany
Italy
Netherlands
Spain
Switzerland
Turkey
UK
US
Domestic vs Foreign Spend Key Luxury Goods Markets % 2015
Domestic Foreign
LUXURY GOODS INDUSTRY OVERVIEW
© Euromonitor International
12
Revenue Shifts for Key Luxury Categories Thanks to Currency Wars
World Top 5 Luxury Categories 2015 and Real CAGR 2010-15
39%
1st
20%
2nd
15%
3rd
11%
4th
10%
5th
Luxury Jewellery &TimepiecesUS$64 bn+4%
Luxury Leather GoodsUS$48 bn+8%
Luxury BeautyUS$35 bn+3%
Designer ApparelUS$123 bn+3%
Luxury Alcoholic DrinksUS$31 bn+4%
Designer apparel and footwear is by far the biggest
category accounts for almost 39%
However, luxury leather goods are by far the most
dynamic in terms of growth with a CAGR of 8% over
the last 5 years. Demand for products such as luxury
bags continues to be particularly robust, as they
represent a symbol of status and wealth
Much inline with the latest results from companies
like LVMH sales of fine wine/Champagne and
spirits have also performed well. This has been on the
back of resurgent growth for fine spirits like Cognac
However at the same time our latest data also reveals
some dramatic revenue shifts for some key luxury
categories thanks to currency wars and commodity
prices
These currency pressures continue to force some of
the world’s leading brands to revisit their pricing
strategies. In some markets, prices are going up,
while, in others, they are going down - it is arguably
one of the biggest challenges facing the luxury
goods industry today.
LUXURY GOODS INDUSTRY OVERVIEW
© Euromonitor International
13
Luxury Watches Feel Full Blow of Currency War and Economic HeadwindsOne such category which has fallen prey to the global currency war is luxury jewellery and time pieces
thanks to the floating Swiss franc impacting sales of Swiss luxury watches
What was once heralded as one of the world’s fastest-growing categories is now dwindling in sales.
Our new research indicates that global sales of luxury watches declined by a real -0.5% in 2014 and will
just reach just over 1% for 2015.
However, the biggest drop in sales was witnessed in Asia Pacific on the back of issues in China and
Hong Kong. Similarly Eastern Europe also took a hit, where the market decreased by -2.2% in 2015, on
the back of the slide in Russia and Ukraine.
-25.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
World Asia Pacific China Hong Kong,China
EasternEurope
Russia Ukraine
% V
alu
e s
ale
s g
row
th
Luxury Timepieces Sales Growth 2003-14 and 2014-15
2013-14 2014-15
LUXURY GOODS INDUSTRY OVERVIEW
© Euromonitor International
14
Real Impact of Currency Headwinds on Market Size and Growth
-6
-4
-2
0
2
4
6
8
10
12
14
-
50
100
150
200
250
300
350
400
450
500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Gro
wth
%
Rea
l val
ue
sale
s U
S$ B
n
Global Luxury Good Sales and Current Growth 2010-2020 US$ Billion
Current value sales US$ (fixed exchange rate) Current growth %
LUXURY GOODS INDUSTRY OVERVIEW
INDUSTRY OVERVIEW
LUXURY GOODS MARKET OVERVIEW
DEMOGRAPHIC SHIFTS
INNOVATION
ABOUT OUR RESEARCH
© Euromonitor International
16
The number of affluent households is expected to grow over 2015-2030. Although North America will
continue to have the wealthiest number of households, Asia Pacific is still expected to see the fastest
increase despite the economic slowdown, posting a 113% growth between 2015 and 2030.
The ever-rising disposable income of middle-class and high-income consumers is changing the attitudes
and purchasing habits of Chinese consumers, which is helping to boost demand for luxury goods
worldwide.
Australasia and North America will follow Asia Pacific in terms of growth, posting an increase of 86%
and 80%, respectively, between 2015 and 2030.
Household Wealth Expected to Grow at Different Speeds Globally
DEMOGRAPHIC SHIFTS
0
2
4
6
8
10
12
14
North America Asia Pacific Western Europe Latin America Australasia Eastern Europe
Mill
ion
ho
use
ho
lds
Households with an Annual Disposable Income Over US$300,000 (Constant) 2010/15/30
2010 2015 2030
© Euromonitor International
17
Rising Number of HNWIs has Major Implications for Luxury Goods
USA: 16m 7%
Japan: 2.3m 2%
France: 2.2m 4%
UK: 2.0m 4%
2014 Top 10 Countries Number of HNWI (million) and % Share of Adult Population
Germany: 1.8m 4%
Italy 1.4m3%
Canada 1.1m 3%
China 1.0m 0.1%
Australia 0.9m 2%
Switzerland: 0.6m 9%
Although high net worth individuals (HNWIs) are not ordinary consumers, insights into their expansion can
shed light on drivers of wealth generation.
According to our latest data HNWIs totalled 33 million globally in 2014, of which the US accounts for almost
half of this population with 16 million people.
The growing number of HNWIs can help spur luxury goods spending in both emerging and developed markets,
as the wealthiest of consumers typically account for a significant proportion of luxury travel expenditure.
Whilst developed markets account for the lions share of the global HNWI population, emerging markets play an
important role in driving its growth. China, in particular, has the highest number of HNWIs in all emerging
markets and the eighth highest globally with just over 1 million people. By 2030 however this number for
China is set to rise to 3 million people making it the fifth highest in the world.
DEMOGRAPHIC SHIFTS
© Euromonitor International
18
Future Source Markets Reach Tipping Point for Luxury Goods
Growth in Number of Households with a Disposable Income over U$300k, 2015-2030 Absolute
Top 20: City (Country) ‘000
London (United Kingdom) 568.20
Moscow (Russia) 359.70
Beijing (China) 211.50
Shanghai (China) 200.70
Tokyo (Japan) 169.50
Toronto (Canada) 138.40
Paris (France) 133.40
Tianjin (China) 127.80
Guangzhou (China) 124.10
Shenzhen (China) 116.60
Stockholm (Sweden) 115.90
Calgary (Canada) 112.60
Dongguan (China) 83.00
São Paulo (Brazil) 79.70
Mexico City (Mexico) 73.30
Zurich (Switzerland) 68.30
St Petersburg (Russia) 63.40
Vienna (Austria) 63.00
Ottawa - Gatineau (Canada) 62.40
Foshan (China) 62.20
The highest tipping point for absolute luxury goods is
U$300,000 per household. This can be considered the
point where households reach an income where high-end
luxury goods form part of their standard annual
expenditure.
Asia Pacific will be the main source for many of the
future’s new luxury consumers, with cities in China,
India, Indonesia, Japan and South Korea seeing
significant growth in the number of households able to
afford luxury goods
Outside Asia, cities in other emerging economies, such
as Mexico, Brazil and Russia, will be adding to the
future luxury traveller pool as high income earners grow
and luxury goods becomes more affordable.
London, Tokyo, Toronto and Paris are the cities of the
developed world which are predicted to see the highest
rise in households with a disposable income over
U$300,000 by 2030.
DEMOGRAPHIC SHIFTS
© Euromonitor International
19
Gender Equality vs. Purchasing Potential in Luxury Goods
MaleDisposable Income
67%
FemaleDisposable Income
33%
Global Female Per Capita Annual DisposableIncome as % of Male Total: 2014
0 10 20 30 40
World
Asia-Pacific
M East & Africa
N America
Australasia
Women Men
Sales Growth in Men’s vs. Women’sDesigner Clothing 2000–15
Despite the narrowing income gap between male and female consumers, men still have considerably
higher incomes than women, especially in the emerging regions.
Men's luxury remains relatively undeveloped. Targeting men is still one of the biggest opportunities
The luxury goods market is hugely dependant on the female consumer but thanks to a fusion of fashion
and aspiration men’s luxury goods in key categories is being driven up
DEMOGRAPHIC SHIFTS
© Euromonitor International
20
Targeting the Decision Maker Becomes Key
Mid-Youth&
Mid-Lifers
Young Adults Mothers
Céline
Michael Kors
Bulgari
Pandora
Later-Lifers
DEMOGRAPHIC SHIFTS
INDUSTRY OVERVIEW
LUXURY GOODS MARKET OVERVIEW
DEMOGRAPHIC SHIFTS
INNOVATION
ABOUT OUR RESEARCH
© Euromonitor International
22
Internet Users
• 2.7 billion
Mobile Phone Users
• 3.6 billion
Mobile Internet Subr.
• 2.4 billion
Social Media Accounts
• 2.3 billion
0
50
100
150
200
250
300
350
2010 2015 2010
mill
ion
un
its
Global Sales Wearables 2010/15/20
2015 started with a bang in terms of wearable's as the Apple Watch was unveiled and according to our
latest data global sales of wearables are expected to grow at a phenomenal speed
However, amongst all the excitement there are concerns over how they can fit into our lifestyles.
The answer in many cases is through social media - which is set to be a major part of the smart age – and
luxury wearables will live and die based on their ability to tap these platforms.
Wearables are Coming and will Drive Up Investment Social Media
INNOVATION
Internet and Social Media Users 2014
+259%Growth 2015 - 20
© Euromonitor International
23
…and Encourage More Luxury Wearable's to Enter the Market
INNOVATION
Hermes Apple Watch. The One
Tory Burch & FitbitTag Heuer Carrera
Wearable 01Ralph Lauren Ricky Bag
Costs from US$1,250 Includes all features of
the apple Watch with Hermes logo on front and Hermes leather strap
Available in 2 sizes, 3 strap variations and 5 colours
Cost: US$38–195 Wide retail reach Available for iOS,
Android and Windows Need to buy the Flex at
additional cost of US$100
Cost: from US$5,000 LED lights that activate
when the bag is opened
An integrated USB port to charge your mobile phone
Cost: US$1,400 Available from
November 2015 Available with Google,
Intel and Android
Despite several brands competing for attention, there are still very few true luxury wearbles on the
market
The most recent being the Tag Heuer smart watch, which will be the first luxury watch of it’s kind, along
with the new partnership between Hermes and Apple to launch The One watch.
Given the projected growth in wearable's, companies way beyond consumer electronics are expected to
jump on this bandwagon and it wont be long before we see more smart luxury on the market
© Euromonitor International
24
Online Luxury Sales are Booming
INNOVATION
Our latest data shows that world sales of online luxury are booming and reached almost US$25 billion
in 2015, accounting for just under 8% of all sales.
While, at first glance, this may seem comparatively small, this figure is up from 3% just 10 years ago,
representing a massive increase of 134% on 2005 numbers.
With such impressive rates of growth, it could only be a matter of time before digital sales catch up with
those of physical stores
3% 5% 8% >10%
97% 95% 93% <80%
2005 2010 2015 2020
© Euromonitor International
25
..but Luxury Retailers need to Drive Up Investment in Digital Technology
INNOVATION
Online Luxury Spend: 10%
Online Luxury Spend: 9%
Online Luxury Spend:6%
Online Luxury Spend: 1%
Online Luxury Spend: 4%
Online Luxury Spend:3%
North America83% Internet
Users
West. Europe74% Internet
Users
Asia Pacific33% Internet
Users
Latin America48% Internet
Users
East. Europe62% Internet
Users
Africa & Mid. East23% Internet
Users
Having access to the internet is paramount for e-commerce, but whether consumers buy online is a much
grater issue and there are still huge disparities across the regions.
In regions such as Latin American around half of the population use the internet just 1% of luxury was
sold online in 2015. Whilst there are plenty of challenges in e-commerce, this disparity also opens up many
opportunities for brands and retailers to drive up investment in digital technology
INDUSTRY OVERVIEW
LUXURY GOODS MARKET OVERVIEW
DEMOGRAPHIC SHIFTS
INNOVATION
ABOUT OUR RESEARCH
© Euromonitor International
27
Euromonitor International is a global market
research company, providing strategic
intelligence on industries, companies, economies
and consumers around the world.
Comprehensive international coverage and
insight across consumer and B2B markets makes
our research an essential resource.
Clients in more than 106 countries rely on
Euromonitor for actionable, unbiased insight
supporting decisions on how, where and when to
grow your business.
Our independent view of the business
environment, competitive landscape and drivers
of industry growth help validate strategic
priorities, redirect assumptions and uncover new
opportunities.
12 Office Locations: London, Chicago,
Singapore, Shanghai, Vilnius, Santiago, Dubai,
Cape Town, Tokyo, Sydney, Bangalore and Sao
Paulo
Local Insight: 1,000+ in-country analysts in
developed, emerging and frontier markets offer
local insight
Global Perspective: Understand the business
landscape in more than 200 countries
About Euromonitor International
ABOUT OUR RESEARCH