Luxury Goods Retailing - Global
Report description
- John Mercer, European Retail Analyst
After China, where’s next?
Who is today’s luxury consumer?
What’s driving digital?
What new opportunities exist in the post-recession era?
During the course of our research we have come across a number of definitions of 'luxury goods', some of which were conflicting, however most were based upon the notion of 'luxury goods' as representing the top sector in any product market. For the purposes of this report we will follow this consensus definition.
However, we would also advise readers that it is helpful to consider the definition as referring to the special element of a luxury product that makes it desired for its own sake rather than any function that it may have.
With the development of the concept of 'accessible items' and the inherent 'aspirational' element in the notion of 'luxury', many luxury goods businesses have extended their reach to a broader audience of consumers, outside of their traditional target group (ie high net worth individuals). This makes a consistent definition of what constitutes a luxury good more difficult to establish. Therefore we believe that our relational definition, ie the 'top sector of any market', is the most useful.
Table of contents
IntroductionCompany coverage
Terms and definitions
Luxury goods - a definition
Market size - Mintel definition
Market size at retail selling prices
Exchange rates
Figure 1: US dollar to euro exchange rates, 2005-10
Technical notes
Financial definitions
Executive Summary
The market
Strong performance in 2010
Possible faltering in later 2011
Variable outlook
Forecast
Figure 2: Global luxury goods: Estimated market size at retail selling prices, 2007-13
Market factors
Potential problems
Tipping point?
HNWIs are key
Market breakdown: where and what
Asia to overtake Europe
Prospects for the Americas
Figure 3: Global luxury goods: Estimated market breakdown by region, 2009 (inner ring) and 2010 (outer ring)
Bounce back for hard luxury
Perfumes and cosmetics outpaced
Soft luxury buoyant
Figure 4: Global luxury goods: Estimated market breakdown by product category, 2009 (inner ring) and 2010 (outer ring)
Companies, brands and innovation
Market shares
LVMH maintains a strong lead
But Richemont a powerful number two
Shiseido in third place
Figure 5: Global luxury goods: Estimated market shares, 2010
Market developments
Focusing on boutiques
Flagship openings
Online investments
What we think
Issues in the Market
After China, where’s next?
Who is today’s luxury consumer?
What’s driving digital?
What new opportunities exist in the post-recession era?
Broader Market Environment
Key points
An international market
Discretionary purchases
Recovery
Western Europe
US
Japan
China, India
Russia
Brazil
Stock markets
Figure 6: Major stock market performance to 5/7/2011
Currencies
Figure 7: Major exchange rate developments, 2002-11 (H1)
Tourism
Figure 8: International arrivals, 2000-10
The growth in numbers of wealthy people
Figure 9: Numbers of HNWIs, 2003-10
Figure 10: World: High net worth individuals, 2006-10
Figure 11: Growth in worldwide share of HNWIs, 2005-10
Global Luxury Goods Market
Market size
Figure 12: Global luxury goods: Estimated market size by major player, 2006-10
Market size at retail selling price
Market shares
Figure 13: Global luxury goods: Estimated market shares of major players, 2008-10
Market size by region
Figure 14: Global luxury goods: Estimated market size by region, 2006-10
Channels of distribution
Market size by channel
Wholesale key to some sectors
Licencing - an opportunity to diversify
Retail is where it’s at
Market Forecasts
Uncertain global environment
Economic growth will slow
Luxury sales rebounded strongly in 2010
2011 off to a cracking start
USA and Europe stronger than expected
The shape of recovery
Figure 15: Global luxury goods: Estimated market size at retail selling prices, 2007-13
Key regions
Europe
Americas
Japan
Other Asia-Pacific
Middle East
Fashion and Leather Goods
Market size
Soft luxury proving dynamic
Figure 16: Global luxury goods: Estimated luxury fashion & leather goods market, 2006-10
Market shares
Figure 17: Global luxury fashion & leather goods market: Estimated market shares of leading brands, 2006 & 2010
Key developments
Men - a major opportunity
Diffusion lines hold their own
Niche brands becoming lifestyle brands
The role of the designer
Changing value of luxury
Celebrities and influences
Fashion looks and trends
Jewellery and Watches
Market size
Strong bounce back for hard luxury
Figure 18: Global luxury goods: Estimated luxury jewellery and watches market, 2006-10
Market shares
Figure 19: Global luxury jewellery & watches market: Estimated market shares of leading brands, 2006 and 2010
Key developments
Continued rising prices
Royal Wedding
Value for money
Increased in-house movement
Demand from China
Watch releases
Perfumes and Cosmetics
Market size
Losing share of the luxury market
Figure 20: Global luxury goods: Estimated luxury perfumes & cosmetics market, 2006-10
Market shares
Figure 21: Global luxury cosmetics & perfumes market: Estimated market shares of leading brands, 2006 and 2010
Key developments
Market recovers
M&A activity muted
Internet gains interest
Key trends
Skin care
Colour cosmetics
Fragrances
What’s next:
Regional and Country Analysis - Introduction
Brazil
Background
Demographics
Economy
Consumer spending and retail sales
Luxury goods market
Figure 22: Brazil: Number of high net worth individuals, 2006-10
Key developments
Surging up the league tables
Consumer trends look favourable
Middle classes are key
Taxes remain a barrier
Consumers pushed abroad
Strong domestic competition
Market activity
Retail development
Brand presence
Figure 23: Brazil luxury goods market: Presence of selected luxury brands, Summer 2011
SWOT
Strengths
Weaknesses
Opportunities
Threats
China
Background
One child policy could hamper economic growth
China overtakes Japan in 2010
And discretionary spending rises
Worrying inflation trends
Retail sales surge ahead
Luxury goods market
GDP per capita growing but still very low
But the gap is less pronounced on retail sales per capita
Fourth largest HNWI population in the world
From billionaires…
… to the middle classes
Figure 24: China: Number of high net worth individuals, 2006-10
Key developments
Another stellar performance drives up investor confidence
Banned billboards to control spending
Or economic protectionism?
Luxury import taxes cause much debate
The gender divide closes
And affords matchmaking opportunities too
SWOT
Strengths
Weaknesses
Opportunities
Threats
Europe
Background
Scale
Diversity
Politics
Luxury goods market
High Net Worth individuals
Figure 25: Europe: Number of high net worth individuals, 2005-10
The East
The West
Trophies
The recovery
Online
SWOT
Strengths
Weaknesses
Opportunities
Threats
India
Background
Demographics
Economy
Consumer spending and retail sales
Luxury goods market
Figure 26: India: Number of high net worth individuals, 2006-10
Key developments
A culture ripe for luxury
Purchasing priorities
Space concerns
Problematic partnerships
FDI rules have proved a bar - up to now
Domestic competition in luxury
Brand presence
Figure 27: India luxury goods market: Presence of selected luxury brands, Summer 2011
SWOT
Strengths
Weaknesses
Opportunities
Threats
Japan
Background
Surprise population rise
Economic malaise
Tragedy strikes
Prolonged retail malaise
Luxury goods market
Figure 28: Japan: Number of high net worth individuals, 2007-10
Key developments
A large but mature market
Changing habits
Operating in a saturated market
Looking to affluent neighbours
SWOT
Strengths
Weaknesses
Opportunities
Threats
Middle East
Background
Lebanon posts above average growth
Saudi Arabia needs more quality space
GDP per capita
The Arab Spring
Luxury goods market
Less than 0.5 million HNWIs
But growing faster than any other region
Kuwait and Bahrain leap ahead
Figure 29: Middle east: Number of high net worth individuals, 2006-10
A younger and more male-focused cohort
Figure 30: Middle east and Global average: high net worth individuals by age, 2010
Figure 31: Middle east and Global average: high net worth individuals by gender, 2010
Key developments
Long tradition of luxury
Activity starts to step up
Better infrastructure and more established wealth than other emerging markets
Focused centres of activity
Dubai shows signs of recovery
International tourist and shopping destination
Capitalising on the Chinese tourist
Beirut in the spotlight too
Joint ventures
SWOT
Strengths
Weaknesses
Opportunities
Threats
Russia
Background
Recovery
Elections coming up
Falling population
Growing affluent middle class
Luxury goods market
High net worth individuals
Figure 32: Russia: Breakdown of population, by average monthly income per capita, 2004-09
Figure 33: Russia: Number of high net worth individuals, 2005-10
Market developments
SWOT
Strengths
Weaknesses
Opportunities
Threats
USA
Background
Population on the rise
The recession
Protracted recovery
Can we really?
The final days of the world’s largest superpower?
Luxury goods markets
Figure 34: US: Number of high net worth individuals, 2006-10
Key developments
Influence on the wane?
The recovery
Luxury tourism potential…
…could be being undermined
SWOT
Strengths
Weaknesses
Opportunities
Threats
Armani
Figure 35: Armani: Share of global luxury goods market, 2006-10
Recent history
Financial performance
Figure 36: Armani Financial performance, 2006-10
Figure 37: Armani: Sales by brand and by region, 2010
Store portfolio
Figure 38: Armani: Outlets, 2006-10
Figure 39: Armani: Outlets by brand, 2008-10
Brand offering
Figure 40: Armani: Brands, 2011
e-commerce
Bulgari SpA
Figure 41: Bulgari: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 42: Bulgari SpA: Financial performance, 2006-10
Figure 43: Bulgari SpA: Sales growth rates by category, 2008-09, 2009-10, Q4 2010, Q1 2011
Figure 44: Bulgari SpA: Contribution to revenue by category, 2006-10
Figure 45: Swiss-watch certificates issued by the COSC, 2007-09
Figure 46: Bulgari SpA: Net revenue growth for selected regions, 2008-Q1 2011
Figure 47: Bulgari SpA: Net revenue by region, 2006-10
Figure 48: Bulgari SpA: Growth rates in Chinese net revenues, 2009, 2010 and Q1 2011
Figure 49: Bulgari SpA: Contribution to revenue by region, 2006-10
Distribution
Figure 50: Bulgari SpA: Outlet numbers, 2006-10
Brand offering
e-commerce
Burberry
Figure 51: Burberry: Share of global luxury goods market, 2006-10
Strategic evaluation
Outlook
Recent history
Financial performance
Figure 52: Burberry Group: Financial performance, 2006/07-2010/11
Figure 53: Burberry Group: Revenue by channel, 2005/06, 2009/10 and 2010/11
Figure 54: Burberry Group: Revenue by regional destination, 2006/07-2010/11
Figure 55: Burberry Group: FY retail/wholesale revenue by region and % year-on-year growth on underlying basis, 2010/11
Distribution
Figure 56: Burberry retail division: Directly-operated outlet data, 2006/07-2010/11
Figure 57: Burberry Group: Directly-operated and franchise outlets, by region, 2010/11
Brand offering
Market positioning/target audience
Product offer
Figure 58: Burberry Group: Retail/wholesale revenue by product category, 2009/10 and 2010/11
Figure 59: Burberry Group: Product categories retail/wholesale revenue and % year-on-year growth on underlying basis, FY 2011
Figure 60: Burberry Group: Product pyramid
Advertising
Ethical/Environmental issues
e-commerce
Christian Dior Couture
Figure 61: Christian Dior couture: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Ownership
Financial performance
Figure 62: Christian Dior Couture: Financial performance, 2006-10
Sales by business sector
Figure 63: Christian Dior Couture: Total revenue, by business sector, 2006-10
Retail revenues by region
Figure 64: Christian Dior Couture: Retail revenue by geographic region, 2006-10
Distribution
Figure 65: Christian Dior Couture: Outlet numbers, 2006-10
Figure 66: Christian Dior Couture: Store coverage by geographic region, 2010
Brand offering
Market positioning and values
Product offer
Marketing
e-commerce
Estée Lauder Companies
Figure 67: Estée Lauder: Share of global luxury goods market, 2006-10
Recent history
Strategic evaluation
Financial performance
Figure 68: Estée Lauder: Group financial performance, by region, 2005/06-2009/10
By region
Figure 69: Estée Lauder: Group sales by region, 2009/10
By product area
Figure 70: Estée Lauder: Group financial performance, by product area, 2005/06-2009/10
Figure 71: Estée Lauder: Group sales by product category, 2009/10
Distribution
Figure 72: Estée Lauder, Net sales by distribution channel, 2004/05 and 2009/10
Brand offering
e-commerce
Figure 73: Estée Lauder websites, 2011
Gucci Group
Figure 74: Gucci Group: share of global luxury goods market, 2006-2010
Strategic evaluation
Recent history
Financial performance
Figure 75: Gucci Group: Financial data, 2006-10
Figure 76: Gucci Group: Share of group sales, by region, 2006 and 2010
Figure 77: Gucci Group: Relative sales importance, by brand division, 2006 and 2010
Figure 78: Gucci Group: Gucci division -turnover by product category and region, 2006-10
Figure 79: Gucci Group: Bottega Veneta division -turnover by product and region, 2006-10
Figure 80: Gucci Group: Yves Saint Laurent division -turnover by product and region, 2006-10
Figure 81: Gucci Group: Other brands division -turnover by product and region, 2006-10
Figure 82: Gucci group: Interim sales and profit, 2010 and 2011
Distribution
Figure 83: Gucci Group: Directly-operated stores, by brand, 2006-10
Figure 84: Gucci Group: Directly-operated stores by brand and region, 2009 and 2010
Brand offering
Market positioning and brand essence
Figure 85: Gucci Group: Brand essence and positioning, 2011
Product offer
Figure 86: Gucci Group: Breakdown of revenue, by major category, 2010
Figure 87: Gucci Group: Main product categories, by brand, 2011
Advertising and marketing
e-commerce
Figure 88: Gucci Group: Group websites, 2011
Hermès International
Figure 89: Hermès: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 90: Hermès: Financial performance, 2006-10
Sales by region
Figure 91: Hermès: Share of group sales by region, 2006 and 2010
Sales by product category
Figure 92: Hermès: Sales by major product category, 2006-10
Distribution
Figure 93: Hermès: Retail outlets, 2006-10
Figure 94: Hermès: Stores by region, 2007-10
Brand offering
Market positioning
Product offer
Figure 95: Hermès: Product breakdown, 2010
Marketing
e-commerce
L’Oréal (Luxury Division)
Figure 96: L’Oréal luxury division: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 97: L’Oréal: Sales by division, 2009-10
Figure 98: L’Oréal Luxury division: Financial performance, 2006-10
Sales by region and product area
Figure 99: L’Oréal Luxury division: Sales by region and product area, 2009 and 2010
Figure 100: L’Oréal Luxury division: Sales breakdown by geographic region, 2005 and 2010
Figure 101: L’Oréal Luxury division: Sales breakdown by product area, 2005 and 2010
First half 2011 results
Distribution
Brand offering
Market positioning
Product offer and major lines
Figure 102: L’Oréal: Luxury brands, product offer and major lines, 2011
e-commerce
Figure 103: L’Oréal luxury brands: E-commerce offer, July 2011
LVMH Holding
Figure 104: LVMH: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 105: LVMH: Group financial performance, 2006-10
Figure 106: LVMH: Relative sales importance, by division, 2006 and 2010
Figure 107: LVMH: Relative profit importance, by division, 2006 and 2010
Sales by region: Rest of Asia drives growth
Figure 108: LVMH: Group sales by region, 2010
Regional sales by division
Figure 109: LVMH: Fashion & leather goods division sales breakdown, by region, 2001, 2009 and 2010
Figure 110: LVMH: Perfumes and cosmetics division sales, by region, 2001, 2009 and 2010
Figure 111: LVMH: Watches and jewellery division sales, by region, 2001 and 2009
Figure 112: LVMH: Sales growth by division and region, 2009-10
Figure 113: LVMH: Performance by luxury brand, 2010
Figure 114: LVMH: Sales by luxury division, interim period 2010 and 2011
Distribution
Figure 115: LVMH: Group outlet numbers, by region, 2006-10
Figure 116: LVMH: Outlet data by luxury brand, 2010
Brand offering
Market positioning and brand essence
Figure 117: LVMH: Brand positioning/essence, 2010/11
Product offer
Figure 118: LVMH: Main product categories by brand, 2010/11
Innovation
Marketing
e-commerce
Polo Ralph Lauren Corp
Figure 119: Polo Ralph Lauren: Share of global luxury goods market, 2006-10
Recent history
Financial performance
Figure 120: Polo Ralph Lauren: Group Financial performance, 2006/07-2010/11
Figure 121: Polo Ralph Lauren: Revenue contributions by segment, 2006/07-2010/11
Figure 122: Polo Ralph Lauren: Turnover by region, 2006/07-10/11
Figure 123: Polo Ralph Lauren: Total group turnover by region, 2008/09-2010/11
Note: No continuous data prior to 2008/09 as Asia was not reported as a segment.
Figure 124: Comparable store sales by fascia, 2009/10-2010/11
Distribution
Figure 125: Polo Ralph Lauren: Company-owned outlet numbers, 2008-11
Figure 126: Polo Ralph Lauren: Retail outlets supplied, 2010-11
Figure 127: Polo Ralph Lauren: % breakdown of outlet numbers supplied, 2010-11
Figure 128: Polo Ralph Lauren: Owned retail outlets, by region, 2010-11
Brand offering
Figure 129: Polo Ralph Lauren: Brands and positioning, 2011
Figure 130: Polo Ralph Lauren: Advertising expenditure, 2008/09-2010/11
e-commerce
Figure 131: Polo Ralph Lauren: Unique visitor and customer numbers, 2009/10-2010/11
Prada
Figure 132: Prada Holding NV: Group share of global luxury market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 133: Prada Group: Financial data, 2006/07-2010/11
Figure 134: Prada Group: Sales by region, 2009/10 and 2010/11
Distribution
Brand offering
Product offer
Figure 135: Prada Group and major brands: Sales by major product category, 2010/11
Figure 136: Prada Group: Sales growth, by major product category, 2009/10 and 2010/11
e-commerce and home shopping
Richemont
Figure 137: Richemont Group: Share of global luxury market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 138: Richemont Group: Financial performance, 2006/07-2010/11
Figure 139: Richemont Group: Sales performance, by region, 2006/07-2010/11
Figure 140: Richemont Group: Contribution to total sales by region, 2006/07-2010/11
Figure 141: Richemont Group: Financial performance by business segment, 2006/07-2010/11
Figure 142: Richemont group: Sales by business segment, 2006/07-2010/11
Figure 143: Richemont Group: Sales by product line, 2006/07-2010/11
Figure 144: Richemont Group: Sales growth rates, by product category, 2009/10 and 2010/11
Figure 145: Richemont Group: Turnover by product category, 2006/07-2010/11
Figure 146: Richemont Group: Performance by brand, 2009/10-2010/11
Distribution
Figure 147: Richemont Group: Number of outlets, 2006/07-2010/11
Figure 148: Richemont Group: Number of outlets, by brand, 2006/07-2010/11
Distribution developments by brand
Figure 149: Richemont Group: Distribution developments by brand 2009/10 and 2010/11
Brand offering
Figure 150: Richemont group: Brand positioning
Figure 151: Richemont Group: Product developments, 2009/10 & 2010/11
Advertising and marketing
e-commerce
Figure 152: Richemont Group: Brand websites, 2011
Shiseido
Figure 153: Shiseido: Share of global luxury goods market, 2006-10
Recent history
Strategic evaluation
Financial performance
Figure 154: Shiseido: Financial performance, 2006/07-2010/11
Figure 155: Shiseido: Sales by region, 2010/11
Figure 156: Shiseido: Financial performance, by region, 2006/07-2010/11
Distribution
Brand offering
e-commerce
Swatch
Figure 157: Swatch Group (Luxury): Estimated share of global luxury goods market, 2006-10
Recent history
Financial performance
Figure 158: Swatch Group: Financial data, 2006-H1 2011
Figure 159: Swiss-watch certificates issued by the COSC, 2007-09
Figure 160: Swatch Group: Estimated contribution to watch & jewellery sales by brand/segment, 2010
Figure 161: Swatch Group: Turnover by region, 2006-10
Figure 162: Swatch Group: Total group turnover, by region, 2006-10
Distribution
Figure 163: Swatch Group: Retail fascia, 2010
Brand offering
Figure 164: Swatch Group: Watch brands by segment, 2010
e-commerce
Figure 165: Swatch Group: Brand websites, 2011
Tiffany & Co
Figure 166: Tiffany & Co: Share of global luxury goods market, 2006-10
Strategic evaluation
Recent history
Financial performance
Figure 167: Tiffany & Co: Financial performance, 2006/07-2010/11
Figure 168: Tiffany & Co: Turnover by region, 2006/07-2010/11
Distribution
Figure 169: Tiffany & Co: Outlet data, 2006/07-2010/11
Brand offering
Market positioning/brand values
Product offer
Brands
Price
Advertising
Home shopping and e-commerce
Valentino Fashion Group
Figure 170: Valentino: Share of global luxury goods market, 2006-10
Recent history
Financial performance
Figure 171: Valentino Fashion Group: Financial performance, 2006/07-2010/11
Distribution
Figure 172: Valentino: Boutiques, 2010
Figure 173: Valentino Fashion Group: Outlets, 2009
Brand offering
Figure 174: Valentino: Principal brands, 2010
Figure 175: Hugo Boss: Principal brands, 2010
e-commerce
Appendix - Broader Market Environment
Population
Figure 176: Selected luxury goods markets: Total population, 2006-10
Figure 177: Selected luxury goods markets: Population breakdown, by age group, 2010
GDP
Figure 178: Selected luxury goods markets: GDP (in current prices), 2001-10
Figure 179: Selected luxury goods markets: GDP growth rates (in constant prices), 2001-10
Consumer prices
Figure 180: Selected luxury goods markets: Consumer prices, 2006-10
Retail sales
Figure 181: Selected luxury goods markets: Total retail sales, 2006-10
High Net Worth individuals
Figure 182: Selected luxury goods markets: HNWI numbers, 2006-10
Figure 183: Selected luxury goods markets: HNWIs as a proportion of the total population, 2006-10
Exchange rates
Figure 184: Selected luxury goods markets: $ to currencies of markets in this report, 2006-10
Figure 185: Selected luxury goods markets: € to currencies of markets in this report, 2006-10
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