Table of Contents
Executive Summary
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- Luxury goods market worth $69.4 billion in 2003
- US market shows strong sales growth
- Europe hit by decrease in tourist numbers
- Impact of SARS in Asia
- French group LVMH leads the global luxury goods market
- Cosmetics brands grow through licensing
- Richemont and Gucci Group a long way behind
- Fashion & Leather category is largest product sector
- Accessories and “accessible lines” attract new customers
- Brand boutiques taking over from licensed stores
- Expanding Chinese market helps fuel global growth
- Counterfeiting remains a threat to the industry
- Positive growth predicted for 2004
- Increasing global wealth provides perfect back-drop for market growth
- Market to break $100 billion by 2008
The Global Luxury Goods Market
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- Report scope
- Terms and definitions
- Luxury goods – A definition
- Exchange rates
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- Figure 1: US Dollar to Euro exchange rates, 1999-2003
- Regions
- Product categories
- Global luxury goods market size
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- Figure 2: Estimated Global luxury goods market size, 2003
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- Figure 3: Global luxury goods market: Market share of leading operators by domicile, 2003
- Regional breakdown
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- Figure 4: Global luxury goods market: Estimated value breakdown by region, 2003
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- Figure 5: Global luxury goods market: Percentage breakdown, by region, 2003
- Europe
- North America
- Japan
- China
- Other markets
- Product breakdown
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- Figure 6: Global luxury goods market: Estimated product breakdown, 2003
- Figure 7: Global luxury goods market, by major product category, 2003
- Perfumes and cosmetics
- Fashion and leather goods
- Watches and jewellery
- Counterfeiting
- Counterfeit product market size
- Counterfeit luxury goods
- Counterfeit luxury goods buyers
- Loss of brand control?
- Internet helping expand the counterfeiting business?
- Fast fashion
- Corporate activity
- Outlook and forecasts
- Outlook
- A strong bounce back in 2004?
- Trends and market drivers
- Selected current trading data
- Macro-economic data
- Other data
- Forecasts
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- Figure 8: Global luxury goods market: Forecast, 2004-08
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- Figure 9: Global luxury goods market: Forecast, 2004-08
The Luxury Goods Market – Demand Drivers & The Economic Cycle
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- Introduction
- GDP Growth
- Eurozone and Japan hold back global growth
- Strong growth forecast for 2004 and 2005
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- Figure 10: World: Selected regional and national real GDP growth rates and forecasts, 1999-2005F
- Figure 11: World: Key luxury goods markets’ real GDP growth 2002 and 2003
- Stock market fluctuations impact market growth
- The bursting of the tech-stock bubble in 2001 has had a lasting effect upon global stock market growth. If we look at the five-year trend from 1999 to 2003, the majority of markets have fallen in value, however, over a shorter 12 to 24-month horizon, growth has been strong. As many key luxury goods customers are also HNWIs and are therefore more likely to have wealth invested in equities, this downturn will have had some impact upon the growth of the market. Declining share prices will have hit global wealth creation, theoretically reducing the pool of potential buyers. Particularly as the tech-stock boom created a large number of “new millionaires”.
- However, many investors have simply chosen to diversify their investments into other areas and have continued to increase the value of their investable assets, despite the stock market declines. For example in the UK and in other markets around the world, the flood of investment into the property market has fuelled price rises and provided another means for significant wealth creation.
- Exchange rate movements also influence market
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- Figure 12: Yen against $ and €, 1st half 2000-1st half 2004
- The Yuan and the US Dollar
- Japanese consumers global influence waning?
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- Figure 13: Japan: Japanese tourist departures, 2002-04
- Chinese consumers the new driving force?
- High Net Worth Individuals (HNWIs)
- HNWIs Background
- More rich than ever before…
- …and they are getting richer
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- Figure 14: World: High Net Worth Individuals, 2000-03
- Increase in Asia Pacific and North American wealth driving market
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- Figure 15: World: Number of High Net Worth Individuals by region, 2000-03
- North America recovers strongly in 2003
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- Figure 16: World: Net worth of HNWIs, 2000-03
- 7.7 million millionaires
- Wealth forecast to 2008
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- Figure 17: World: Wealth forecast – HNWI growth in financial wealth by region, 2003-08F
Channels of Distribution
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- Introduction
- Control distribution and you control the brand
- Channel structure
- Brand boutiques
- Background
- Franchised stores
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- Figure 18: Luxury brands: Company-owned stores
- History of the model
- International expansion
- Jewellery
- Watches
- Market development/trends
- Coherent brand vision
- Prada Epicenter Concept stores
- Location, location, location
- Emerging markets
- Network rationalisation
- Shopping for pleasure
- Interaction with products
- Outlook
- Trend towards company-owned stores
- Major openings in 2004
- But at what cost?
- Licensing
- What is a licence?
- The evolution of licensing
- Return to control – different approaches
- Pierre Cardin – over-extending the brand
- Gucci – taking back control
- Burberry – striking a balance
- LVMH – keeping it in-house
- Parallel imports
- The pros and cons of licensing
- Licensing versus integrated distribution
- Specialist manufacturing & distribution
- Perfumes and cosmetics
- Eyewear
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- Figure 19: Luxury goods brands’ eyewear licenses, by licensee, June 2004
- The future of licensing
- Concessions
- Background
- Definition
- A mutually beneficial arrangement
- Evolution of department store model
- Where and why?
- Appearance is everything
- Mini stores
- Market developments/trends
- Competition from young brands
- Superbrands
- Brand control
- Burberry – a mixed model
- Brand stratification
- Entry vehicle
- Recent openings
- Outlook
- Emerging markets
- Accessories profile to drive format
- Japan the exception?
- The Tax-Free Duty Free Market
- The global luxury goods tax-free retail market size
- Duty-free shopping
- History of duty-free
- Terminology
- Tax-free retailing
- The benefits for customers
- The benefits for luxury goods companies
- Leading tax-free luxury goods retailers
- DFS Group
- The Nuance Group
- The future
Luxury Goods Product Markets
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- Introduction
- Background
- Product market sizes
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- Figure 20: Global luxury goods market: Estimated product breakdown, 2003
- Leather goods and accessories
- Background
- Market size
- Market shares
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- Figure 21: Global leather goods and accessories market: Estimated market shares, 2003e
- Leading players
- LVMH
- Coach
- Gucci
- Prada
- Hermès
- Richemont
- Product trends
- Handbags drive category
- Colour trends
- The logo
- Counterfeit threat
- Launches and innovations
- Outlook
- Fashion focus set to continue
- Developments
- Ready-to-wear and footwear
- Background
- Market size
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- Figure 22: Global ready-to-wear and footwear market: Estimated market shares, 2003
- Leading brands
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- Figure 23: Global ready-to-wear and footwear market, brand stables and retail presence, 2003
- Polo Ralph Lauren
- Tommy Hilfiger
- Max Mara
- Armani
- Chanel
- Ermenegildo Zegna
- Escada
- Product trends
- Luxurious materials
- ‘Chanel moment’
- Ethnic influences
- Menswear
- Footwear
- Industry developments
- Outlook
- Vogue for accessories impacting clothing?
- ‘Fast fashion’
- Brand ‘stretching’
- Perfumes and cosmetics
- Background
- History
- The luxury perfumes and cosmetics market
- Market structure
- Control over the distribution chain
- Market size
- Market shares
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- Figure 24: Global luxury goods market: Perfume & cosmetics sector, estimated market shares, 2003
- Product trends
- Targeting a younger consumer
- Male consumption increasing
- Anti-ageing
- Leading players
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- Figure 25: Leading luxury goods perfume & cosmetics brands, 2003
- Shiseido
- L’Oréal (Luxury Products Division)
- Estée Lauder
- YSL Beauté
- Outlook
- New product launches
- Developing markets
- Expanding customer markets
- Luxury watches and jewellery market
- Background
- Intertwined markets…
- …but distinct performances
- Market size
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- Figure 26: Leading luxury jewellery and watch brands, 2003
- Watches
- Leading brands
- Regional trends
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- Figure 27: Distribution of Swiss watches by region, 2002-03
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- Figure 28: Global distribution of swiss watches by major regions, 2003
- Figure 29: LVMH watches & jewellery division, sales by region, 2003
- Product trends
- Jewellery
- Leading brands
- Product trends
- Outlook
- Innovation is key
- Differentiation
Major Company Profiles
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- Burberry
- Background
- International expansion
- Acquisition and flotation
- Repositioning
- Opportunities/strategy
- Financial data
- Five year summary
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- Figure 30: Burberry Group: Financial data, 1999/2000-2003/04
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- Figure 31: Burberry group: Turnover by regional market, 1999/2000-2003/04
- Full year 2003/04
- Robust first half…
- …consolidated in second half
- Strategies for 2004/05
- Recent trading update
- Outlets
- Retail expansion
- Japan
- 2004/05 strategy
- Channels of distribution
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- Figure 32: Burberry Group: Turnover by channel, 2003/04
- Strategic direction
- Products
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- Figure 33: Burberry Group: Turnover by product category, 2003/04
- Clothing
- Clothing icons
- Accessories
- The ‘It’ bag category
- Logo
- Footwear
- Home
- Fragrances
- Advertising
- SWOT
- Gucci Group
- Background
- Early years
- International expansion
- Family feuds
- Turnaround
- Multi-brand strategy
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- Figure 34: Gucci Group: Financial data, 2001/02-2003/04
- Three year overview
- Full year 2003/04
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- Figure 35: Gucci group: Turnover by region, 2002/03
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- Figure 36: Gucci Group: Outlet data by brand, 2000-03
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- Figure 37: Gucci group: Outlet data by country, 2000-03
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- Figure 38: Gucci Group: Group turnover by product category, 2002/03
- Major brand divisions
- Gucci
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- Figure 39: Gucci division: Sales by product category, 2003/04
- Yves Saint Laurent
- YSL Beauté
- Other operations
- Sergio Rossi
- Boucheron
- Bottega Veneta
- Financial data
- Outlets
- Bédat & Co
- Emerging brands
- Balenciaga
- Stella McCartney
- Alexander McQueen
- Online and mail order
- SWOT
- LVMH Holding
- Background
- Centuries-old heritage
- Bernard Arnault buys into Dior
- Louis Vuitton grows under Alain Racamier
- Merger with Möet Hennessy creates LVMH
- Arnault teams up with Guinness to take control
- LVMH grows through acquisition
- Group structure
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- Figure 40: Christian Dior/LVMH ownership structure, 2003
- Financial and outlet data
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- Figure 41: Christian Dior Couture: Financial data, 1999-2003
- LVMH brand portfolio
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- Figure 42: LVMH: Owned brands, by division, as at 31 December 2003
- Group financial data
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- Figure 43: LVMH: Group financial data, 1999-2003
- Figure 44: LVMH: Group sales, by region, 2003
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- Figure 45: LVMH: Group outlet data, by division and region, 1999-2003
- Review by division
- Fashion and leather goods
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- Figure 46: LVMH: Fashion & leather goods division, financial and outlet data, 1999-2003
- Figure 47: LVMH: Fashion & leather goods division’s sales breakdown, by region, 2003
- Perfumes and cosmetics
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- Figure 48: LVMH: Perfumes and cosmetics division, financial and outlet data, 1999-2003
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- Figure 49: LVMH: Perfumes and cosmetics division sales, by region, 2003
- Watches and jewellery
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- Figure 50: LVMH: Watches and jewellery division, financial and outlet data, 1999-2003
- Figure 51: LVMH: Watches and jewellery division sales, by region, 2003
- E-commerce
- SWOT
- Richemont
- Background
- Financial data
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- Figure 52: Richemont Group: Financial performance, 1999/2000-2003/04
- Five year picture
- Latest financial year
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- Figure 53: Richemont: Sales by region, 2003/04
- Outlets
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- Figure 54: Richemont group: Number of outlets, 2001-04
- Products
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- Figure 55: Richemont: Sales by product category, 2003/04
- Review by business segment
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- Figure 56: Richemont: Turnover by business segment, 2002/03
- Jewellery
- Cartier
- Van Cleef & Arpels
- Specialist watchmakers
- Jaeger-LeCoultre
- Piaget
- Baume & Mercier
- IWC
- Vacheron Constantin
- A. Lange & Söhne
- Officine Panerai
- Writing instrument manufacturers
- Montblanc
- Montegrappa
- Leather and accessories
- Alfred Dunhill
- Lancel
- Other businesses
- Chloé
- Hackett
- Old England
- Shanghai Tang
- James Purdey & Sons
- SWOT
Mini Profiles
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- Hermès
- Background
- Group financial data
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- Figure 57: Hermès: Financial data, 1999-2003
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- Figure 58: Hermès; Sales by region, 2003
- Figure 59: Hermès: Sales by major product category, 2002-03
- Outlets
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- Figure 60: Hermès: Stores by region, December 2003
- Products
- SWOT
- Prada
- Background
- Group financial data
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- Figure 61: Prada Holding NV: Financial data, 2002-03
- Outlets
- Products
- SWOT
- Tiffany & Co
- Background
- Group financial data
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- Figure 62: Tiffany & Co: financial data, 2001/02-2003/04
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- Figure 63: Tiffany & Co: Retail turnover by region, 2001/02-2003/04
- Outlets
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- Figure 64: Tiffany & Co: Outlet data, 2001-03
- Products
- Speciality retail
- Online and mail order
- SWOT
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