What you need to know

Growth in the global luxury goods market remains robust and Mintel estimates that retail sales rose 7.8% to €299 billion in 2018, with a further 4.3% growth forecast in 2019. Political and economic uncertainty continues to loom, and there was a decline in the HNWI population, which could impact growth going forward. However, to date demand has remained resilient and the biggest luxury houses have continued to see exceptional sales growth.

Young consumers are buoying sales and helping to expand the overall value of the market. Meanwhile, growth in the online market continues to far outpace growth in the wider market, with more consumers than ever before shopping online for luxury goods. Luxury brands are responding and adjusting their strategies accordingly to engage a younger, tech-savvy generation of shoppers. Aligning with this, sustainability and customer experience have become an important focus for luxury goods brands and retailers.

Products covered in this Report

Report scope

Most people have an idea of what constitutes a luxury item, but it is very difficult to quantify it. However, one can say that a luxury good is branded, and it is the goods that are luxury, not the retailer. It is up to the retailer to merchandise the goods in a way that sets them off to their best advantage.

Mintel market sizes

Since it is the brands that are luxury and not the retailer, Mintel has calculated the size of the market from the aggregated turnover of brands that we think are viewed as luxury brands, adjusted where necessary to add a retail margin and the sales of smaller players.

Defining luxury goods

Luxury goods are priced high and that is often justified by a very high level of craftsmanship. They must have an element of exclusivity and be out of the reach of most mass market buyers, certainly in terms of regular purchasing. However, defining the market can be difficult because perception of luxury can be very subjective. What counts as luxury for one consumer may be considered high-end, mass market by another. The introduction of ‘masstige’ goods, which are mass-produced goods marketed by brands as luxury items, further complicates matters.

It is usually fairly apparent where a product is luxury and equally obvious where it isn’t, but there is a grey area that is more subjective. Take the Swatch Group, for example. The Swatch brand itself is mass market and, while they are more upmarket, we think that Longines and Tissot are too. But Omega is a luxury brand, and one of the more desirable as well. Or look at Net-a-Porter - some of the brands it sells are most definitely luxury brands (eg those from the Kering and Prada stables), but others are not. J Crew is a US mass market brand.

Luxury goods do have certain clear characteristics, which make them something that some people aspire to. For the purpose of this report, in order to be considered luxury, items must have all or most of the following characteristics:

  • Luxury goods must be highly priced – they must be beyond the reach of the average consumer, thus increasing the desirability of the product (known as the Veblen effect)

  • They are made with high levels of craftsmanship – often made locally in company-owned factories, to ensure quality

  • They are aspirational

  • They are regarded as symbols of a higher status

  • They are discretionary purchases – luxury goods are non-essential

  • They are sometimes fashion leaders, though this is not always the case.

Product breakdown

In our analysis there are three main categories of luxury goods to which we add a miscellaneous group of smaller products:

  • Fashion & leather goods

  • Fragrances & cosmetics

  • Jewellery & watches

  • Other – writing instruments, eyewear, furniture and other home goods and other miscellaneous items. It may also include a small element from hotels (eg Bulgari), spas and bars.

Food, beverages, tobacco, electronic/electrical goods, automobiles and services, such as travel, are all excluded from our market size.

Geographical breakdown

We provide a broad regional breakdown of our market size. This is based mainly on data published by the leading luxury groups themselves.

We look at the following regions:

  • Europe

  • Americas

  • Asia Pacific

  • Rest of the world (includes the Middle East and Africa).

We also estimate national market sizes for the ten largest markets, which together account for around three-quarters of the global luxury market.

The report also includes findings from Mintel’s exclusive consumer research carried out across seven major markets: the UK, the US, France, Germany, Italy, Spain and China. This proprietary data provides valuable insights into attitudes and buying habits related to luxury goods in the major markets.

Company profiles

The report also includes profiles of 15 leading luxury companies, spanning the categories that are the focus of this report: fashion and leather goods, fragrances and cosmetics, and watches and jewellery.

Technical notes

Financial definitions

All sales figures and luxury goods market sizes are quoted excluding VAT, unless specifically stated otherwise. All consumer spending data is quoted including VAT, unless specifically stated otherwise.

Operating profit is trading profit after normal operating costs and depreciation, but before interest, goodwill amortisation and exceptional items.

Pre-tax profit is calculated after all costs, including exceptionals, interest, and non-cash charges such as amortisation, but before tax.

Note that there can be a number of reasons why tables do not sum exactly:

  • Rounding of figures

  • Currency conversions if original data for different subsidiaries was in different currencies (companies sometimes provide information in local currencies)

  • VAT (sales tax) – if original data was provided gross (including sales tax), we have extracted VAT at the relevant rates for countries concerned and at the estimated appropriate rates depending on product categories sold.

Exchange rates

The euro and the US dollar are the main currencies used in this report and the average annual exchange rates used for the period 2012-17 are shown below. However, in some cases, average exchange rates will have been matched to company year-ends and not necessarily calendar year-ends in the company profiles.

Figure 1: US Dollar to Euro annual average exchange rates, 2012-18
2012 1.29
2013 1.33
2014 1.33
2015 1.11
2016 1.11
2017 1.13
2018 1.18
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