Luxury Goods Retailing: Inc Impact of COVID-19 - International - August 2020

OVERVIEW
Key issues covered in this Report
COVID-19 market context
UK
China
US
France
Germany
Italy
Spain
Figure 1: Projected real* GDP growth, 2020 and 2021
Products covered in this Report
Report scope
Mintel market sizes
Defining luxury goods
Product breakdown
Geographical breakdown
Company profiles
Financial definitions
EXECUTIVE SUMMARY
Impact of COVID-19 on luxury goods retail
Figure 2: Short, medium and long term impact of COVID-19 on luxury goods retail, August 2020
The market
Luxury goods sales and forecast
Figure 3: Luxury goods market size, reported and total retail sales and forecasts (excluding VAT), 2015-25
Product segmentation
Figure 4: Global luxury market by type of product, 2019
Regional breakdown
Figure 5: Regional share of the luxury goods market, 2019
Companies and brands
Covid-19 impact
Key metrics
Figure 6: Leading luxury companies, % CAGR in revenues, 2014-19
Market shares
Figure 7: Leading luxury goods groups’ shares of all luxury goods sales, 2019
Brands optimise supply-chains
The consumer
Impact of COVID-19 on the luxury consumer
Figure 8: Changes to shopping behaviours since the COVID-19/coronavirus outbreak, by average consumers and consumers with the highest household income, May 2020
Who buys luxury goods
Figure 9: Consumers who have bought luxury goods in the last 18 months, May/June 2016, May/June 2017, June/July 2018, June 2019 and May 2020
What they buy
Figure 10: Types of luxury goods bought in the last 18 months, May 2020
Where they shop
Figure 11: Where luxury goods were bought in the last 18 months, May 2020
Luxury goods shopping behaviours
Figure 12: Luxury shopping behaviours, May 2020
Attitudes towards shopping for luxury goods
Figure 13: Attitudes towards shopping for luxury goods, May 2020
COVID-19 AND LUXURY GOODS RETAIL
The market
COVID-19 set to wipe nearly a fifth off sales
Fashion/leather goods is largest segment but will lose out from COVID-19
COVID-19 impact depends on regional orientation of each luxury business
HNWI’s wealth declines
Pandemic halts luxury retail tourism
The consumer
Affluent consumers delay luxury purchases
Hard luxury gives way to smaller indulgences
Companies and brands
Brands introduce more personalised shopping service
Luxury purchases shift online
ISSUES AND INSIGHTS
COVID-19 will impact luxury hard
Adapting to a changing Chinese luxury consumer
How can the luxury sector do more to appeal to the youth market?
THE MARKET - KEY TAKEAWAYS
COVID-19 set to wipe nearly a fifth off sales
Fashion/leather goods is largest segment but will lose out from COVID-19
Asia Pacific region set to cement its position as largest market for luxury goods…
Japan pulls away from US as largest luxury goods market in the world
China forecast to continue growth but at a slow rate
US leads rise in HNWIs
MARKET SIZE AND FORECAST
Impact of COVID-19 on luxury goods retail
Figure 14: Short, medium and long term impact of COVID-19 on luxury goods retail, August 2020
Lockdown
Re-emergence
Recovery
The global economy
Mintel’s market size methodology
The switch to owned retail outlets
Mintel’s market size and forecast
Figure 14: Global luxury goods market size, reported and total retail sales and forecasts (excluding VAT), 2015-25 (prepared on 13th August 2020)
Market drivers and assumptions
Figure 15: Key drivers affecting Mintel’s market forecast: annual percentage GDP growth at constant prices in selected key luxury goods markets, 2015-21 (prepared on 11th August 2020)
Figure 16: Key drivers affecting Mintel’s market forecast: unemployment rates in selected key luxury goods markets*, 2015-21 (prepared 11th August 2020)
Learnings from the last recession
Figure 17: Global luxury goods market size, reported and total retail sales and forecasts (excl VAT), 2007-12
Forecast methodology
PRODUCT SEGMENTATION
Mintel’s segmentation methodology
Market size breakdown
Figure 18: Global luxury market by type of product, 2019
Figure 19: Global luxury market, sales by product, 2010-19
Fashion and leather goods
Figure 20: Global luxury market: fashion and leather goods sales, 2015-19
Perfumes and cosmetics
Figure 21: Global luxury market: perfumes and cosmetics sales, 2015-19
Jewellery and watches
Figure 22: Global luxury market: jewellery and watches sales, 2015-19
REGIONAL BREAKDOWN
Mintel’s segmentation methodology
Market size breakdown
Figure 23: Luxury goods, sales by region, 2015-19
Share of market by region
Figure 24: Regional share of the luxury goods market, 2019
Figure 25: Luxury goods, percentage of sales by region, 2010-19
Country market sizes
Spend per capita
Figure 26: Wealth per HNWI by region, 2019
Luxury spending per country
Figure 27: Top 10 luxury goods markets, 2015-19
Figure 28: Top 10 countries in the luxury goods market by share of luxury spending, 2015-19
Americas
Figure 29: The Americas: leading luxury goods markets, 2015-19
Figure 30: The Americas, luxury markets’ shares of all luxury spending in the Americas, 2015-19
Asia Pacific
Figure 31: Asia Pacific: leading luxury goods markets, 2015-19
Figure 32: Asia Pacific luxury markets’ share of all luxury spending in the Asia Pacific region, 2015-19
Europe
Figure 33: Europe: leading luxury goods markets, 2015-19
Figure 34: European luxury markets’ share of all luxury spending in Europe, 2015-19
MARKET DRIVERS
Economic background
Global uncertainty: COVID-19
Figure 35: Growth in real* GDP and GDP at current prices in US$, 2015-19
Figure 36: Projected real* GDP growth, 2020 and 2021
Global uncertainty: the US-China trade war
Global uncertainty: Brexit
Currency
Figure 37: Leading international currency exchange rates, 2010-20
The who, where and why of the luxury goods consumer
Who?
Figure 38: HNWIs by level of wealth, 2019
Figure 39: Share of wealth of HNWIs, 2019
Figure 40: Number of HNWIs by region, 2012-19
Figure 41: Wealth of HNWIs by region, 2012-19
Figure 42: Top 10 largest HNWI populations, 2018 and 2019
Where?
Figure 43: Where luxury branded items have been bought in the past 18 months, May 2020
Figure 44: International inbound tourism, 2015-19
COMPANIES AND BRANDS - KEY TAKEAWAYS
LVMH is the world’s largest luxury group
Aggregate sales up in all regions in 2019
Retailers shift product launches online amid COVID-19 and innovate with VR and AR technologies
Leading players tighten grip on the market
Online expected to receive a boost from COVID pandemic
Luxury houses look to digital enhancements
COMPANY METRICS
Covid-19 impact
Rankings
Figure 45: Leading luxury companies, by net revenues, 2017-19
Revenue growth rates
Figure 46: Leading luxury companies, % CAGR in revenues, 2014-19
Product revenue mix
Figure 47: Leading luxury companies, revenue by product group, 2019
Figure 48: Leading luxury companies, revenue by product group, 2019
Figure 49: Leading luxury companies, percentage point change in product mix by product group revenue, 2015-19
Regional revenue growth
Figure 50: Leading luxury companies, total revenue by region, 2015-19
Store numbers
Figure 51: Selected leading luxury retailers, estimated store numbers, 2019
Brand ownership
Figure 52: Brand ownership, by leading luxury companies, 2020
MARKET SHARES
Covid-19 impact
LVMH tightens grip on market
Figure 53: Leading luxury goods groups’ shares of all luxury goods sales, 2019
Figure 54: Leading luxury goods groups, share of all luxury goods sales, 2017-19
Product market shares
Figure 55: Leading luxury goods groups’ shares of all luxury fashion/leather goods sales, 2019
Figure 56: Leading luxury goods groups’ shares of all luxury perfumes/cosmetics goods sales, 2019
Figure 57: Leading luxury goods groups, share of all luxury watches/jewellery goods sales, 2019
ONLINE AND SOCIAL MEDIA
The market
The outlook
Brands look to develop own ecommerce capabilities
COVID-19 accelerates digital innovations
The brands online
Figure 58: Major luxury brands: Number of markets with transactional websites, 2016-20
Pureplay luxury e-tailers
Farfetch expands brand portfolio with collaborations
Pureplayers launch sustainable initiatives
Alibaba helps make first luxury purchase more affordable
Social media
Retailers and brands invest in editorial content across social media channels
Luxury brands combine social media with novel augmented reality experiences
LAUNCH ACTIVITY AND INNOVATION
Brands bolster customer engagement through social media
Gucci teams up with Snap Inc. to create limited edition Spectacle glasses
Figure 59: Spectacles X Gucci glasses with its duel-camera setup, 2019
Prada launches talk series on Instagram
Figure 60: Advertisement for Prada Possible Conversations on its Instagram account, 2020
Louis Vuitton adds behind-the-scenes content to its YouTube channel
Figure 61: Louis Vuitton’s LVTV video on YouTube, 2020
Burberry launches digital pop-up experience at Ely’s Yard
Figure 62: Burberry’s porcelain fawn at its pop-up experience in Ely Yard, 2019
AR and VR technologies connect brands with customers
Burberry launches new AR shopping tool
Figure 63: Burberry’s AR search tool, 2020
Gucci introduces AR technology for its Ace sneakers
Figure 64: Gucci’s AR tool, 2019
Prada launches virtual tours of its ateliers and boutiques
Figure 65: Prada Virtual reality tour of one its production sites, 2020
Chanel Christmas pop-up featured AR snow globe
Figure 66: Chanel’s AR snow globe, 2019
In-store experiences and pop-ups attract footfall
Burberry launches its first video game
Figure 67: Burberry’s B Bounce game,2019
Gucci announces new Gucci Pin
Figure 68: Gucci Pin pop-up in Milan, 2019
Resale site Xupes opens first store
Figure 69: Xupes store at the Royal Exchange in the City of London, 2019
Estée Lauder pop-up educates visitors on the importance of sleep
Figure 70: The Night is Yours pop-up in Singapore, 2019
Burberry pops up at Printemps in Paris and takes over Selfridges’ Corner Shop
Figure 71: Burberry at Printemps Paris and at Selfridges Corner Shop in London, 2020
Brands optimise supply chains
LVMH unveils plans for first global blockchain
Ralph Lauren launches digital IDs to authenticate products
Kering launches first 'regenerative sourcing' standard
Sustainability prompts new product launches
Shiseido adds new sustainable skin care brand to prestige line-up
Figure 72: Shiseido’s newly added sustainable brand BAUM, 2020
Farfetch launches online sustainability calculator
Burberry launches ‘ReBurberry Edit’
Figure 73: Burberry’s ReBurberry edit collection, 2020
Prada’s Re-Nylon bags
Figure 74: Prada’s Re-Nylon collection, 2019
Gucci launches sustainable Off the Grid collection
Figure 75: Jane Fonda sporting Gucci’s Off the Grid collection, 2019
COVID-19 innovations and launch activity
Ralph Lauren launches polo design competition for Covid-19 relief
Figure 76: Ralph Lauren’s polo competition, 2020
Giorgio Armani holds A/W 2020 show behind closed doors
Figure 77: Armani’s A/W 20 show held behind closed doors, 2020
Gucci unveils virtual exhibition
Figure 78: Gucci’s ‘No Space, Just A Place. Eterotopia’ exhibition at the Daelim Museum in Seoul, 2020
Estée Lauder launches home concierge to target customers in lockdown
Figure 79: Estée Lauder’s home concierge advertisement on Instagram, 2020
Gucci goes seasonless
Gucci launches virtual shopping service
Figure 22: Gucci 9 shopping service at its Florence store, 2020
THE CONSUMER – KEY TAKEAWAYS
COVID-19 hits luxury consumers hard
Chinese and young consumers drive purchasing
Growing shift towards buying luxury online
Growing demand for discounting of luxury
IMPACT OF COVID-19 ON THE LUXURY CONSUMER
Concerns about risk of infection remain high
Figure 80: Extremely worried about exposure to COVID-19/coronavirus, July 2020*
Affluent consumers delay purchase of fashion until after the outbreak
Figure 81: Changes to shopping behaviours since the COVID-19/coronavirus outbreak, by average consumers and consumers with the highest household income, May 2020
The shift to online shopping
Figure 82: Changes to fashion shopping behaviours since the COVID-19/coronavirus outbreak, by average and consumers aged 16-24, May 2020
Consumers expect to spend less on fashion, but same on beauty
Figure 83: Expected changes to usual spending habits on clothing and accessories (including Footwear) over the coming month, July 2020
Figure 84: Expected changes to usual spending habits on beauty products and toiletries over the coming month, July 2020
Chinese will cut back on luxury and buy more domestically
Figure 85: Agreement with statement about luxury branded accessories and retailing, May 2020
WHO BUYS LUXURY GOODS
Decline in UK, while China purchasing remains high
Figure 86: Consumers who have bought luxury goods in the last 18 months, May/June 2016, May/June 2017, June/July 2018, June 2019 and May 2020
China luxury sales driven by women
Figure 87: China: consumers who have bought luxury goods in the last 18 months, by gender, age and monthly household income, May 2020
Men are the main luxury buyers
Figure 88: Consumers who have bought luxury goods in the last 18 months, by gender, May 2020
Young drive purchasing
Figure 89: Consumers who have bought luxury goods in the last 18 months, by age, May 2020
COVID-19’s impact on incomes will hit luxury market
Figure 90: European consumers who have bought luxury goods in the last 18 months, by monthly household income, May 2020
Figure 91: UK consumers who have bought luxury goods in the last 18 months, by annual household income, May 2020
Figure 92: US consumers who have bought luxury goods in the last 18 months, by annual household income, May 2020
WHAT THEY BUY
Beauty products most purchased luxury items
Figure 93: Types of luxury goods bought in the last 18 months, May 2020
Figure 94: Breakdown of the types of luxury goods bought in the last 18 months, May 2020
Luxury customer profiles by country
China: Most affluent buy clothing and footwear
Figure 95: Types of luxury goods bought in the last 18 months, by gender, age and monthly household income May 2020
US: Young buy fashion accessories and footwear
Figure 96: Types of luxury goods bought in the last 18 months, by gender, age and annual household income May 2020
UK sees rise in demand for luxury beauty
WHERE THEY SHOP
Growing shift towards buying luxury online
Figure 97: Where luxury goods were bought in the last 18 months, May 2020
Chinese buying more luxury domestically
UK sees drop in in-store purchasing
Figure 98: Where luxury goods were bought in the last 18 months, in-store in home country, May 2020
Europeans less inclined to buy luxury goods abroad
Figure 99: Where luxury goods were bought in the last 18 months, in-store abroad, May 2020
France remains main destination for Chinese luxury shoppers
Figure 100: China: where consumers bought luxury goods abroad in the last 18 months, May 2020
Big rise in online shopping
Figure 101: Where luxury goods were bought in the last 18 months, online, June 2019-May 2020
LUXURY GOODS SHOPPING BEHAVIOURS
Well-known brands appeal to buyers
Figure 102: Luxury goods shopping behaviours, May 2020
Men look for items without obvious logos
Figure 103: Male consumers who look for well-known brands and items without obvious logos, May 2020
Women monitor items until they go on sale
Figure 104: Female consumers who monitored items until they went on sale, May 2020
ATTITUDES TOWARDS SHOPPING FOR LUXURY GOODS 
Figure 105: Attitudes towards shopping for luxury goods, May 2020
Shoppers trust credible online retailers to sell authentic luxury goods
Figure 106: Consumers in UK, US and germany who agree that trustworthy online retailers are guaranteed to sell authentic luxury goods, by gender, may 2020
Chinese shoppers think brand heritage is important when buying luxury goods
Figure 107: Chinese consumers who think brand heritage is important when buying luxury goods, by gender, May 2020
US male shoppers want more diversity in luxury advertising
Figure 108: US consumers who think there is not enough diversity in luxury advertising, by gender, May 2020
Charitable brands appeal to Spanish and Italian luxury buyers
Figure 109: Consumers from Spain who agree that it is important to shop with luxury brands that support a charity/important cause, by gender, May 2020
GIORGIO ARMANI
What we think
New store concept offering an enhanced customer experience
Book an appointment
New multichannel shopping project with Yoox Net-a-Porter
Philanthropic response to the COVID-19 pandemic
Teams up with Italian luxury car brand Ferrari for fashion collaboration
Moves towards more sustainable and eco-friendly products
Company background
Company performance
Figure 110: Giorgio Armani: group financial performance, 2015-19
E-commerce
BURBERRY GROUP
What we think
New flagship stores in Tokyo, Beijing and Moscow
Burberry doubles down on eco-credentials
New technologies, new opportunities
Global pandemic impacts luxury market
What next?
Company background
Company performance
Figure 111: Burberry Group Plc: Group financial performance, 2015/16-2019/20
Figure 112: Burberry Group Plc: revenue by product division, 2015/16-2019/20
Figure 113: Burberry Group Plc: Outlet data, 2015/16-2019/20
Ecommerce
HERMèS
What we think
Hermès unveils its first beauty line Rouge Hermès
Hermès improves the quality of its distribution network
Hermès Carré Club finishes its world tour in  Paris
Hermès donates €20 million to French medical system to help fight COVID-19
What next?
Company background
Company performance
Figure 114: Hermès: financial performance, 2015-19
Figure 115: Hermès: group sales, by region, 2015-19
Figure 116: Hermès: Group sales by product category, 2016-19
KERING
What we think
New store concepts to experience and discover the essence of the brands
Gucci haute cuisine
Yves Saint Laurent targeting consumers on-the-go
Virtual sales showroom to engage with consumers during the COVID-19 crisis
Joining the fight against COVID-19
100% eco-responsible fashion collection
Company background
Company performance
Figure 117: Kering: Financial performance, 2015-19
Figure 118: Kering Luxury: Breakdown of revenue by region, 2015-19
Figure 119: Kering Luxury: Directly-operated stores, 2018 and 2019
E-commerce
ESTÉE LAUDER 
What we think
Estée Lauder reveals AI-powered assistant Liv
Estée Lauder repurposes manufacturing factories as part of its COVID-19 relief efforts
Company background
Company performance
Figure 120: Estée Lauder Companies: group financial performance, 2014/15-2019/20
Figure 121: Estée Lauder Companies: Group financial performance, by region, 2014/15-2018/19
Figure 122: Estée Lauder Companies: Group financial performance, by product category, 2014/15-2018/19
RALPH LAUREN
What we think
Carving out a bigger digital presence and ramping up multichannel capabilities
Giving back during the COVID-19 crisis
Proof-of-concept initiative to ensure the integrity of products
Company background
Company performance
Figure 123: Ralph Lauren Corporation: Group financial performance, 2015/16-2019/20
Figure 124: Ralph Lauren Corporation: Global directly-operated stores and concessions, 2015/16-2019/20
E-commerce
L’ORÉAL LUXE
What we think
L’Oréal signs licensing agreement with Prada to complement Luxe brands
Lancôme expands store network in China and France
L'Oréal teams up with WeChat to launch its first AR make-up try-on app
L’Oréal strives for transparency with ’Inside Our Products’ platform
Company background
Company performance
Figure 125: L’Oréal Luxe: financial performance, 2015-19
LVMH
What we think
Global presence provides resilience to shock
Tiffany acquisition pulled
Online performance improved
Sustainability to the fore
What next?
Company background
Company performance
Figure 126: LVMH Group: financial performance, 2015-19
Figure 127: LVMH Group: distribution of luxury revenues by region, 2015-19
Figure 128: LVMH Group: distribution of luxury revenues by product category, 2015-19
Figure 129: LVMH: outlet portfolio*, 2018 and 2019
Figure 130: LVMH: Store numbers by Luxury maisons (division), 2018 and 2019
Brands
Figure 131: LVMH: Luxury goods brands by ‘Maisons’, 2020
E-commerce
PRADA GROUP
What we think
Adapting to shopping restrictions during the COVID-19 crisis
Exclusive 24-hour limited edition product drops to help drive ecommerce growth
New shop-in-shop concept in prestigious Chinese department store
L’Oréal deal an opportunity for Prada to broaden its appeal in the beauty market
Luxury athleisure collaboration with Adidas
Company background
Company performance
Figure 132: Prada Group: financial performance, 2015-19
Figure 133: Prada Group: net revenues breakdown, by channel, 2015-19
Figure 134: Prada Group: net retail revenues breakdown, by brand, 2015-19
Figure 135: Prada Group: net retail revenues breakdown, by region, 2015-19
Figure 136: Prada Group: net retail revenues breakdown, by product line, 2015-19
Figure 137: Prada Group: directly operated stores, 2015-19
E-commerce
RICHEMONT
What we think
An increased focus on hard luxury?
Franchised outlet growth outstripping own outlet openings
Sustainability rises up the agenda
Not afraid to create partnerships for new markets
Making it personal
Driving m-commerce
What next?
Company background
Company performance
Figure 138: Richemont: group financial performance, 2015/16-2019/20
Figure 139: Richemont: revenues by region, 2015/16-2019/20
Figure 140: Richemont: revenues by product, 2015/16-2019/20
Figure 141: Richemont: revenues by maison, 2015/16-2019/20
The impact of COVID-19 on financial performance
Figure 142: Richemont: group financial performance, 1st quarter 2019 vs 1st quarter 2020
Figure 143: Richemont Group: outlet numbers and transactional websites, 2018/19-2019/20
E-commerce
SHISEIDO
What we think
Shiseido expands its presence in ‘clean beauty’ by acquiring Drunk Elephant
Shiseido focuses on developing prestige offer
Shiseido to focus on ‘Made in Japan’ brands to capture Chinese consumers
Shiseido expands fragrance portfolio in new tie-up
Shiseido unveils exhibition on ageing in Yokohama
COVID-19 relief efforts
Company background
Company performance
Figure 144: Shiseido: group financial performance, 2016-19
Figure 145: Shiseido: Group sales performance, by region, 2016-19
SWATCH GROUP
What we think
Hong Kong protests and uncertainty
Swatch tackles grey market sales
Vintage is the future
A mixed year for the Swiss watch industry as a whole
Impact of the COVID-19 pandemic
What next
Company background
Company performance
Figure 146: Swatch Group: financial performance by brand, 2015-19
Figure 147: Swatch Group: net sales by region, 2015-19
Figure 148: Swatch Group: watches and jewellery segment financial performance, 2015-19
Retail operations
E-commerce
TAPESTRY
What we think
Zoom shopping parties and livestreams
Coach’s biggest footwear initiative in years to offset falling women’s handbags sales
New York pop-up pilots new bag rental service
Company background
Company performance
Figure 149: Tapestry Inc.: Group financial performance, 2014/15-2018/19
Figure 150: Tapestry Inc.: Net sales, by region, 2014/15-2018/19
Figure 151: Tapestry Inc.: Product sales breakdown, 2014/15-2018/19
Figure 152: Tapestry Inc.: Directly-operated stores, 2014/15-2018/19
E-commerce
TIFFANY & CO.
What we think
LVMH pulls out of Tiffany acquisition
Tiffany & Co. breaks new ground
Breakfast at Tiffany’s around the world
Tiffany & Co. Foundation supporting pandemic related causes
New stores and new looks
Provenance is key
What next?
Company background
Company performance
Figure 153: Tiffany & Co.: group financial performance, 2014/15-2019/20
Figure 154: Tiffany & Co., sales performance by jewellery category, 2019/20
Figure 155: Tiffany & Co.: company-operated stores and estimated sales per outlet, 2014/15-2019/20
E-commerce
TOD’S GROUP
What we think
Former Google exec spearheading Tod’s digital development
Debuts two new brick-and-mortar concepts as distribution focus shifts to own stores
€5 million donation to help ease COVID-19 burden
Company background
Company performance
Figure 156: Tod’s Group: Financial performance, 2015-19
Figure 157: Tod’s Group: sales, by region, 2018 and 2019
Figure 158: Tod’s Group: Sales by product type, 2018 and 2019
Figure 159: Tod’s Group: Sales, by brand, 2018-19
Figure 160: Tod’s Group: sales by distribution channel, 2018-19
E-commerce
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
Data sources