Luxury Goods Retail - International - August 2018

OVERVIEW
What you need to know
Products covered in this Report
Report scope
Mintel market sizes
Defining luxury goods
Geographical breakdown
Company profiles
Technical notes
Financial definitions
Exchange rates
Figure 1: US Dollar to Euro annual average exchange rates, 2012-17
EXECUTIVE SUMMARY
The market
Luxury market forecast to grow 7.9% in 2018
Figure 2: Luxury goods market size and forecast (excl. VAT), 2013-23
Far East continues to expand the luxury goods market
Figure 3: Regional share of luxury goods sales, 2008-17
Beauty outperforms, but demand for fashion and leather goods also robust
Figure 4: Luxury goods sales by product category, 2017
The consumer
Decline in the number of people buying luxury goods
Figure 5: Consumers who have bought luxury goods in the last 18 months, by country, April/May 2015, May/June 2016, May/June 2017 and June/July 2018
Luxury consumers continue to favour physical stores
Figure 6: Where consumers bought luxury goods in the last 18 months, by country, June/July 2018
Department stores and specialists remain popular
Figure 7: Retailers used to buy luxury goods in the last 18 months, by country, June/July 2018
Bold branding is growing in popularity again
Figure 8: Consumer attitudes towards owning luxury goods, by country, June/July 2018
Collaborations can strengthen a brand’s appeal
Figure 9: Consumer attitudes towards luxury goods and exclusivity, by country, June/July 2018
Sustainability becomes a priority
Figure 10: Consumer attitudes towards luxury goods and sustainability, by country, June/July 2018
Companies and brands
Company market shares
Figure 11: Top 15 leading luxury companies’ shares of all luxury sales, 2016 and 2017
Online sales of luxury goods account for 5% of the total market
Innovation centred on customer experience
What we think
ISSUES AND INSIGHTS
The digital evolution of the luxury goods industry
The facts
The implications
Exclusivity vs inclusivity – striking the right balance
The facts
The implications
Ongoing pressure to up the ante on sustainability
The facts
The implications
THE LUXURY MARKET – WHAT YOU NEED TO KNOW
MARKET SIZE AND FORECAST
Global economy
Mintel’s market size
The switch to retailing
Prices and costs
Market size and outlook
Figure 12: Luxury goods market size, reported and total retail sales and forecasts (excl VAT), 2013-23
PRODUCT SEGMENTATION
Figure 13: Global luxury market, sales by product, 2013-17
Figure 14: Global luxury market by type of product, 2017
Fashion and leather goods
Figure 15: Global luxury market: fashion and leather goods sales, 2013-17
Figure 16: Top 10 leading luxury goods companies by share of the fashion and leather goods sector, 2017
Jewellery and watches
Figure 17: Global luxury market: jewellery and watches sales, 2013-17
Figure 18: Top 10 leading luxury goods companies by share of the jewellery and watches sector, 2017
Perfumes and cosmetics
Figure 19: Global luxury market: perfumes and cosmetics sales, 2013-17
Figure 20: Top 10 leading luxury goods companies by share of the perfumes and cosmetics sector, 2017
REGIONAL VIEW
Market size by region
Figure 21: Luxury goods, sales by region, 2013-17
Figure 22: Regional share of the luxury goods market, 2008-17
 COUNTRY MARKET SIZES
Figure 23: Wealth per HNWI by region, 2017
Luxury spending by country
Figure 24: Top 10 luxury goods markets, 2013-17
Figure 25: Top 10 countries in the luxury goods market by share of luxury spending, 2013-17
Americas
Figure 26: The Americas: leading luxury goods markets, 2013-17
Figure 27: The Americas, luxury markets’ shares of all luxury spending in the Americas, 2013-17
Asia Pacific
Figure 28: Asia Pacific: leading luxury goods markets, 2013-17
Figure 29: Asia Pacific luxury markets’ share of all luxury spending in the Asia Pacific region, 2013-17
Europe
Figure 30: Europe: leading luxury goods markets, 2013-17
Figure 31: European luxury markets’ share of all luxury spending in Europe, 2013-17
MARKET DRIVERS
What are luxury goods?
The who, when, where, and why of the luxury goods consumer
Wealthy individuals
Figure 32: Numbers and share of wealth of HNWIs, 2017
Regional data
Figure 33: Number of HNWIs by region, 2009-17
Figure 34: Wealth of HNWIs by region, 2010-17
Figure 35: Top 10 largest HNWI populations, 2016 and 2017
Economic background
Figure 36: GDP growth in US dollars at current values, 2013-18
Figure 37: Leading international currency exchange rates, 2008-18*
Stock markets
Figure 38: Leading stock markets, year-on-year growth, 2012-17
Threat of trade war
Tourism
Figure 39: International inbound tourism, 2011-17
THE CONSUMER – WHAT YOU NEED TO KNOW
Technical note
Decline in the luxury shoppers
Physical stores remain important
Pressure on brands to act for sustainability
Limited edition product and collaborations boost brand appeal
Luxury goods perceived as too expensive
WHO BUYS LUXURY GOODS
Luxury demand remains strongest in China
Figure 40: Consumers who have bought luxury goods in the last 18 months, by country, June/July 2018
Fewer consumers buying luxury goods
Figure 41: Consumers who have bought luxury goods in the last 18 months, April/May 2015, May/June 2016, May/June 2017 and June/July 2018
Male shoppers still more engaged
Figure 42: Consumers who have bought luxury goods in the last 18 months, by gender, June/July 2018
Young continue to buoy the market
Figure 43: Consumers who have bought luxury goods in the last 18 months, by age, June/July 2018
Affluence is also a key driver
Figure 44: Europe: consumers who have bought luxury goods in the last 18 months, by annual household income, July 2018
Figure 45: UK: consumers who have bought luxury goods in the last 18 months, by annual household income, July 2018
Figure 46: US: consumers who have bought luxury goods in the last 18 months, by annual household income, June 2018
Female shoppers more important in China
Figure 47: China: consumers who have bought luxury goods in the last 18 months, by gender, age and annual household income, June 2018
WHERE THEY SHOP FOR LUXURY GOODS
Most still shop in-store in home country
Figure 48: Where consumers bought luxury goods in the last 18 months, by country, June/July 2018
Uplift in Chinese spending abroad
Figure 49: China: where consumers bought luxury goods abroad in the last 18 months, June 2018
Department stores remain popular
Figure 50: Retailers used to buy luxury goods in the last 18 months, by country, June/July 2018
Luxury customer profiles by country
China: vintage stores appeal to younger consumers
Figure 51: China: where consumers bought luxury goods in the last 18 months, by age and annual household income, June 2018
Italy: duty free usage highest amongst affluent shoppers
Figure 52: Italy: where consumers bought luxury goods in the last 18 months, by age and annual household income, July 2018
Spain: online-only retailers attract a different audience
Figure 53: Spain: where consumers bought luxury goods in the last 18 months, by age and annual household income, July 2018
UK: affluent head straight to the designer’s store or website
Figure 54: UK: where consumers bought luxury goods in the last 18 months, by age and annual household income, July 2018
US: multibrand pureplay usage peaks amongst younger customers
Figure 55: US: where consumers bought luxury goods in the last 18 months, by age and annual household income, June 2018
Germany: designer outlets appeal to high earners
Figure 56: Germany: where consumers bought luxury goods in the last 18 months, by age and annual household income, July 2018
France: young and affluent most inclined to buy second-hand goods
Figure 57: France: where consumers bought luxury goods in the last 18 months, by age and annual household income, July 2018
ATTITUDES TOWARDS LUXURY GOODS
Why do consumers buy into luxury brands?
Figure 58: Consumer attitudes towards purchasing luxury goods, June/July 2018
Italy: young consumers wait for special occasions
Figure 59: Italy: consumer attitudes towards purchasing luxury goods, by age, July 2018
France: women want to buy into the luxury lifestyle
Figure 60: France: consumer attitudes towards purchasing luxury goods, by gender, July 2018
Owning luxury goods makes people feel good
Figure 61: Consumer attitudes towards owning luxury goods, by country, June/July 2018
US: men shop to make themselves stand out
Figure 62: US: consumer attitudes towards owning luxury goods, by gender, June 2018
UK: young Brits want brands that reflect their personality
Figure 63: UK: consumer attitudes towards owning luxury goods, by age, July 2018
Limited edition products can help brand retain exclusivity
Figure 64: Consumer attitudes towards luxury goods and exclusivity, by country, June/July 2018
Spain: young most likely to buy into designer collaborations
Figure 65: Spain: consumer attitudes towards luxury goods and exclusivity, by age, July 2018
China: men want brands to be exclusive
Figure 66: China: consumer attitudes towards luxury goods and exclusivity, by gender, June 2018
Just how important is sustainability to luxury shoppers?
Figure 67: Consumer attitudes towards luxury goods and sustainability, by country, June/July 2018
Germany: older consumers show most concern about luxury ethics
Figure 68: Germany: consumer attitudes towards luxury goods and sustainability, by age, July 2018
REASONS FOR NOT PURCHASING LUXURY GOODS
Consumers would rather spend money on other things
Figure 69: Reasons for not purchasing luxury goods in the last 18 months, by country, June/July 2018
Non-luxury customer profiles by country
China: affluent consumers worry luxury goods aren’t ethical enough
Figure 70: China: consumers’ reasons for not purchasing luxury goods in the last 18 months, June 2018
Italy: Millennials think luxury brands are too expensive
Figure 71: Italy: consumers’ reasons for not purchasing luxury goods in the last 18 months, July 2018
Spain: older generation prefer to spend money on something else
Figure 72: Spain: consumers’ reasons for not purchasing luxury goods in the last 18 months, July 2018
UK: younger demographic have concerns about luxury ethics
Figure 73: UK: consumers’ reasons for not purchasing luxury goods in the last 18 months, July 2018
US: higher earners think luxury products are pretentious
Figure 74: US: consumers’ reasons for not purchasing luxury goods in the last 18 months, June 2018
Germany: low earners don’t feel luxury goods are better quality
Figure 75: Germany: consumers’ reasons for not purchasing luxury goods in the last 18 months, July 2018
France: affluent struggle to find what they are looking for
Figure 76: France: consumers’ reasons for not purchasing luxury goods in the last 18 months, July 2018
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
LVMH is the world’s largest luxury group by revenue
Kering the strongest CAGR
Revenue growth up across all regions
Online sales of luxury goods account for 5% of the total market
INNOVATION AND LAUNCH ACTIVITY 
Breakfast at Tiffany’s
Figure 77: Tiffany’s take on Breakfast at Tiffany’s –The Blue Box Cafe, November 2017
Gucci turns to augmented reality
Figure 78: Gucci Spring/Summer 2018 AR campaign, titled ‘The Gucci Hallucination’
Harvey Nichols’ not so little ‘Black Book’
Figure 79: Harvey Nichols partnership with Hero
MatchesFashion London townhouse
Figure 80: Matchesfashion.com London townhouse at 5 Carlos place London, May 2018
Stella McCartney’s sustainable store
Figure 81: Luxury leather alternative Mylo™ made from mycelium
Gucci’s ‘Artlab’
See-Now-Buy-Now with Burberry
Menswear at Moda Operandi
Farfetch and Chanel partnership
YNAP communicates via WhatsApp
One-click with Oyst
Hermès connects with consumers through play
Customisation at Burberry and Ralph Lauren
Design collaborations from Louis Vuitton
RIMOWA benefits from LVMH acquisition
Activewear everywhere
ONLINE AND SOCIAL MEDIA
The market
The outlook
Figure 82: Patek Philippe Instagram debut, 2018
The brands online
Figure 83: Major luxury brands: number of markets with transactional websites, 2016-18
Pureplay luxury e-tailers
Figure 84: Martha Louisa footwear, 2018
The consumer: shopping online
Figure 85: Where luxury consumers purchased luxury products in the last 18 months, by country, June/July 2018
Figure 86: Type of online channel luxury brands were purchased from, by country, June/July 2018
Figure 87: Luxury buyers who research luxury purchases more than other purchases, by country, June/July 2018
Social media
Prada case study
Figure 88: Postman Dreams 2 series, by Prada, 2017
Figure 89: Prada Nylon Farm, 2018
Figure 90: Lil Miquela showcasing Prada on Instagram, 2018
COMPANY METRICS
Figure 91: Leading luxury companies, by net revenues, 2015-17
Revenue growth rates
Figure 92: Leading luxury companies, % CAGR in revenues, 2012-17
Product revenue mix
Figure 93: Leading luxury companies, revenue by product group, 2017
Figure 94: Leading luxury companies, percentage point change in product mix by product group revenue, 2013-17
Regional revenue growth
Figure 95: Leading luxury companies, total revenue by region, 2013-17
Store numbers
Figure 96: Selected leading luxury retailers, estimated store numbers, 2017
Brand ownership
Figure 97: Brand ownership, by leading luxury companies, 2018
MARKET SHARES
Figure 98: Top 20 luxury goods groups, share of all luxury goods sales, 2015-17
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Abbreviations
Consumer research methodology
BURBERRY GROUP 
What we think
The dream team
A greater focus on leather goods
Collaborations
Digital focus
Burberry rainbow check design
Cracking down on counterfeits
Company background
Company performance
Figure 99: Burberry Group Plc: group financial performance, 2013/14-2017/18
Figure 100: Burberry Group Plc: revenue by product division, 2013/14-2017/18
Figure 101: Burberry Group Plc: outlet data, 2013/14-2017/18
E-commerce
ESTÉE LAUDER
What we think
Too faced and BECCA forecast to contribute to 2% of annual sales
Further influencer partnerships
#Beautyhub partnership with Debenhams
Access to a beauty expert is as easy as reaching for your phone
Boost continues from Millennials
Company background
Figure 102: Estée Lauder Companies brand map, 2018
Company performance
Figure 103: Estée Lauder Companies: group financial performance, 2012/13-2017/18
Figure 104: Estée Lauder Companies: group financial performance, by region, 2012/13-2016/17
Figure 105: Estée Lauder Companies: group financial performance, by product category, 2012/13-2016/17
E-commerce
GIORGIO ARMANI
What we think
Could do better when it comes to e-commerce
Succession plans clearer but no news on successor
Exposure to department stores sector could become a problem
Company background
Company performance
Figure 106: Giorgio Armani: group financial performance, 2012-17
E-commerce
HERMèS
What we think
Hermès.com spreads its reach
Growth in workforce
Let’s play!
Highlights commitment to sustainability
Company background
Company performance
Figure 107: Hermès: financial performance, 2013-17
Figure 108: Hermès: sales by product category, 2016-17
Q1 2018
E-commerce
KERING
What we think
Expanding e-commerce footprint
Gucci puts sustainability and transparency in the spotlight
New retail concepts to excite customers and drive footfall
Bag and sneaker personalisation
Testing luxury fashion and accessories rental service
Gucci launches luxury home décor collection
Company background
Company performance
Figure 109: Kering: financial performance, 2013-17
Figure 110: Kering Luxury: breakdown of revenue by region, 2013-17
Figure 111: Kering Luxury: directly-operated stores, 2016-17
E-commerce
L'ORÉAL LUXE
What we think
Accessible luxury boosts Chinese spending
David Beckham in partnership with L'Oréal Luxe
L’Oréal ‘s new paper-based bottle
Company background
Company performance
Figure 112: L'Oréal group: net revenues by division, 2013-17
Figure 113: L'Oréal Luxe: financial performance, 2013-17
E-commerce
LVMH
What we think
RIMOWA gains greater brand awareness
Christian Dior Couture continues with excellent momentum
Launch of 24Sèvres.com
What next?
Company background
Christian Dior Couture
Company performance
Excellent 2018 first half
Figure 114: LVMH Group: financial performance, 2013-17
Figure 115: LVMH: distribution of revenues by region, 2013-17
Figure 116: LVMH: geographic distribution of revenues by product category, 2013-17
Wholesale/retail
Figure 117: LVMH: sales by type of distribution (excluding Louis Vuitton and Christian Dior Couture), 2013-17
Figure 118: LVMH: outlet portfolio, 2016 and 2017
E-commerce
PRADA GROUP 
What we think
The devil clicks Prada
A family affair
Exclusive collaborations
Celebrities showcase the brand
Company background
Company performance
Figure 119: Prada: group financial performance, 2013/14-2017
Figure 120: Prada: group net revenue breakdown, by channel, 2013/14-2017
Figure 121: Prada: group retail revenue breakdown, by brand, 2013/14-2017
Figure 122: Prada: group retail revenue breakdown, by market, 2016/17-2017
Figure 123: Prada: group retail revenue breakdown, by product line, 2013/14-2017
Figure 124: Prada: directly-operated stores, 2013/14-2017
E-commerce
RALPH LAUREN
What we think
Brand damage and dilution
Accelerating digital sales growth a priority
China a key growth market for Ralph Lauren
Increasing its focus on customisation
Company background
Company performance
Figure 125: Ralph Lauren Corporation: group financial performance, 2013/14-2017/18
Figure 126: Ralph Lauren Corporation: global directly-operated stores and concessions, 2013/14-2017/18
E-commerce
RICHEMONT
What we think
Cartier rereleases classic designs
Richemont succeeds in its bid for YNAP
Chloe and Dunhill welcome new creative directors in 2017
A celebration of the life of Alaïa
What next
Company background
Company performance
Figure 127: Richemont: group financial performance, 2013/14-2017/18
Figure 128: Richemont: revenues by region, 2013/14-2017/18
Figure 129: Richemont: revenues by product, 2013/14-2017/18
Figure 130: Richemont: revenues by maison, 2013/14-2017/18
Figure 131: Richemont Group: outlet numbers and transactional websites, 2016/17-2017/18
YNAP: company performance
Figure 132: YNAP Group: group financial performance, 2014-17
E-commerce
SHISEIDO
What we think
Luxury brands come first
Shiseido embraces personalisation
Environmental issues come to the fore
Company background
Company performance
Figure 133: Shiseido: group financial performance, 2012/13-2017
Figure 134: Shiseido: outlet data, 2012/13-2017
E-commerce
SWATCH GROUP – LUXURY
What we think
An opportunity to extend personalisation to the luxury range
Swatch Pay contactless payment taps into growth of contactless payment
Experimenting with new retail formats
Move online in the US could signal change of strategy
Company background
Company performance
Figure 135: Swatch Group: financial performance by brand, 2013-17
Figure 136: Swatch Group: net sales by region, 2013-17
Figure 137: Swatch Group: watches and jewellery segment financial performance, 2013-17
Retail operations
E-commerce
TAPESTRY
What we think
New name to reflect the group’s brand and product diversity
Turnaround plan for Kate Spade
Targeting younger shoppers
Stuart Weitzman debuts handbag and jewellery collections and new store concept
Extending customisation options to more stores and product categories
Handbag specialist expands product offering with touchscreen smartwatch
Company background
Company performance
Figure 138: Coach Inc.: group financial performance, 2012/13-2016/17
Figure 139: Coach Inc.: net sales, by region, 2012/13-2016/17
Figure 140: Coach Inc.: Coach product sales breakdown, 2012/13-2016/17
Figure 141: Coach Inc.: directly-operated store data, 2013/14-2016/17
E-commerce
TIFFANY & CO.
What we think
Shop renovation programme helping boost same-store sales growth
Diversifying its product range to appeal to a wider audience
Celebrity-driven campaigns to appeal to a younger audience
New ‘everyday luxury’ range a shift away from special occasion jewellery
Breakfast at Tiffany's
Company background
Company performance
Figure 142: Tiffany & Co.: group financial performance, 2013/14-2017/18
Figure 143: Tiffany & Co.: company-operated stores and estimated sales per outlet, 2013/14-2017/18
E-commerce
TOD’S GROUP
What we think
Multiple collections throughout the year
Reaching out to China’s high-end shoppers
New ideas and concepts to drive store sales
Bespoke upgrade for iconic driving shoe
Collaborating with social media celebrities
Banking on Kendall Jenner to better engage with a younger audience
Company background
Company performance
Figure 144: Tod’s Group: financial performance, 2013-17
Figure 145: Tod’s Group: sales, by region, 2016-17
Figure 146: Tod’s Group: sales, by product type, 2016-17
Figure 147: Tod’s Group: sales, by brand, 2016-17
Breakdown of sales by distribution channel
Figure 148: Tod’s Group: sales by distribution channel, 2016-17
E-commerce