Beruflich Dokumente
Kultur Dokumente
MARKET STUDY
FallWinter 2015
A time to act: How luxury brands
can rebuild to win
By Claudia DArpizio, Federica Levato,
Daniele Zito and Jolle de Montgoler
Claudia DArpizio and Federica Levato are Bain & Company partners, and Daniele Zito
is a manager. All three are based out of the rms Milan ofce. Jolle de Montgoler
is the practice area senior director for Retail, Luxury and Consumer Products in EMEA.
She is based out of the rms Paris ofce. All four are members of Bains Global Retail
and Luxury practices.
Table of contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1
1.
2.
3.
4.
5.
Page i
Page ii
Executive summary
Currency uctuations and globe-trotters boost the personal luxury goods market, but real
growth slows
The 14th edition of the Bain Luxury Study, published by Bain & Company for Fondazione Altagamma, the
trade association of Italian luxury-goods manufacturers, analyzed recent developments in the global luxurygoods industry.
The overall luxury industry tracked by Bain & Company comprises 10 segments, led by luxury cars,
luxury hospitality and personal luxury goods, which together account for 80% of the total market. The industry surpassed 1 trillion in retail sales value in 2015 and delivered healthy growth of 5% year over year (at
constant exchange rates), driven primarily by luxury cars (8%), luxury hospitality (7%) and ne arts (6%).
Aided by global currency uctuations and continued purchases by borderless consumers, the personal
luxury goods marketthe core of the core of luxury and the focus of the Bain Luxury Studyballooned to
more than 250 billion in 2015. That represents 13% growth over 2014 at current exchange rates, while
real growth (at constant exchange rates) has eased to only 1% to 2%. The slowdown conrms a shift to a
new normal of lower sales growth in the personal luxury goods market, which we highlighted in previous
analyses. The challenge for luxury brands in this environment is to successfully navigate market volatility
driven by currency swings and uctuating tourist ows.
Boosted by a strong US dollar, the Americas emerged as the biggest global region for personal luxury goods purchases. However, in real terms, the US market did not deliver. The super-dollar was too expensive for
many global tourists and, although local consumption grew, it was barely sufcient to offset the decline in
tourism revenue.
Europe posted sound growth, primarily fueled by Chinese and US tourists attracted by a weak euro. The old continent has become the worlds largest in-season outlet. Our analysis of European tax-free shopping data,
conducted in partnership with Global Blue, showed that Chinese tax-free purchases in Europe increased by
64% while tax-free purchases by American tourists in Europe grew by 67%, primarily in the high end
of the luxury spectrum. Meanwhile, Russian and Japanese travelers cut their tax-free spending in Europe
by 37% and 16%, respectively.
Page 1
Japan has proven to be a consistent champion in both real and nominal terms, as a sound base of local consumers
and the emergence of Chinese tourists looking to capitalize on currency uctuations are driving sales.
South Korea shined, with 11 billion in retail sales value, growing at 4% in constant exchange rates despite
the negative impact of the Middle East Respiratory Syndrome in the second half of the year.
Hong Kong and Macau faded, primarily due to government reforms against graft and the gray market
(respectively 7 billion and 1 billion in retail sales value, both declining at 25% in constant exchange rates).
Chinese consumers play a primary role in the growth of luxury spending worldwide. They account for the largest
portion of global purchases (31%), followed by Americans (24%) and Europeans (18%). Chinese shoppers continue to spend far more abroad than in Mainland China, which accounts for only 20% of their global purchases.
However, the depreciation of the euro boosted the country to the global luxury podium; it is now the third-biggest
market in the world, after the US and Japan. The most popular travel destinations for Chinese luxury shoppers
shifttypically to Europe, South Korea or Japanin response to currency uctuations, which create temporary
favorable price gaps.
Chinese consumers play a primary role in the growth of luxury spending worldwide. They account for the largest portion of global purchases (31%), followed
by Americans (24%) and Europeans (18%).
Wholesale still dominates, but company-owned retail and e-commerce are growing faster
Wholesale is still the dominant selling channel within the personal luxury goods market, capturing
66% of the total market. However, retail continues to gain share, driven by network expansion (600
new directly operated stores opened globally in 2015, a decline from the 750 opened in 2014) and
growth in same-store sales (13% at current exchange rates). The wholesale channels slower performance stems from three factors: the ongoing retailization of luxury (converting franchised locations
into company-owned stores or joint ventures); the lackluster performance of US department stores
across product categories (particularly in leather goods); and the decreasing sales of Asian watch
retailers, which are coping with excessive stock and a reduction in the overall store network.
E-commerce grew to a 7% market share in 2015, nearly doubling its penetration since 2012. Specialized e-commerce players are outperforming the market globally, with Chinese e-tailers progressively
extending their geographic reach and gaining share on a global basis. The e-commerce sites of European and American retailers (such as department stores) continue to grow, a response to customers
demands for an omnichannel experience. Luxury brands are losing share online overall, with highly
Page 2
variable performance: The largest brands with established direct online and omnichannel platforms
are outperforming but the majority of brands still lag, especially European brands.
Luxury globe-trotters have also fueled the performance of airport retail, which posted a 29% growth rate in
current exchange rates (18% in constant exchange rates) and now accounts for 6% of the global luxury market.
With the growing middle class in markets such as China seeking good quality and good value, and consumers in mature markets looking for bargains, the off-price channel has more than doubled to nearly
26 billion. Markdowns are also increasing in prevalence across more than 35% of the luxury market.
Accessories remain the leading category
Among specic categories of personal luxury goods, accessories remained the leader, capturing 30% of the
market and growing by 3% in 2015 (at constant exchange rates). That was faster than the next two largest
categories, apparel (which grew 2% at constant exchange rates) and hard luxury (which contracted by 3%).
Within accessories, high-end shoes (4%) continued to grow faster than leather goods overall (2%). Jewelry was the star category within hard luxury, growing at 6% in constant exchange rates, while watches
were strongly hit by the channel overstocking in Asia and contracted by 6% in constant exchange rates.
Page 3
1.
Luxury spending
trends in 2015
Figure 1: The global luxury market exceeded 1 trillion in 2015, posting overall growth of 5%, driven by
cars, hospitality and ne arts
Worldwide luxury market, 2015E ( billions)
40
45
64
32
21
1,044
176
405
253
Personal
luxury goods
Growth,
201415E
13%
12%
Growth,
201415E
(at constant
exchange rates)
Luxury
cars
15%
Luxury
hospitality
17%
Fine wines
and spirits
10%
Fine
food
13%
Fine
art
19%
Designer
furniture
9%
Private
jets
14%
Yachts
Luxury
cruises
Total 2015E
2%
16%
14%
8%
7%
3%
4%
6%
4%
1%
1%
4%
5%
Figure 2: Currency uctuations inated the personal luxury goods market to more than 250 billion, while
real growth slowed down
Global personal luxury goods market, 19942015E ( billions)
Socioeconomic turbulence
SARS
Subprime and
financial crisis
September 11 Spike in
$/
exchange
rate
Chinese stock
market turmoil
253
Year-over-year growth at current exchange rates
212
218
224
3%
3%
7%
3%
192
128
73
77
85
92
96
133
133
128
136
147
108
159
170
167
173
153
13%
12%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E
Source: Bain & Company
Page 6
26
3%
13%
3%
12%
224
1
218
2013
Constant
growth
Currency
effect
2014
Constant
growth
Currency
effect
2015E
Figure 4: The general trend was a depreciation of the euro vis--vis most other global currencies
Evolution of key currencies against the euro
2014 vs. 2013
US
19%
0%
UK
5%
Switzerland
Russia
11%
1%
14%
17%
23%
Brazil
8%
Japan
8%
12%
4%
Mainland China
Hong Kong
1%
0%
South Korea
Singapore
18%
19%
4%
12%
1%
10%
0%
19%
Saudi Arabia
0%
19%
Page 7
2.
Regional
highlights
Figure 5: The Americas became the biggest global region in 2015, primarily because of the super dollar
Personal luxury goods market by region, 20072015E ( billions)
CAGR
CAGR
CAGR
(0709) (0915E) (1415E)
Rest of world
253
218
212
224
0%
11%
17%
Japan
9%
3%
13%
Asia
9%
14%
11%
Europe
5%
6%
9%
Americas
10%
11%
18%
192
170
173
167
153
2007
2008
2009
2010
2011
2012
2013
2014
2015E
Figure 6: The US remained the largest global market but did not deliver real growth; China joined the global
luxury podium
Personal luxury goods, top countries, 2015E ( billions)
78.6
72.1
China
France
Italy
20.1
17.9
17.3
17.1
15.6
11.9
Japan
Global rank
in 2014
Growth in euros
20142015E
US
Japan
China
Italy
20%
13%
17%
6%
10%
16%
9%
1%
6%
10%
5%
0%
Growth in local
currency, 20142015E
France
4
Page 10
UK
6
10.8
8.1
6.8
3.2
South
Korea
Middle
East
Hong
Kong
Russia
10
11
14%
16%
19%
11%
25%
14%
4%
0%
25%
2%
Germany
7
Figure 7: Local spending in mainland China continued to contract in real terms; mainland China accounts for
20% of global Chinese shoppers purchases
Personal luxury goods market in
mainland China, 20072015E ( billions)
18
Rest of world
Japan
+17%
Americas
15
15
13
0%
Europe
2%
10
CAGR 0713:
+23%
7
6
1%
Asia
Mainland China
2007
2008
2009
2010
2011
2012
2013
2014 2015E
Figure 8: New York City, Paris and London each account for more than 10 billion of luxury sales; luxury goods
purchases in New York City outweigh those across all of Japan
Personal luxury goods, top cities, 2015E ( billions)
27
20
13
13
New
Paris
Tokyo
Hong
Las
York
Kong
Vegas
City Japan
Beijing
London
Seoul
Source: Bain & Company
Honolulu
Los
Angeles
Milan
Shanghai
Page 11
Osaka
Taipei
Rome
Munich
Miami
Singapore
Moscow
Dubai
Figure 9: Since 2009, the US market alone contributed 1.7 times as much absolute value growth as Asia;
Europe contributed 80% of the growth of Asia
Personal luxury goods: growth contribution in absolute value, by region and top contributing market, 20092015E ( billions)
37.4
x1.7
21.6
Japan
US
~80%
18.3
Italy
Hong Kong
Germany
South Korea
France
China
UK
Americas
Russia
1.3
Europe
Asia
Figure 10: Chinese consumers now represent about one-third of the global market, up from only 1% in 2000;
Japanese consumers, who accounted for a quarter of the market in 2000, now make up 10% of global purchases
Global personal luxury goods market by consumer nationality, 20002015E ( billions)
Rest of world
Asian
Chinese
Japanese
American
European
2000
2010
2013
Page 12
2014
2015E
Figure 11: Europe is largely supported by tourists; consumers from mature markets buy primarily domestically
Personal luxury goods spending by consumer nationality
and location of purchases, 2015E ( billions)
83
Regional
tourists
85
20
18
100%
~45
Rest of
world
Rest of
~60
Europe
Americas
80
~25
Europe
Americas
Japan
Americas
80
Extraregional
tourists
~80 world
Asia
China
60
60
Americas
Europe
40
Asia
40
Japan
20
Local
consumers
20
Europe
Europe
Americas
Japan
Mainland
China
Page 13
European
consumers
American
consumers
Japanese
consumers
Chinese
consumers
3.
Distribution trends
Figure 12: Wholesale still dominates among distribution channels, but company-owned retail
grows faster
Personal luxury goods market, by channel, 20072015E ( billions)
253
224
218
212
CAGR
(0715E)
192
170
173
167
66
153
3%
Retail
11%
68
69
71
Wholesale
72
79
73
78
75
21
23
25
27
28
2007
2008
2009
2010
2011
29
31
32
2012
2013
2014
34
2015E
6%
253
253
7%
10%
23%
Wholesale
66%
Multibrand
47%
25%
Market
share
29%
Monobrand
53%
Retail 34%
Monobrand
stores
Department
stores
Specialty
stores
Off-price
stores
Page 16
Online
Airport
Global
luxury
Global
luxury
Figure 14: The online luxury market has grown tenfold since 2005, rising to 7% market share
Online personal luxury goods market, 20032015E ( billions)
7%
16.8
5%
4%
12.0
9.8
3%
5.8
2%
4.5
2003
2004
37%
Year-over-year
growth
3.5
2.2
2.6
2.9
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015E
31%
29%
18%
12%
21%
29%
29%
33%
27%
22%
40%
1.7
1.0
7.7
22%
Figure 15: The online channel is particularly strong in the Americas and is skewed to the accessories
and fashion categories
Online personal luxury goods market, 2015E ( billions)
16.8
16.8
Other 5%
Rest of world 19%
Beauty 17%
Europe 25%
Apparel 27%
Americas 56%
Accessories 40%
By geography
By category
Page 17
Figure 16: Luxury globe-trotters have fueled the performance of airport retail
Airport personal luxury goods market, 20122015E ( billions)
Other 2%
Market share 6%
14.1
14.1
Rest of world 9%
Americas 16%
14.1
Hard luxury 10%
Apparel and
accessories 13%
CAGR
+18%
Market share 4%
8.7
Europe 31%
Beauty 75%
Asia and Japan
44%
2012
Growth since 2014
Growth since 2014 (at constant exchange rates)
2015E
29%
By geography
By category
18%
Figure 17: The off-price channel has more than doubled over the past three years
Off-price personal luxury goods market, 20122015E ( billions)
Market share 10%
25.9
Other 1%
25.9
25.9
Rest of
world 20%
Hard luxury 9%
Beauty 5%
Europe 21%
Market share 5%
12.6
Apparel and
accessories 85%
CAGR
+27%
2012
Americas 59%
2015E
35%
23%
By geography (%)
Page 18
By category (%)
Figure 18: The share of markdown is quickly increasing across formats and reaches over one-third of the
total market
Global personal luxury goods market, share of markdown by format, 2015E ( billions)
253
Apparel
Beauty
Accessories
Hard luxury
Markdown
~35%
Monobrand
stores
Department
stores
Specialty
stores
Off-price
stores
Page 19
Online
Airport
Global
luxury
4.
Individual category
performance
Figure 19: Accessories have been the biggest personal luxury goods category since 2011; they remain
the fastest growing
Personal luxury goods market, by category, 20072015E ( billions)
CAGR
CAGR
(0709) (0915E)
253
218
212
Other
10%
4%
Beauty
3%
5%
224
192
170
173
167
153
Hard luxury
7%
11%
Apparel
8%
7%
Accessories 1%
2008
2007
2009
2010
2011
2012
2013
2014
12%
2015E
Figure 20: Ready-to-wear posted soft positive growth, with different dynamics across menswear and
womenswear
Men's ready-to-wear
Luxury men's ready-to-wear market, 20132015E ( billions)
26
Casual wear posting low single-digit growth, while formal wear continues
to suffer
- Mixed performance within both segments, with Absolute brands
experiencing a very sound trend, offset by negative Aspirational and
lackluster Accessible brands
29
26
13%
1%
2013
2%
2014
2015E
Women's ready-to-wear
Luxury women's ready-to-wear market, 20132015E ( billions)
30
26
26
14%
3%
2013
2014
Year-over-year growth at
current exchange rates
2%
2015E
Year-over-year growth at
constant exchange rates
Page 22
Figure 21: Within accessories, shoe sales continue to outpace leather goods
Leather goods
Luxury leather goods market, 20132015E ( billions)
43
38
36
14%
5%
2013
2%
2015E
2014
14
13
16
16%
6%
2013
4%
2015E
2014
Year-over-year growth at
constant exchange rates
Year-over-year growth at
current exchange rates
Source: Bain & Company
Figure 22: Within hard luxury, jewelry continues growing, while watches remain affected by a negative
trend in Asia
Watches
Luxury watches market, 20132015E ( billions)
36
36
+7%
+0%
2013
6%
2014
Exposure to Swiss watchmakers impacted the overall category, with the Swiss
franc appreciating over the euro and consequent price adjustments
2015E
Jewelry
14
13
+18%
+8%
2013
Year-over-year growth at
current exchange rates
+6%
2014
2015E
Year-over-year growth at
constant exchange rates
Page 23
Figure 23: Within the beauty category, fragrances are on a positive trajectory; skincares performance
is lackluster
Fragrances
Luxury fragrances market, 20132015E ( billions)
20
23
20
11%
2%
2%
Mature markets post mixed performances, with Chinese and Middle Eastern
demand continuing to rise
- The growth in mature markets is mainly driven by price increases despite
an increasing weight of promotions
The top end of the market, exclusive lines and essences, and artisanal niche
brands are outperforming
- Growing interest for customized products
- Brands refocus storytelling on scents, ingredients and nose
Travel sizes experience a sustained trend
2014
2013
2015E
Cosmetics
27
24
23
15%
2%
2013
Year-over-year growth at
current exchange rates
1%
2014
2015E
Makeup is the main growth engine in the category, offsetting the overall
performance of skin care
- Sound trend of makeup across subcategories
- Devices show strong dynamism within skin care, while other
subcategories suffer
Premium Korean brands are increasingly popular among Asian consumers
- Western players looking for potential acquisitions
Year-over-year growth at
constant exchange rates
Page 24
Page 25
5.
Outlook for
the future
Figure 24: Strategic international pricing is becoming the main issue to be tackled in the industry
Until recently ...
... now
Exogenous effects
exacerbating price
differentials globally
(currency fluctuations,
import
tariff cuts)
- To maximize touristic
flows and local
consumption (Japan)
Mature consumers are cut off from an industry they can't fully afford anymore and whose real value is strongly questioned,
while emerging consumers struggle in truly matching price and value of these products
Source: Bain & Company
Figure 25: The global personal luxury goods market: 10 key takeaways for 2015
A mature market strongly impacted by macroeconomic and sociopolitical events
Markets and consumers
Route to market
Value proposition
E-commerce is starting to
become disruptive, yet brands
are still struggling with it
Wholesale formats try to hold
ground while attempting
to modernize
Tactical channels such as
off-price and airport retail
become increasingly strategic
Page 28
Figure 26: Key strategic questions for luxury players going forward
How to reduce brand performance volatility at global and local levels?
Markets and consumers
Route to market
Value proposition
How to (re)build
aspiration, credibility
and trust for
luxury products?
How to broaden brand
territories and platforms
to bond with tomorrow's
consumers?
Route to market
Value proposition
Personalize customer
experiences in store
Page 29
Retail
Retail
Wholesale
Licenses
Top-down cross-check
Category-specific data in the main geographic markets
Comparison between market breakdown and turnover
breakdown of key players
Expert interviews (top management of brands, distributors,
department stores)
Player 1
Player 2
Player 3
Page 30
Americas
Asia-Pacic