LUXURY GOODS WORLDWIDE MARKET STUDY, SPRING 2018 CLAUDIA D ARPIZIO FEDERICA LEVATO

Transcription

1 LUXURY GOODS WORLDWIDE MARKET STUDY, SPRING 2018 CLAUDIA D ARPIZIO FEDERICA LEVATO

2 PERSONAL LUXURY GOODS: AFTER 2016 STAGNATION, THE MARKET EXPERIENCED A HEALTHIER NEW NORMAL IN 2017 SORTIE DU TEMPLE DEMOCRATIZATION CRISIS CHINESE 85B 96 92B 96B B B 133B 136B 133B 128B B B B 167B 07 ' B ' B ' B ' E CAGR SHOPPING FRENZY 251B 212B 12 +5% 218B 224B REBOOT 15 +4% 16 NEW NORMAL 250B 16 17E YoY 260B 17E Current exchange rate +6% Constant exchange rate 2

3 THE FINAL QUARTER OF 2017 OFFERED A PREVIEW OF KEY 2018 TRENDS RENEWED TRUST AMONG CHINESE CONSUMERS CONFIDENCE OF CHINESE CONSUMERS CONTINUES TO INCREASE, THANKS TO FURTHER REDUCTION OF PRICE DIFFERENTIALS; CUSTOMER BASE IS GROWING POSITIVE TRENDS FOR LOCALS AS WELL AS TOURISTS (PARTICULARLY WITHIN THE REGION) EUROPE SLIGHTLY DECELERATING STRENGTHENING EURO NEGATIVELY IMPACTING TOURIST FLOWS AND SPENDING MIXED PERFORMANCE ACROSS COUNTRIES: GERMANY SLOWING DOWN, UK STILL IMPACTED BY UNCERTAINTY AFTER BREXIT VOTE, CONTINUING POSITIVE REBOUND OF FRANCE AMERICAS REGAINING CONFIDENCE WEAKENING DOLLAR BOOSTING TOURIST FLOWS DURING HOLIDAY SEASON DEPARTMENT STORES STILL UNDERPERFORMING AND MAINLY GROWING THROUGH OFF-PRICE SALES 3

4 POSITIVE Q PERFORMANCE, STRONGLY IMPACTED BY CURRENCY FLUCTUATIONS 1 at current + Q % exchange rates 6/7% at constant exchange rates Europe ~/+ Americas + Japan ++ Asia +++ LOWER TOURIST SPENDING BUT POSITIVE LOCAL CONSUMPTION IN EUROPE US BENEFITING FROM A FAVORABLE DOLLAR; LOCAL CUSTOMERS REGAINING CONFIDENCE BOOST FROM TOURIST SPENDING IN JAPAN (CHINESE AND S. KOREAN CUSTOMERS) COUPLED WITH STRONG LOCAL GROWTH Rest of World + CHINA TOP PERFORMER, HONG KONG AND MACAU REGAINING TRACTION IN THE REGION SHOES AND JEWELRY STILL ON THE RISE, FOLLOWED BY LEATHER GOODS POSITIVE BEAUTY PERFORMANCE, BOOSTED BY MAKEUP (SKIN CARE) VS. FRAGRANCES APPAREL MILDLY POSITIVE, SUPPORTED BY ONGOING CASUALIZATION FLAT PERFORMANCE OF WATCHES, RECOVERY STILL UNDERWAY Note: Trends by regions and categories refer to growth at constant exchange rate ~/+ ~ Accessories & Jewelry Beauty Apparel Watches 4

5 2018 FULL-YEAR OUTLOOK BY REGION (1/2) AMERICAS US BACK TO GROWTH: LOCAL CORE CUSTOMERS REAPPROACHING LUXURY, WHILE EU AND ASIAN TOURISTS BOOST TOP CITIES GROWTH DRIVEN BY RETAIL AND ONLINE, WHILE DEPARTMENT STORES STILL SOFT AND DRIVEN BY OFF-PRICE SALES CANADA GROWING, BUT MIXED PERFORMANCE IN LATIN AMERICA REDUCTION IN TOURIST PURCHASES, ONLY PARTIALLY OFFSET BY HIGHER AVERAGE SPENDING EUROPE POSITIVE TREND FOR LOCAL CONSUMERS, WITH MIXED PERFORMANCE ACROSS COUNTRIES: BRISK GROWTH IN RUSSIA, POSITIVE PERFORMANCE IN FRANCE AND SWITZERLAND, BUT SOFT UK REGISTERING LOW TRAFFIC MAINLAND CHINA STILL ACCOUNTS FOR THE LION S SHARE OF GROWTH: REVISED LOCAL PRICING AND CUSTOMER EXPERIENCE STRATEGIES NURTURING LOCAL CONSUMPTION YOUNGER GENERATIONS AND ONLINE BOOSTING SALES, WITH SOCIAL MEDIA PLAYING AN IMPORTANT ROLE IN SHOPPING DECISIONS 5

6 2018 FULL-YEAR OUTLOOK BY REGION (2/2) REST OF ASIA HONG KONG AND MACAU REGAINING SHARE, BENEFITING FROM CHINESE CONSUMERS INCREASED TRAVELING CONTINUING POSITIVE GROWTH OF S. KOREA, REINFORCING ITS CENTRAL ROLE IN INFLUENCING CHINESE SHOPPERS IN THE SPOTLIGHT: EVOLUTION OF INTERNATIONAL POLITICAL SITUATION IN THE REGION, CRUCIAL IMPACT ON 2018 GROWTH TREND STRONG SPENDING BY TOURISTS, WITH TOKYO AND OSAKA BOOMING, DESPITE PARTIAL REDIRECTION OF SPENDING ON LUXURY EXPERIENCES LOCAL CUSTOMERS ARE INCREASINGLY THOUGHFUL WITH REGARDS TO LUXURY PURCHASES JAPAN LOCAL INFLUENCERS AND WORD OF MOUTH KEY DRIVERS FOR TASTES AND PURCHASES OF YOUNGER JAPANESE GENERATIONS REST OF WORLD MIXED PERFORMANCE ACROSS COUNTRIES IN MIDDLE EAST: DUBAI STABLE, SUSTAINED BY INTERNATIONAL TOURISTS; QATAR GROWTH FUELED BY LOCAL CONSUMPTION DUE TO TRAVEL BAN AUSTRALIA MAINTAINING A POSITIVE TRAJECTORY, FUELED BY STORE NETWORK EXPANSION 6

7 GLOBAL PERSONAL LUXURY GOODS GROWTH EXPECTED TO ACCELERATE IN 2018, WITH POSITIVE SENTIMENT ACROSS REGIONS AMERICAS +3/ + 5% EUROPE +2/ + 4% Rest of the World ± 0/ + 2% Mainland CHINA +20/ + 22% JAPAN Rest of Asia (excluding M. China) + 9/ + 11% + 6/ + 8% 2018F GLOBAL PERSONAL LUXURY GOODS MARKET Note: Figures refer to growth ranges at constant exchange rate +6/ 8% At constant + exchange rates 7

8 4 KEY TRENDS SHAPING MARKET GROWTH IN 2018 CHINESE CONSUMERS CASUAL & STREETWEAR CRITICAL NATIONALITY DRIVING LUXURY MARKET ACCELERATION YOUNG, PRICE-VALUE EQUATION- DISCERNING AND FASHION-EDUCATED GAINING SHARE, BLURRED BOUNDARIES WITH PHYSICAL CHANNELS EXPECTED BOOST FROM SOCIAL MEDIA SHOPPING, PARTICULARLY BY YOUNGER GENERATIONS DEDICATED STRATEGIES AND INVESTMENTS KEY LEVER TO ATTRACT NEW CUSTOMERS AND EXPAND SHARE OF WARDROBE TO INCLUDE WEAR-TO- WORK OCCASIONS VOLUME GROWTH DRIVING THE MARKET (VS. PRICE INCREASES) EXCHANGE RATE FLUCTUATIONS REDIRECTING SPENDING AMONG REGIONS BUT NOT IMPACTING GLOBAL GROWTH ONLINE, ONLINE, ONLINE! CONSOLIDATING NEW NORMAL 8

9 NEW NORMAL ERA CHARACTERIZED BY DISTINCTIVE PILLARS THE NEW NORMAL NEW PARADIGM FOR BRAND GROWTH REQUIRES INNOVATIVE (AND EXPENSIVE) STRATEGIES TO SERVE NEW CUSTOMERS VIA AN UPGRADED VALUE PROPOSITION AND DEDICATED ROUTE-TO-CUSTOMER CUSTOMER ROUTE-TO-CUSTOMER MILLENNIAL STATE OF MIND: NEW SET OF VALUES DISRUPTING THE LUXURY PARADIGM; YOUNGER CONSUMERS WILL DICTATE THE RULES OF THE MARKET GOING FORWARD POST-ASPIRATIONAL ERA OF LUXURY: OPINION (SELF- EXPRESSION THROUGH STYLE) VS. EXCLUSIVITY, AND EPISODIC NARRATION (OF A BRAND S CREATIVE STANDPOINT) VS. SEASONAL STATEMENTS ECOSYSTEMIC, CONVERSATIONAL AND EXPERIENTIAL ROUTE- TO-CUSTOMER, WITH DIGITAL SOON TO BE #1 IN TERMS OF BOTH CONTENT AND COMMERCE VALUE PROPOSITION 9

10 TRENDS OF 2017 ARE HERE TO STAY AND WILL DRIVE THE MARKET GOING FORWARD PERSONAL LUXURY GOODS MARKET ( 16 25F B) B THE KEYWORDS OF THE NEW NORMAL ERA 250B 260B +4% YoY +6% YoY* B +6/8% YoY* +4/5% YoY* CUSTOMER VALUE PROPOSITION ROUTE-TO- CUSTOMER LOCAL & TOURIST ASIA-DRIVEN MILLENNIAL-MINDED POST-ASPIRATIONAL CURATED EPISODIC ECOSYSTEMIC DIGITAL EXPERIENTIAL 16 17E 18F 25F *: at constant exchange rates 10

11 A LOOK AHEAD: 3 IDEAS TO KEEP ON YOUR RADAR FABER EST SUAE QUISQUE FORTUNAE FROM 1 INDUSTRY TO INDUSTRIES OF 1 NEXTGEN IS NOW MARKET RESPONDING POSITIVELY TO PROACTIVE AND DEDICATED STRATEGIES: GROWTH INCREASINGLY DRIVEN BY PLAYERS FROM A SINGLE AND REPLICABLE WINNING FORMULA, TO MULTIPLE SUCCESSFUL STRATEGIES UNIQUELY SHAPED BY BRANDS BE PROACTIVE, DISTINCTIVE AND MILLENNIAL-MINDED AND BEYOND! EARLY EYE ON GEN Z KEY TO WIN: TOP PERFORMERS ARE ALREADY ENGAGING WITH THEM 11

12 PEOPLE, PASSION, RESULTS!

13 CLAUDIA D ARPIZIO, PARTNER BAIN & COMPANY LUXURY GOODS VERTICAL Claudia has spent 24 years advising multinational luxury and fashion clients on everything from strategy and new product development to innovation and organizational change. She is also the lead author of the Bain Luxury Study, one of the most cited sources of market information in the luxury industry. In 2009, Claudia was recognized as one of the Top 25 Consultants in the World by Consulting Magazine. FEDERICA LEVATO, PARTNER BAIN & COMPANY LUXURY GOODS VERTICAL Over the last 14 years, Federica has led more than 200 assignments in the fashion and luxury industry on issues relating to corporate and brand strategy, portfolio management, merchandising, retail and wholesale excellence, digital acceleration, millennial strategies, marketing and communication, and more. Alongside Claudia D Arpizio, Federica is the coauthor of the Bain Luxury Study, one of the most cited sources of market information in the luxury industry. 13

14 BAIN CONTACTS FOR ANY QUESTIONS OR FURTHER DISCUSSION, PLEASE CONTACT: FOR A COPY OF THE STUDY, PLEASE CONTACT: CLAUDIA D ARPIZIO - PARTNER (MILAN) - CLAUDIA.DARPIZIO@BAIN.IT FEDERICA LEVATO - PARTNER (MILAN) - FEDERICA.LEVATO@BAIN.IT INTERNATIONAL PRESS - ALIZA MEDINA (ALIZA.MEDINA@BAIN.COM OR ) - DAN PINKNEY (DAN.PINKNEY@BAIN.COM OR ) ITALIAN PRESS - GIULIA ZANICHELLI (GIULIA.ZANICHELLI@BAIN.IT OR ) 14

15 METHODOLOGY OF THE STUDY 1 Revenues at retail equivalent value Revenues at retail value represent total sales valued at retail price. Each player s consolidated sales are retailized through the following methodology: Retail + Wholesale + Licenses Retail Wholesale at retail value Licenses at retail value PLAYER CONSOLIDATED SALES PLAYER SALES AT RETAIL VALUE + + Application of estimated markups by geography and category Application of estimated royalty rates and markups by geography and product category 2 Bottom-up and top-down estimates BOTTOM-UP TOP-DOWN Industry-specific (e.g., watches vs. beauty) data in the main geographical markets Comparison between market breakdown and turnover breakdown for key players Tens of industry expert interviews (top management of brands, distributors, department stores) Consistency check on the data and fine-tuning We add brands individual retail values and cross-check results 15

16 PEOPLE, PASSION, RESULTS!