Professional Documents
Culture Documents
WORLDWIDE LUXURY
MARKET MONITOR
THE FUTURE OF LUXURY:
A LOOK INTO TOMORROW
TO UNDERSTAND TODAY
GLOBAL
PERSONAL
LUXURY GOODS
MARKET
RESTATEMENT CHI Burberry discussion June 2018v3
Note: (1) Personal luxury goods market includes Apparel, Accessories, Hard luxury and Beauty
2
GLOBAL LUXURY MARKETS: ~1.2T€, WITH 5% REAL-TERM GROWTH IN 2018
Global luxury goods markets | €B
@K: Growth at constant exchange rates
+1%
+5%
@K
2018
GROWTH
’17-’18E
@K 6% 5% 5% 4% 6% 6%
CHI 4%
Burberry discussion June 2018v3 -3% 7%
3
PERSONAL LUXURY GOODS MARKET OVERPERFORMING OTHER LUXURY
SEGMENTS IN 2018
'17-18EYoY
'96-'18ECAGR
+2% Current
CHI
+6%Burberry discussion June 2018v3
+6%
Exch. rate
Constant
Exch. rate
6
SOLID MID-TERM GROWTH TO 2025, DRIVEN BY POSITIVE FUNDAMENTALS,
WITH SOME POSSIBLE BUMPS ALONG THE ROAD
+3 / 5 %
18E–25
CAGR
2
+ %
BUMPY ROAD
YoY
• Possible bumps along the road (e.g.
6
+ %
socio political issues, government
@k
commercial policies, possible short-term
soft recessions,…) could make the path
less smooth
CULTURES AND
A YOUTHFUL MARKET ONE MARKET
(SUB)CULTURES
…DISRUPTING GROWTH …SERVING MARKETS OF
…TAKING OVER
PATHS ONE
CONSUMPTION TRENDS
8
MORE CHINESE-DRIVEN PURCHASES… HAPPENING IN CHINA
11
POSITIVE GROWTH ACROSS THE BOARD IN 2018. CHINA AND CHINESE
CONSUMERS LEADING THE GROWTH
-6% ±0% @k
+7% +9%
+18% +20%
+3% +6%
-1% +5%
+1% +3%
LOCAL SPENDING
2x • Price harmonization
• Currency effect
• New-to-market
VOLUMES customers (Mid-class
and Gen Z)
13
EUROPE LAGGING BEHIND DUE TO STRONG CURRENCY; SOLID AMERICA
(IN REAL TERMS); ASIA AND CHINA OUTPERFORMING
China Asia Japan Europe Americas RoW
• Lion’s share of the • Good performance • Soft local • Mildly positive local • Boost of local • Negative Middle
growth of HK and Macau, purchases, consumption, with purchases, driven by East due to low local
• Consumers valuing benefitting from increasingly pushing mixed country positive US consumer
trendy products and Chinese purchases brands to find new performance economic cycle; yet confidence,
tailored initiatives • Dynamic S. Korea, solutions to bring brands are mindful hit by government
• Online booming, with strong local them back to stores • Strong currency of a possible short- spending restriction
impacting tourist term soft recession
supported by consumption • Brands starting to
increased • Brisk growth in other rethink distribution spending • Strong dollar
investments Asian countries model in light of impacting Asian and
(Singapore, Thailand increased touristic Latam tourists
& Taiwan) consumption • Canada and Mexico
strong; Brazil
impacted by political
@K: +20%
uncertainties
+9%
€80B €12B
+6% +5%
€23B €39B €22B €84B +3% ±0%
'18E VS '17 Note: RoW = Rest of the World @K: Growth at constant exchange rates
CHI Burberry discussion June 2018v3
14
AMERICAS AND ASIA ENJOYING ROBUST LOCAL DEMAND, WHILE EUROPE
AND JAPAN CONTINUING ON A SOFT TREND
LOCALS
TOURISTS
MAIN • Strong Euro • US strong economy • Lower price • Continued interest • Local consumption • Oil price drop in
affecting tourists’ driving up differentials and from Chinese on the rise Middle East
DRIVERS purchasing power disposable income stricter controls tourists sustained by strong affecting locals’
and spending from on borders fueling economic growth of disposable income
• Tourists leveraging
locals local consumption emerging markets
cheap flights to • Turbulent political
(Vietnam,
• US West Coast still reach main situation impacting
Philippines)
17-18E “hot destination” shopping cities tourist flow (both
GROWTH for tourists, yet offset (e.g. Kyoto and • Chinese tourists extra and intra
by drop of tourists Osaka) continuously regional)
+ 4% LOCAL
SPEND elsewhere
CHI
providing an extra-
Burberry discussion Juneboost
2018v3
+ 0%
TOURIST
SPEND Growth trend (increasing, decreasing, flat) 15
STRONG EURO IMPACTING TOURIST SHOPPING, EXCEPT FOR FRANCE;
AVERAGE TICKET INCREASE PARTIALLY OFFSETTING VOLUME REDUCTION
2017-2018E European personal luxury goods tax free shopping growth in local currencies
(in GBP)
AVERAGE TICKET
TRANSACTIONS
CHI Burberry discussion June 2018v3
NOTE: figures refer to Jan-Sep period
16
E-COMMERCE, ONLINE, DIGITAL… PERMEATING EVERY SINGLE PURCHASE
19
ASIA CHAMPION REGION, BOOMING HARD LUXURY AND KEY PARTNERSHIPS
AMONG PLAYERS ENABLING THE ONLINE CHANNEL
22
DIGITAL PENETRATION WILL LEAD TO FOOTPRINT CONSOLIDATION WITHIN
LUXURY INDUSTRY, AS ALREADY HAPPENED IN OTHER SEGMENTS
MAJOR
DISRUPTION
LIMITED
DISRUPTION
MINOR
DISRUPTION
NO
DISRUPTION
23
ROLE OF THE STORE TO INEVITABLY CHANGE: FROM POINT OF SALES TO
POINT OF TOUCH, A 360° CHANGE IN THE APPROACH TO CUSTOMERS
TODAY TOMORROW
Strategic
REGIONS CITIES
focus
SILOES
Span ECO-SYSTEM
LIMITED (OMNI)CHANNEL
24
IN 2018 SUSTAINED RETAIL PACE, DRIVEN BY ORGANIC GROWTH; WHOLESALE
SLOWED DOWN DUE TO WEAK DEPT. STORES & SPECIALTY
WHOLESALE RETAIL
• High-end department store under recovery, accessible segment • Like-for-like performance driving 2/3 of retail channel growth
struggling
• Perimeter expansion sustained also by network buybacks in
• Specialty stores slowing down suffering from tough online specific geographies
competition
38%
37%
2018
2017
62%
63%
2018
2017
25
A YOUTHFUL MARKET… DISRUPTING GROWTH PATHS
27
GEN Z ALREADY SHOWING ORIGINAL TRAITS vs. MILLENNIALS, WITH LOCAL
SPECIFICITIES EMERGING
FLUID INDIVIDUALISTS
BACK IN THE
GEN Z
UBIQUITOUS STORE
(BUT CONNECTED)
MILLENNIALS
UNIVERSAL LOGO-LOVERS
(BUT NO BRAND LOYAL)
CHINESE GEN Z
SOCIAL
LUXURY-ATTITUDE
28
YOUNGER GENERATIONS DELIVERED THE ENTIRE MARKET GROWTH IN
2018; GEN Y WITH A LEADING ROLE; GEN Z READY TO TAKE OFF
Personal luxury goods Personal luxury goods millions Contribution to total market growth of Gen Z and
consumers by generation | €B of consumers by generation Gen Y (%)
~100%
2018 ~85%
2017
29
CULTURES AND (SUB)CULTURES… TAKING OVER CONSUMPTION TRENDS
CULTURES/SUB-CULTURES AND
NEW CONSUMPTION PATTERNS WILL ARISE…
CATEGORIES WILL BLEND: BRANDS MUST BE
DYNAMIC AND RESPONSIVE TO ADAPT
CULTURES AND SUB-CULTURES ARE TAKING OVER THE CONSUMPTION
CULTURES WILL EAT (SUB)CULTURES AND
(PRODUCT) STRATEGY IDEAS WILL BECOME
FOR BREAKFAST FASHION MAINSTREAM
2025
CULTURALLY
INCLUSIVE MODELS
M-Millennials Minorities 31
…CURRENTLY GENERATING MATERIAL RESULTS
CULTURES WILL EAT (SUB)CULTURES AND
(PRODUCT) STRATEGY IDEAS WILL BECOME
FOR BREAKFAST MAINSTREAM
~40% ~20%
9% CAGR ’15-18E
CHANNELS
• Still mainly physical (small local stores)
• Online fastest growing, boosted by emerging specialized platforms
GEOGRAPHIES
• Europe key geography, followed by US
• Dynamism in Japan, while China (still) marginally present
GENERATIONS
• Strong traction from younger generations, particularly
“opinionated” millennials
33
SHOES AND JEWELRY CONFIRMED GROWTH DRIVERS IN 2018, FOLLOWED
BY ACCESSORIES AND BEAUTY; APPAREL SUFFERING
Shoes Jewelry Bags Beauty Watches Apparel
• Still on the rise, on • Confirmed among top • Confirmed brisk • Cosmetics driving • Flat performance of • Womenswear
the tailwind of the performing growth, sustained by growth, with make-up watches, with mixed positive growth offset
ongoing category, sustained entry and trendy maintaining a positive regional trends by negative
casualization trend by Asians and items growth, and skincare (lackluster Europe, menswear
growing younger booming more dynamic Asia) performance
customers (particularly from US
• Beauty at the forefront • Women watches
gaining share, & European giants)
of high-tech innovation
mainly on jewel-
• Indie brands (skin care
watches
and make-up) on the
'18E VS '17 rise thanks to new
business models
• Flattish performance of
fragrances
€60B
€19B €18B €51B €56B €37B
34
ONE MARKET… SERVING MARKETS OF ONE
Fashion & sportswear cross over Cross-segment competition in 2017 personal goods market
PRODUCT SEGMENT
LIFESTYLE
Luxury €200B
FASHION
BRANDS
€158B Premium
STYLE
FASHION SPORT
€319B Mass
SPORT
WEAR €186B
BRANDS
SPORT SPECIALISTS
2017 Global Burberry
CHI personal goods
discussion market: soft (apparel, shoes, leather goods,
June 2018v3
accessories) and hard (watches and jewelry)
36
THE GROWTH MODEL WILL EVOLVE LEADING TO THE RISE OF
MONOGRAPHIC BRANDS AND ANTHOLOGICAL BRANDS…
S
P
E X T E N S I ON
C
I
A
L LIFESTYLE
I
BRAND
S
A
T ANTHOLOGICAL
I SPECIALIST
O BRANDS BRANDS
N TODAY
MONOGRAPHIC
BRANDS
TOMORROW
CHI Burberry discussion June 2018v3
37
…DRIVEN BY A CONSOLIDATION OF THE POST-ASPIRATIONAL VALUE DRIVERS:
THE REDISCOVERY OF EXCELLENCE AND THE GROWING POWER OF IDEAS
38
ALREADY CLEAR SIGNS OF THIS TRAJECTORY AS COMPANIES ARE RATHER
DEFINED BY THEIR CORE COMPETENCES THAN THEIR CONTINGENT OFFER
FROM TO
39
AS SIGN OF THIS ERA, THE TWO CENTRAL FUNCTIONS OF THIS INDUSTRY
ARE CONVERGING, DESPITE IN CONSTANT TENSION
3 r
t
A DE S IGN
MER CHAN d
-
f
P
v i
r
a c
i
n i
n
A n a l y t i cs a
t
e Intell igence
i
d
n
CHI Burberry discussion June 2018v3
g 40
DIFFERENTLY PROFITABLE BRANDS… NIMBLE IS THE NEW BLACK
43
LUXURY IN 2025 WILL BE A DIFFERENT PLACE
44
LUXURY IN 2025: NEW TECHNOLOGIES PLAYING A CRUCIAL ROLE AS A
FUNDAMENTAL ENABLER OF LUXURY BRAND STRATEGIES
E-COMMERCE, ONLINE, FOOTPRINT
MORE CHINESE-DRIVEN PURCHASES…
DIGITAL… PERMEATING EVERY CONSOLIDATION… RESHAPING THE
HAPPENING IN CHINA
SINGLE PURCHASE STORE OF THE FUTURE
DIFFERENTLY PROFITABLE BRANDS PREDICTIVE ADVANCED ANALYTICS AND ROBOTIC PROCESS AUTOMATION TO OPTIMIZE COST
…NIMBLE IS THE NEW BLACK STRUCTURE, SUPPLY CHAIN AND INVENTORY, INCREASING PERFORMANCE AND EFFICIENCY
CHI Burberry discussion June 2018v3
45
AS WE LOOK AHEAD: 3 STRATEGY MANTRAS AND 1 FUNDAMENTAL ENABLER
TO BEAR IN MIND
Personal luxury goods market forecast | €B
• Win by developing dedicated and
BE PROACTIVE… proactive strategies for
customers
• Stand-out by designing a
…DISTINCTIVE… “unique” winning formula shaped +3 / 5 %
around consumer needs 18E–25F
CAGR
+ %2
YoY
• Focus effort and strategy on
… NEXT GEN
MINDED…
winning younger generations as + %6
key engine of future market growth @k
48
BAIN CONTACTS
For any questions or further discussion, please contact: For a copy of the study, please contact:
49
METHODOLOGY OF THE STUDY
Revenues at • Revenues at retail value represent total sales valued at retail price.
retail • Each player consolidated sales are retailized through the following methodology:
Bottom-up
Bottom-up Top-down
and top-down
estimates • 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 experts interviews (top management of brands, distributors,
department stores, …)
• Consistency check on the data and fine tuning
50
PEOPLE PASSION RESULTS!