Statista InDepthReport LuxuryGoods 2020

In-depth: Luxury Goods 2020
Statista Consumer Market Outlook

August 2020
Management summary (1/2)
The global luxury goods market is expected to increase from US$285.1 billion in 2020 to US$388
billion in 2025, at a CAGR of 6.4%. The Covid-19 pandemic is expected to result in cutbacks on
discretionary spending in 2020, amid falling GDPs and employment levels. Additionally, the potential
slowdown in international travel is expected to further disrupt the market, at least until an effective
vaccine is available at scale. Growth is expected to resume in 2021 supported by Mainland China’s
recovery, pent-up demand by millennials and Generation Z and the ongoing maturity of the digital
channel. Asia, including Australia and Oceania, is expected to witness the highest spending riding on
the back of Mainland China’s resurgence, followed by Europe, North America, South America, and
Africa.
Even though online sales of luxury goods are expected to cannibalize the brick-and-mortar share
over the next few years, the importance of the physical store continues to increase. Companies are
following different strategies to augment their retail experience in the days of eCommerce.
Interestingly, digital born luxury companies are now opening physical stores to increase traffic to
their eCommerce stores, enhance brand legitimacy, provide the touch-and-feel lacking in an online
store, and improve local community engagement. An overall Luxury 4.0 model is emerging which is
characterized not only by the growth of the online sales channel but by the digitalization of a
consumer’s entire luxury shopping journey.
The luxury industry has been associated with excessive consumerism and a general lack of respect
for the environment. However, with the growing influence of Millennials and Generation Z who
deeply consider the social impact of their luxury purchase, the industry is gradually moving towards
ethical and sustainable products and experiences. Casualization of apparel, the growing demand for
experiential luxury, rentals and the rising share of online sales and accessories are the other
important market trends.
Spending by millennials from Mainland China, both at home and overseas, is one of the main drivers
of the global luxury market. Mainland China currently has around 400 million millennials, five times
more than the U.S., and they are expected to make up around 65% of the region’s consumption
growth through 2020. International tourism is another driver with a 2017 Deloitte study showing
global tourists to account for almost 47% of luxury goods purchases. The recent rise of luxury
menswear has resulted in brands such as Prada, Gucci, and Dolce & Gabbana, which traditionally
have not been known for their menswear lines, to open stores focused only on men.
Brands are now adopting digital technologies to not only mimic the in-store shopping experience on
their eCommerce platforms but to also enhance the physical store experience. Artificial intelligence
(AI) is currently the most sought-after technology, as it enhances customer experience and helps
brands reach a wider audience. Immersive technologies such as virtual and augmented reality
(VR/AR) are also experiencing increasing use due to their ability to enhance the overall shopping
experience and create high quality content for digital marketing. 3D printing is used mainly in luxury
fashion as it enables the creation of shapes without molds, thus resulting in elements with extreme
intricacy.
2
Management summary (2/2)
The U.S., Mainland China, and Japan are projected to be the three biggest markets for luxury goods
in 2020 with a market size of US$65bn, US$38.1bn and US$27.4bn, respectively. The dominance of
these markets can be gauged from the fact that they are projected to account for almost 46% of the
global luxury goods sales in 2020. Even though the U.S. retains the leading position for luxury goods
globally, factors such as economic and political uncertainty, cutbacks on discretionary spending and
low sales to international tourists mainly due to the Covid-19 pandemic, are affecting market growth.
Clothing accessories and glasses/sunglasses are the most preferred luxury categories by
respondents from both the U.S. and the UK, whereas Germans preferred perfumes. Chanel is the
most preferred cosmetics brand, whereas Rolex leads the chart for luxury watches and Gucci is
preferred for luxury fashion and accessories. The majority of the luxury purchases are associated
with gifts for someone. However, while making the purchase decisions, quality remains as the prime
factor. Germans prefer online shopping channels for luxury goods, whereas Americans and Britons
prefer department stores or physical store.
France leads in the number of leading luxury goods companies globally. Specifically, most of the
prominent French luxury goods companies are located in Paris. We have a closer look at some of
those prominent French companies: LVMH, L'Oréal, Kering, and Hermès along with other global
leaders including Burberry, Swatch, Estée Lauder, and Coty. Most of the luxury goods companies
followed inorganic growth path by acquiring competitor companies to increase their business
presence. A few of them opted for licensing and distribution arrangements to support their bottom
line.
Questions? U.S.: support@statista.com EU: eu.support@statista.com
3
Table of contents (1/4)
Management summary 02
Table of contents 03
Global luxury goods market 08

▪ Overview 09
▪ Luxury fashion 12
▪ Prestige cosmetics & fragrances 14
▪ Luxury watches & jewelry 16
▪ Luxury leather goods 18
▪ Luxury eyewear 20
▪ Luxury goods as investments 22
Deep dive: luxury retail & online shopping 23

▪ Luxury retail shopping 24
▪ Omnichannel strategy 26
▪ Luxury online shopping 27
▪ Marketing investments 31
▪ Digital touchpoints 32
Trends 33
▪ Sustainable luxury 34
▪ Mass customization 36
▪ Casual clothing 37
▪ Experiential luxury 38
▪ Democratization of luxury 40
4
Trends (continued)
▪ Rentals and subscription models 41
▪ Online sales 42
▪ Importance of accessories 43
Drivers 44
▪ Chinese millennials 45
▪ HENRY population 46
▪ International tourism 47
▪ Luxury men’s wear 48
Technological impact 49
▪ Use of AI 50
▪ Use of AR 52
▪ 3D printing 53
▪ Tech start-ups 54
Country analysis 56
▪ U.S. 57
▪ Mainland China 60
▪ Japan 63
▪ France 66
▪ UK 69
▪ Hong Kong SAR 72
▪ Singapore 75
5
Consumer insights 79
▪ Overview 80
▪ Interest in luxury goods 82
▪ Luxury fashion & accessories 85

▪ Luxury cosmetics 87
▪ Luxury watches 88
▪ Luxury jewelry 89
▪ Purchase behavior 90
▪ Purchase decisions 91
▪ Sales channels 93
▪ About the study 95
Competitive landscape 96
▪ Company comparison 97
▪ LVMH 98
▪ L'Oréal 104
▪ Kering 110
▪ Estée Lauder 115
▪ Coty 120
▪ Swatch Group 124
▪ Hermès 128
▪ Burberry 132
6
Appendix 136
▪ Glossary 137
▪ Statista Global Consumer Survey , Statista Consumer Market Outlook 138
▪ Statista Content & Design , Statista Research & Analysis 139

▪ Authors 140
7
Global luxury goods market
The global luxury goods market is expected to increase from US$285.1 billion
in 2020 to US$388 billion in 2025, at a CAGR of 6.4%. The Covid-19 pandemic is
expected to result in cutbacks on discretionary spending in 2020, amid falling
GDPs and employment levels. Additionally, the potential slowdown in
international travel is expected to further disrupt the market, at least until an
effective vaccine is available at scale. Growth is expected to resume in 2021
supported by Mainland China’s recovery, pent-up demand by millennials and
Generation Z, and the ongoing maturity of the digital channel. Asia, including
Australia and Oceania, is expected to witness the highest spending riding on
the back of Mainland China’s resurgence, followed by Europe, North America,
South America, and Africa.
8
Luxury goods market to reach
US$388bn by 2025
Overview (1/3)
The global luxury market covers many segments but for the purpose of this report we have:
Included: Personal luxury goods such as watches and jewelry, apparel and footwear, eyewear,
cosmetics, and fragrances.
Excluded: Wine and spirits, food, designer furniture, hospitality and travel, luxury cars, artisanal, and
small-scale production.
According to Statista’s Consumer Market Outlook (CMO), even though cutbacks on discretionary
spending and an uncertain economic climate, triggered by the Covid-19 pandemic, are expected to
cut demand in 2020, the resurgence in Chinese spending, and the increasing dominance of
millennials and Generation Z will drive market growth in the period after. The global luxury goods
market is expected to increase from US$285.1 billion in 2020 to US$388 billion in 2025, at a CAGR1
of 6.4%.
Asia is expected to witness the highest spending, despite Mainland China and India being two of the
worst affected countries, by the Covid-19 pandemic, in the world, with total expected sales of
US$100.8 billion in 2020, followed by Europe (US$88.8 billion), North America (US$73.5 billion), South
America (US$8.8 billion), Africa (US$6.1 billion), and Australia and Oceania (US$5.5 billion). The U.S. is
expected to be the largest market, followed by Mainland China, Japan, France, and the UK.
The online channel is expected to continue to gain ground as boundaries blur with the traditional
physical channels, accounting for 11% and 14% of total sales in 2020 and 2023, respectively.
Luxury goods market in billion US$
6.4%1
377,2 388,0
366,3
348,5
313,5 322,0
287,1 285,1
260,4 269,2
244,1 250,8
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Statista Consumer Market Outlook 2020
1: CAGR: Compound Annual Growth Rate/ average growth rate per year
Luxury fashion to bring in the
highest revenues globally in 2020
Overview (2/3)
Statista’s CMO has segmented the global luxury goods market into five categories:
Luxury leather goods: includes handbags, suitcases and briefcases as well as small leather goods
such as wallets.
Luxury watches and jewelry: includes only sales of luxury brands; trend watches and fashion
jewelry are excluded.
Luxury fashion: includes only apparel and footwear made by luxury brands; mass-market products
are excluded.
Luxury eyewear: includes only luxury eyewear frames and sunglasses; lenses and contact lenses are
excluded.
Prestige cosmetics and fragrances: includes only prestige skin care, fragrances, and decorative
cosmetic; hair care, oral care, personal hygiene, and professional products produced for hair salons
or cosmetic parlors are not included.
According to the CMO, luxury fashion continues to dominate the market in terms of revenues,
followed by prestige cosmetics and fragrances, watches and jewelry, leather goods, and eyewear.
However, in terms of growth over the period 2020-2025, luxury leather goods with 7.3% leads the
other categories, followed by watches & jewelry (6.9%), fashion (6.6%), prestige cosmetics and
fragrances (5.9%), and eyewear (3.0%).
Luxury goods market segment shares in 2020

Eyewear
6,9%
Leather Goods
Fashion
15,8%
33,1%
17,7%
Watches & Jewelry
26,5%
Cosmetics & Fragrances
10
Luxury goods average revenue per
capita to register a slow growth
Overview (3/3)
Luxury goods market: average revenue per capita in US$
5.4%1
48,85 49,81
47,85
45,94
42,55 42,84
39,37 38,31
36,49 37,32
34,99 35,55
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Luxury goods average revenue per capita by top 5 countries in US$
Hong Kong SAR Singapore Luxembourg Switzerland Iceland
983
734 725
518
444 427
366 354
336 331
304 317 332
236
133
2015 2020 2025

11
Luxury fashion market to value
nearly US$130 billion by 2025
Luxury fashion (1/2)
The total luxury fashion market, which includes apparel and footwear, is expected to increase from
US$94.3 billion in 2020 to US$130.1 billion in 2025, at a CAGR1 of 6.6%. The U.S. is the largest market
in this category with cumulative sales of US$168.9 billion during 2020-2025, followed by Mainland
China (US$58.8 billion), Japan US$57.4 billion), Germany (US$39.4 billion), and Italy (US$39.1 billion).
However, the Uzbekistan luxury fashion market is expected to have the highest growth rate of 13.5%
over the period 2020-2025, followed by Mongolia (11.0%), Togo (10.8%), India, Sri Lanka, Bangladesh,
Turkmenistan and Timor-Leste (10.7% each), Cambodia (10.6%), and Georgia (10.5%). The U.S. and
Japan are expected to lose market share till 2025 with, Mainland China, France and Italy gaining
ground.
Even though the luxury fashion market is still driven by high-end brands such as Gucci, Versace,
Chanel, and Christian Dior, premium brands such as Diesel, Guess, Tommy Hilfiger, and Calvin Klein
are beginning to cannibalize their market share and are expected to be the new engines of market
growth. According to a study by consulting firm Ernst & Young, the casualization of luxury fashion,
and growing instances of millennials opting to mix and match high end products with premium
products, are the two main factors responsible for this.
Another important trend in this market segment is the rapid emergence of accessories and shoes as
the new driving forces, replacing ready-to-wear clothes, the previously dominant category. In fact a
study conducted by French bank BNP Paribas and the fashion consultancy company VR Fashion
Luxury Expertise found that ready-to-wear collections now make up only up to 10% of the business
for most fashion houses.
Luxury fashion goods market in billion US$
6.6%1
126,6 130,1
123,1
117,3
106,2 108,0
97,4 94,3
89,1 91,6
84,8 85,9
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
12
U.S., Japan and Mainland China lead
the luxury fashion market
Luxury fashion (2/2)
Luxury fashion market in top 5 countries in billion US$
U.S. Japan Mainland China Italy France
30.0
27.0
24.0
11.3
10.5
7.7 8.0 7.5 7.3 7.3

5.4 4.9 5.4 5.2
4.5
2015 2020 2025

Luxury fashion market share by top 5 countries
U.S. Japan Mainland China Italy France Others
42% 47% 49%
5%
6% 6% 6%
6% 6% 6%
9% 8% 9%
8% 8%
31%
25% 23%
2015 2020 2025

13
Prestige cosmetics & fragrances is
the second largest segment
Prestige cosmetics & fragrances (1/2)
The global prestige cosmetics & fragrances market is expected to be the second largest in terms of
cumulative spending during 2020-2025, growing from US$75.6 billion in 2020 to US$100.6 billion in
2025, at a CAGR1 of 5.9%. Top-line growth in prestige beauty has outperformed both mass-market,
beauty and other consumer categories for many years now.
The Japan market is estimated to be the largest market in the world in terms of cumulative spending
during 2020-2025 (US$91.9 billion), followed by U.S. (US$89.2 billion), Mainland China (US$60.8
billion), France (US$23.4 billion), and the UK (US$19.2 billion). India is expected to be the fastest
growing market over 2020-2025 with a CAGR1 of 9.1% followed by Mainland China (8.9%), Indonesia
(8.5%), Vietnam (8.4%), South Korea (8.3%), Pakistan and Thailand (8.2% each), Uzbekistan (7.8%), and
Turkmenistan (7.6%).
The prestige cosmetics and fragrances segment has traditionally been a fairly consolidated industry
with the top two brands Estée Lauder and L'Oréal making up more than 50% of the market.
However, digital channels have now lowered the barriers to entry which is driving the rapid
emergence of new brands. This has made the market more fragmented and is breaking down the
long-established model, where brands focused on maximum category presence, producing all
products in their category. They are now instead operating a pick-and-mix approach towards
products, brands, and categories.
Sustainability is one of the biggest challenges facing the market currently. Even though western
consumers have started rejecting beauty products that are tested on animals, Mainland China, which
is one of the major markets in this category, still follows this practice, thereby posing a challenge for
global brands.
Prestige cosmetics & fragrances market in billion US$
5.9%1
100.6
97.0
93.2
88.7
82.9
75.8 75.6
68.4
63.0
55.9 58.9
54.2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
14
Top 5 countries account for nearly
half of the global market
Prestige cosmetics & fragrances (2/2)
Prestige cosmetics & fragrances market in top 5 countries in billion US$
U.S. Japan Mainland China France UK

17.1
16.2
13.0 13.0
11.6 12.0
9.5
7.8
4.0 4.3
3.4 3.5
2.7 2.7
2.1
2015 2020 2025

Prestige cosmetics & fragrances market share by top 5 countries
U.S. Japan Mainland China France UK Others
46% 47% 47%
4% 4% 4%
5% 4% 4%
7% 10% 12%
17%
17% 17%
21% 17% 16%
2015 2020 2025

15
Market for luxury watches & jewelry
to value US$70.4 billion by 2025
Luxury watches & jewelry (1/2)
The global luxury watches and jewelry market which grew at a CAGR1 of 2.9% during the period
2014-2019 is expected to increase from US$50.4 billion in 2020 to US$70.4 billion in 2025, at a
CAGR1 of 6.9%. Mainland China is the dominant market in this category with a market size of US$14.7
billion in 2020, which is estimated to increase to US$22.2 billion by 2025 at a CAGR1 of 8.6%. One of
the main reasons for this robust growth is the sharp fall in revenues in 2020 due to the pressures
exerted by the Covid-19 pandemic and the subsequent strong recovery driven majorly by the
Chinese millennials. To put the increasing influence of millennials in perspective: They number
around 350 million in Mainland China which is around 20 million more than the entire population of
the U.S.
The U.S. is another important market for luxury watches and jewelry with the second highest
cumulative spend of US$64 billion over the period 2020-2025, after Mainland China (US$116.8
billion). The market is expected to value US$11.4 billion in 2025, increasing at a CAGR1 of 5.2% over
2020-2025.
Japan is expected to be the third largest market with a total spend of US$23.8 billion over 2020-
2025. However, its growth is expected to be slow mainly due to cutbacks on discretionary spending
by U.S. consumers in the face of an uncertain political and economic climate and changing consumer
preferences towards smart watches. In fact according to Apple’s CEO Tim Cook, the sales of Apple
Watches in the U.S. have surpassed the combined sales of the entire luxury Swiss watch industry.
Interestingly, Uzbekistan is expected to witness the highest growth in this segment with a CAGR1 of
12.1% over 2020-2025, followed by Mongolia (10.9%), India (10.4%), Georgia (10.3%), Turkmenistan
(10.2%), Thailand (9.9%), and Philippines (9.7%).
Luxury watches & jewelry market in billion US$
6.9%1
69.2 70.4
68.0
65.0
61.9
58.1 59.3
54.4 55.4 56.0
53.7
50.4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
16
Mainland China and U.S. lead the
luxury watches & jewelry market
Luxury watches & jewelry (2/2)
Luxury watches & jewelry market in top 5 countries in billion US$
Mainland China U.S. Japan France Italy

22.2
14.5 14.7
10.9 11.4
8.8
3.9 4.2
3.3 3.0 2.8
2.5 2.6 2.2 2.2
2015 2020 2025

Luxury watches & jewelry market share by top 5 countries
Mainland China U.S. Japan France Italy Others
37% 38% 38%
5% 4% 4%
5% 4% 4%
7% 7% 6%
17% 16%
20%
27% 29% 32%
2015 2020 2025

17
Luxury leather goods to witness
highest growth among all categories
Luxury leather goods (1/2)
The global market for luxury leather goods is expected to witness the highest growth among all
categories during 2020-2025 at 7.3%, growing from US$45.1 billion to US$64.1 billion. With a
cumulative spending of US$336.6 billion, it is expected to be the fourth largest category after fashion,
prestige cosmetics & fragrance, and watches & jewelry.
U.S. is the largest market for luxury leather goods in the world by far, with an expected cumulative
spend of US$75.9 billion over 2020-2025, followed by the Mainland China (US$55.7 billion), France
(US$25.9 billion), Japan (US$20.3 billion), and the UK (US$16..6 billion). Uzbekistan is the fastest
growing market over 2020-2025 with a CAGR1 of 12.8%, followed by Mongolia (10.5%), Togo and
Chad (10.3% each), Iceland, Turkmenistan and Georgia (10.2% each), Bangladesh (10.1%), and India,
Nigeria and Ivory Coast (10.0% each).
One of the main challenges facing the market is the lack of adequate quality leather. There are only a
few animals that can be used to produce the high-quality leather that is required by luxury brands to
produce items such as handbags, watch straps, wallets, shows, and apparel. Moreover, many brands
that historically did not produce any leather items are now doing so due to high growth prospects,
thereby adding to the shortage of supply.
In order to meet this growing demand, brands are either partnering with or acquiring leather
suppliers. For example, LVMH has partnered with Tannerie Masure in Belgium and acquired
crocodile skin supplier Heng Long (Singapore) and Les Tanneries Roux (France). Other acquisitions
include Tanneries d’Annonay (France) by Hermès, France Coco by Kering, and Bodin Joyeux by
Chanel.
Luxury leather goods market in billion US$
7.3%1
64.1
61.8
59.5
55.5
50.6
48.1
45.1
42.2
37.4
33.5 35.1
32.1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
18
Despite its increase in market size,
the share of the U.S. to decline
Luxury leather goods (2/2)
Luxury leather goods market in top 5 countries in billion US$
U.S. Mainland China France Japan UK

14.1
10.6 10.8
9.3
7.2
4.8 4.9
3.5 3.9
2.7 3.1
2.6 2.3
1.9 2.0
2015 2020 2025

Luxury leather goods market share by top 5 countries
U.S. Mainland China France Japan UK Others
39% 42% 43%
6% 5%
6% 5%
6% 6%
8% 8% 8%
14%
16% 17%
28% 23% 22%
2015 2020 2025

19
Luxury eyewear market is the
smallest among all categories
Luxury eyewear (1/2)
The luxury eyewear market is the smallest among all categories in terms of revenues with an
expected cumulative spend of US$130.9 billion over 2020-2025. The market is estimated to increase
from US$19.7 billion in 2020 to US$22.8 billion in 2025, at a CAGR1 of 3.0%, as compared to a growth
of 2.3% during 2014-2019.
The U.S. is by far the largest market for luxury eyewear, accounting for almost 43.3% of the total
estimated spend during 2020-2025, followed by Germany, France, Italy, and Mainland China.
Guatemala and Panama is expected to be the fastest growing market over 2020-2025 at 5.2% each,
followed by India and Romania (5.0% each), Dominican Republic, Nicaragua and Belize (4.9% each),
Russia, Sweden and Belarus (4.8% each), and Ireland (4.7%).
Unlike apparel, shoes and bags which are usually manufactured in house, luxury eyewear is licensed
by companies that specialize in manufacturing and marketing. The main companies in this segment
are Luxottica, Safilo and Kering Eyewear which have monopolized the market, representing brands
such as Fendi, Dolce & Gabbana, Cartier, and Gucci, among others.
In fact, Luxottica is so dominant that it accounts for 85% of all luxury eyewear sales in the U.S.
followed by Safilo with a paltry market share of 7.7%, according to Statista’s Consumer Market
Outlook. In addition to owning brands like Oakley, Ray-Ban, and Persol, Luxottica is also the parent
company of major distributors like Sunglass Hut, LensCrafters, Pearle Vision, and Sears Optical.
Luxury eyewear market in billion US$
3.0%1
22.5 22.7 22.8

21.9 21.6 22.0
21.0 21.2 21.0 21.1
19.3 19.7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
20
The U.S. accounts for around 43.5%
of the total market in 2020
Luxury eyewear (2/2)
Luxury eyewear market in top 5 countries in billion US$
U.S. Germany France Italy Mainland China

9.8
9.2
8.6
1.2
1.1 1.0
1.0 0.9
0.9 0.8 0.8 0.9 0.9 0.9 0.8
2015 2020 2025

Luxury eyewear market share by top 5 countries
U.S. Germany France Italy Mainland China Others
40% 39% 39%
4% 4% 4%
4% 4% 5%
4% 4% 5%
4% 5% 5%
44% 44% 43%
2015 2020 2025

21
The luxury assets are soaring in
value
Luxury goods as investments
Demand for luxurious items has been rising steadily in line with dramatic growth in the number of
super rich individuals worldwide. Even though millionaires and billionaires love splurging on mega
purchases like yachts, private jets, and property, they also splash the cash on a long list of other
"investments of passion". The 2020 Global Wealth Report from Knight Frank sheds light on some of
the luxury items that have gained the most value over the past ten years.
These days, rare bottles of whisky are a hot property, particularly older varieties of single malt Scotch.
2018 saw a record when a bottle of Scotch fetched US$0.9 million at auction in October and this was
then swiftly beaten in November when another bottle went for a mind-blowing US$1.5 million. The
Macallan whisky was distilled in 1926 and sold in a hand-painted bottle at Christie's wine and spirits
auction in London. Over the past year, the value of rare whiskey has shot up 40 percent and over the
past decade, it has soared 564 percent.
The super rich's relationship with luxury cars needs no introduction. Their value has climbed 194
percent over the past 10 years and 2018’s top sale was a Ferrari 250 GTO. That fetched US$48.4
million at an auction. Coins and stamps are also still in demand today, and their value has increased
175 and 64 percent since 2010, respectively. The most expensive stamp sold in 2018 collected
US$1.6 million while a Polish gold 100 ducat coin was sold by the Classical Numismatic Group for
US$2.2 million. Art (141%), wine (120%), and handbags (108%) have also gained value steadily.
Change in value of selected luxury assets during 2010-2019
564%
194%
175%
141%
120% 108%
90%
64% 60%
0%
Rare Cars Coins Art Wine Handbags Jewellery Stamps Watches Furniture
Whisky
Source: Knight Frank
22
Sources: Knight Frank

Deep dive: luxury retail & online
shopping
Even though luxury online sales are gaining market share worldwide, the
importance of the physical store continues to increase. Companies follow
different strategies to augment their retail experience in the days of
eCommerce. Interestingly, digital born luxury companies are now opening
physical stores to increase traffic to their eCommerce stores, enhance brand
legitimacy, provide the touch-and-feel lacking in an online store, and improve
local community engagement.
An overall Luxury 4.0 model is emerging, which is characterized not only by
the growth of the online sales channel but by the digitalization of a
consumer’s entire luxury shopping journey.
23
Store closures are a result of
changing industry dynamics
Luxury retail shopping (1/2)
According to a report by investment research and management company Bernstein, which tracked
7,000 stores for 36 luxury brands across the world, the number of net store openings for the one
year starting July 2016, was in the negative. But even though there is an existing trend of luxury
eCommerce sales cannibalizing the brick-and-mortar share worldwide, it does not quite spell the end
of physical luxury retail. In fact, according to a Google-Ipsos survey, 87% of affluent consumers in
Japan and western Europe preferred in-store purchases of luxury goods because they want to see or
touch the product (65%) or are afraid of buying counterfeit goods (22%).
Store closures are either the result of some brands increasing their eCommerce presence in
favorable markets such as Mainland China, or simply changing their brick-and-mortar strategies to
cater to evolving preferences of the modern luxury customers.
There are yet others who are readjusting their channel strategies on account of being overstored in
the past and are thus switching from many small stores to fewer larger stores in prime areas. This
enables them to showcase their full product range, thereby allowing consumers to have a fully
immersive shopping experience. A few examples are mentioned below.
Burberry: Despite posting an increase in sales and earnings, Burberry announced the closure of its
physical stores in many markets in 2017. This was part of the company’s strategy to remove focus
from markets it considered ‘luxurious’ such as the U.S. and Europe and instead focus on the ultra-
high-end markets dominated by luxury consumers mainly in Asia-Pacific.
Louis Vuitton: In 2015, the company shut several stores in Mainland China amidst a slowdown in the
country’s luxury market which was followed by the closure of two more stores in Shanghai and
Shanxi in 2016. However, this was not as much a strategy for Louis Vuitton to shift its focus from
Mainland China, as it was to focus on online retailing owing to the growing dominance of the tech-
savvy Chinese millennial consumer.
Hermès: The brand restructured its retail network all over the world in 2017, closing 2 boutiques in
France in Avignon and Rouen. Hermès also closed its store in Charlotte, North Carolina as well as its
concession outlet dedicated to watches and jewelry at Harrods in London. However these closures
have been followed by new openings in growth markets such as Istanbul, Sao Paulo, and Changsha
(Mainland China). According to its CEO Axel Dumas, even though the brand is closing small airport
concessions, it is focusing on department stores, as that’s where its growth lies.
Prada: In 2016 Prada announced that it would offset new shop openings with selective closures in
2016 and 2017, to shield profit margins from weaker demand in a few countries.
Overall, brands are increasingly reinventing the purposes of their brick-and-mortar stores by
studying the success of their monoband platforms and marketplaces. Therefore, there exist new
opportunities to bridge the gap between physical and digital luxury shopping mainly by adopting an
omnichannel strategy which offers a seamless click-and-mortar experience for consumers.
24
Source: Burberry, Harvard Business Review, RWTH Aachen University

Comparison of luxury stores in
different countries
Luxury retail shopping (2/2)
Region U.S. UK Mainland China
LVMH
Burberry
L'Oréal
Kering -
Swatch
Estée Lauder
Hermès
25
Source: Company website

Digital luxury eCommerce brands
are opening physical stores
Omnichannel strategy
Even as the global luxury goods market gradually moves towards online retailing with digital revenues
quickly outpacing brick-and-mortar, digital-born luxury companies such as Warby Parker, Bonobos,
and Glossier are now opening physical stores of their own. Interestingly, these stores are not only
temporary pop-ups but also permanent showrooms. Even though this move may seem to be
counterintuitive at first, there are many complementary benefits to be derived from it.
Touch-and-feel: Even though online shopping offers convenience for luxury shoppers, it doesn’t
satiate their need to touch and feel a high-end product before buying. The stores provide a platform
for consumers to have a more immersive brand experience than what is possible online, thereby
enabling the eCommerce companies to have control over the entire customer journey.
Increased eCommerce traffic: While online shopping remains highly transactional, it is the brick-
and-mortar stores that are leveraging the interpersonal interaction to drive conversion rates and
enhance average purchase values. According to an L2 Intelligence study, physical stores result in an
increase in brand mentions and searches online, thereby driving greater organic traffic for their
eCommerce site.
Beyond mere consumption, we’ll go to these spaces for entertainment,

education, connection and community. This is not to suggest that there will
be no products for sale in these physical spaces, only that the emphasis will
not be sales but rather on catalyzing a relationship with the consumer that
transcends the store.
Doug Stephens, Founder & President at Retail Prophet
Brand legitimacy: Legitimacy and consumer trust are probably the most important reasons for
digital born luxury companies to open physical store fronts. This is especially true in today’s time
when anybody can start a professional looking eCommerce website at a negligible cost, regardless of
where they are present in the world. Having a physical presence is therefore increasingly being
considered a clear metric of brand legitimacy. According to a survey of U.S. adults conducted by the
Pew Research Center, even though around 80% of them were online shoppers, 64% cited their
preference to shop in a physical store as opposed to an online one, with all things being equal. Over
33% also said that they don’t like to wait for items to ship, and 90% said they are more likely to make
a purchase if they receive assistance from a shop assistant.
Local community engagement: A storefront is also one of the best ways to engage with the local
community and build brand awareness, whether through personal events, social media channels,
CRM content or partnerships with other brands. It also helps in building out an influencer program
and getting more media coverage by hosting press briefings.
26
Source: Forbes, Luxe Digital, Pew Research Center

The luxury 4.0 model is digitalizing
the entire shopping journey
Luxury online shopping (1/4)
Even though luxury brands have historically been reluctant to sell their products online, factors such
as the growth of tech-savvy millennials as the focal luxury consumer, success of digital marketplaces
such as Net-A-Porter and Farfetch and an overall shift to an omnichannel business environment, are
driving the global online luxury goods market. In fact, Farfetch raised US$885 million, stamping a
valuation of US$6.2 billion on the first day at the stock market on September 20, 2018.
According to Statista’s Consumer Market Outlook, the share of online sales of luxury products is
expected to increase from 11% in 2020 to 14% in 2023.
According to a McKinsey study, an overall Luxury 4.0 model is emerging which is characterized not
only by the growth of the online sales channel but by the digitalization of a consumer’s entire luxury
shopping journey. Therefore, brands and retailers are now increasingly using digital technologies to
not only capture emerging customer preferences and enhance the customer relationship but also to
create new products.
Luxury goods market sales channel shares
Offline Onine
10% 11% 12% 13% 14%
90% 89% 88% 87% 86%
2019 2020 2021 2022 2023

27
Source: CNBC, McKinsey

Around 80% of total luxury sales are
now digitally influenced
In addition to the increased penetration of the online channel for consumer purchases, digital is also
having a huge influence on how luxury shoppers choose brands and products. The shopping journey
of a typical luxury consumer today is usually a mix of the online and offline channel. In fact, a 2018
study by McKinsey estimates that nearly 80% of all luxury sales today are influenced by one or more
digital touchpoints, meaning shoppers either researched online and bought at the store, shopped in
the store but bought online, or purchased online outright. Perhaps the most interesting finding of
the study was the gradual disappearance of the purely offline luxury shopper, who now represents
only 22% of the total market.
Brands such as LVMH, Burberry, Chanel, Gucci, and Fendi have responded to this change by not only
launching their online portals but also increasing their social media presence with high quality
content. In fact after Hugo Boss’s online sales fell by 6% in 2016, its CEO Mark Langer admitted that it
was primarily because the brand had ignored social media for too long.
In order to keep pace with this digital growth, luxury brands have begun forming strategic
partnerships with technology companies to complement in-house competencies and enhance
customer experiences. For example, Burberry tied up with Google to create The Burberry Booth,
where shoppers are filmed dancing to the T-Rex song Cosmic Dancer, as in the company’s TV ad.
Upon completion, the clip is sent to the consumer for sharing on social media or email. In another
initiative Burberry also teamed up with DreamWorks Animation to create an interactive marketing
campaign using 3-D technology on Piccadilly Circus corner screens. In this, pedestrians can use the
interactive system to design their own scarves and up to five people at a time can interact and
manipulate the movement of the on-screen scarf on the big screen.
Journey of a typical luxury goods shopper
Pure offline shopper Pure online shopper Online influenced

(22%1) (8%1) shopper (70%1)
Reference Reference
Social Social
from from
media Media
friends & friends &
reference Reference
family family
Previous Trusted Trusted

experience Shopper bloggers Shopper bloggers Shopper
Visits
Visits Visits
company
different company
website /
shops website
Offline Store Online Store stores Offline Store
Source: McKinsey
28
1: Estimates as of 2016
Source: Cartonomy, McKinsey
Luxury brands partner with
marketplaces to achieve rapid scale
As luxury fashion houses increase their online presence, they are beginning to realize that they yet
don’t have the digital expertise to replicate the white-glove experience online that luxury consumers
have become accustomed to in their physical stores. This is why brands such as Louis Vuitton, Gucci,
and Chanel have started partnering with specialized multi-brand portals such as Farfetch, Yoox Net-
A-Porter, and MatchesFashion.
According to Denise Dahlhoff, research director at Wharton’s Baker Retailing Center, these online
marketplaces not only have a global reach thereby allowing brands to scale their online operations
quickly, but also a thorough understanding of how to replicate the physical luxury shopping
experience online. Luxury brands are also more comfortable with these platforms as opposed to
either Amazon or eBay, as they are careful to maintain an upscale image and not sell counterfeit
products. The three main players in this field are:
Farfetch: provides an online marketplace for 500 independent luxury boutiques and 200 brands
including Burberry, Chanel, Louis Vuitton, Dior, Paul Smith, and Alexander McQueen, among others. It
also allows consumers all over the world to shop in their own currencies. Farfetch handles the
customer service and arranges for express global delivery, including a same-day service in London,
New York, Paris, and other major cities. In the U.S. it also offers free shipping and returns. The
company generated US$2.1 billion in terms of Gross Merchandize Value (GMV) and US$1 billion as
revenue for the year ended 31st December 2019.
Yoox Net-a-Porter: provides an online platform for over 350 fashion designers including Bottega
Veneta, Burberry, Cartier, Dolce & Gabbana, Emilio Pucci, Fendi, Gucci, and Givenchy. However it
doesn’t yet have partnership agreements with some of the big brands such as Chanel and Louis
Vuitton. Among its unique offerings are a two-hour delivery window, fashion consultants who are
available all day and night and a new premier service called “You Try, We Wait” for its special
customers. Swiss-based Richemont – which owns high-end brands such as Cartier, Montblanc, and
Dunhill London acquired Yoox Net-a-Porter (YNAP) in May 2018. The company’s revenues totaled
US$15.7 billion in 2019, up 27% from 2018.
MatchesFashion: has partnered with over 450 luxury brands such as Gucci, Saint Laurent, Valentino,
Prada, Balenciaga, Acne Studios, and Balmain. The company delivers in products to over 170
countries around the world and offers special services such as its 24/7 stylist. The company reported
27% growth in revenue for the fiscal year 2018 to reach US$487 million1.
29
1: Converted from GBP to US$, exchange rate: GBP-US$ 1.30909 as of 31st Jan 2019 (Oanda)
Sources: BusinessofFashion.com, CNBC, Digital Commerce 360, Wharton
Beauty products have the highest
online sales penetration
The top three luxury categories for online sales are beauty products, apparel (ready-to-wear), and
accessories (handbags, small leather goods etc.), with watches, and jewelry following them only
because of their higher price points. According to an A.T. Kearney study on 800 American online
beauty shoppers, luxury beauty products have almost twice the internet penetration as compared to
mass-market cosmetics, suggesting that luxury consumers are more willing to embrace eCommerce.
This is surprising for a product that usually requires detailed testing and inspection to ensure that
the desired colors and shades are indeed being purchased.
One of the main reasons for this according to a McKinsey study, is the influence of digital marketing
and social media which has been more profound in the luxury beauty industry that any other FMCG
category. Beauty consumers overall, have higher digital engagement all through their purchase cycle
than any other industry. According to a survey by the WaR Agency, a London-based marketing firm,
70% of the respondents wanted to learn about beauty products through quality content rather than
simple advertising. Beauty is, in fact, one of the most searched topic on Google. YouTube is already
the world’s leading beauty platform, with over 1.5 million beauty videos (accounting for 4.6 billion
views) uploaded each month. In 2018, beauty-related content generated more than 169 billion views
on the video platform, compared to 104 billion in 2017. Yuya, Jeffree Star, Musas, Wengie, and Nikkie
Tutorials are the most popular beauty and style channels on YouTube as of March 2020.
This is why luxury beauty brands are investing heavily in digital media and influencer marketing and
are working to foster engaging user-generated online content. Since 2010, L’Oréal has hired 1,600
digital experts including a Chief Digital Officer, while Estée Lauder launched its new Double Wear
Foundation on Facebook and liberally uses augmented reality while interacting with its customers.
Online luxury sales penetration
Categories 2014 2016
Beauty 7.2% 9.2%
Ready-to-wear 7.2% 8.7%
Accessories 6.4% 8.2%
Watches and jewelry 4.1% 5.3%
Source: McKinsey
30
Source: McKinsey, Pixability

Cartier, Omega, and Bvlgari rely on
print as the main marketing channel
Marketing investments
Marketing investment by channel in 2016
Print Digital Events
Cartier 65% 25% 10%
Omega 65% 25% 10%
Bvlgari 65% 25% 10%
Prada 50% 40% 10%
Miu Miu 50% 30% 20%
Fendi 50% 20% 30%
Hermes 45% 40% 15%
Bottega
45% 40% 15%
Veneta
Louis
45% 30% 25%
Vuitton
Saint
45% 10% 45%
Laurent
Gucci 40% 30% 30%
Burberry 33% 33% 34%
31
Source: McKinsey
Mainland China has the highest
number of avg. digital touchpoints
Digital touchpoints
Overview on average offline & online touchpoints
Offline touch points Online touch points

Countries 2014 2016 2014 2016
Mainland China 7 7 6 8
South Korea 6 6 5 7
Italy 5 5 4 6
Brazil 5 5 3 5
Japan 4 5 3 5
France 4 4 3 5
U.S. 4 4 3 4
UK 4 4 2 4
Global 5 5 4 6
32
Source: McKinsey
Trends
The luxury industry has been associated with excessive consumerism and a
general lack of respect for the environment. However, with the growing
influence of Millennials and Generation Z who deeply consider the social
impact of their luxury purchase, the industry is gradually moving towards
ethical and sustainable products and experiences.
Casualization of apparel, the growing demand for experiential luxury, rentals,
and the rising share of online sales and accessories are the other important
market trends.
33
Brands moving towards sustainable
luxury to woo millennials
Sustainable luxury (1/2)
In July 2017, BSR, a global non-profit organization, hosted a conference consisting of a group of
luxury brands to discuss the current state of sustainability in the luxury market. The brands reported
that luxury customers were now starting to focus more on topics such as the origin of ingredients
and raw materials, animal welfare, and social and environmental impacts of products. Another study
by IFOP, a market research company and Nelly Rodi, a trend forecasting agency, of 1000 global
luxury consumers, showed that they no longer found traditional brands desirable, instead identifying
more with new age brands such as Apple and Amazon.
In the past, the luxury industry has been associated with excessive consumerism and a general lack
of respect for the environment. However, with the growing influence of Millennials1 and Generation Z
who deeply consider the social impact of their luxury purchase, the industry is gradually moving
towards ethical and sustainable products and experiences. People are now less keen on simply
possessing goods, instead wanting their luxury purchases to speak about their increasing education
levels and cultural awareness. In fact, according to a recent McKinsey US cohort survey, around 66%
of the total respondents and 75% of the millennial respondents agreed to considering sustainability
before making a luxury purchase.
Luxury brands have responded to this changing mindset by adopting stronger environmental and
social practices. One such example is jewelry company Tiffany which came under fire for purchasing
conflict diamonds from Africa. In order to change public perception, the company now not only has a
zero-tolerance policy for such diamonds but also actively supports the elimination of coral from its
jewelry while working to protect special places such as Bristol Bay in Alaska. Cosmetic company
Guerlain has pledged to reduce consumption of its iconic raw materials such as orchids, vetiver,
sandalwood, and lavender.
Our customers are very conscious of the importance of sustainability, and

unlike many people, they can afford to choose products that, while perhaps
initially more expensive, will last for years. Increasingly, all consumers are
aware of the impact on the environment of the production of fashion and are
concerned. The younger the customer, the more this is a consideration for
them.
Stella McCartney, Fashion Designer
1: A Nielsen study showed that 73% of Millennial respondents would spend more on a product 34
if it comes from a sustainable or socially conscious brand
Source: BSR, The Luxonomist, The Upsider, Vogue
Luxury brands focus towards
changing public perception
Sustainable luxury (2/2)
Stella McCartney, a staunch vegan and animal advocate, has been using leather substitutes for her
clothes and accessories for quite some time now. In October 2017, Gucci announced that it was
going to stop using fur to make its clothes, while Burberry and Diane von Furstenberg now put both
real and faux fur in their collections. LVHM has announced its own commitments including an animal
based Raw Materials Sourcing Charter, under which it will source 70% of its leather from Leather
Working Group (LWG) certified tanneries. Even Tom Ford, who’s been unapologetic in the past about
his use of fur and other glamorous materials, is now taking great pains to find rare mills and
craftsmen whose techniques have little negative impact on the ecosystem.
What is most interesting though, is that these luxury brands are not adopting sustainable methods of
production while impacting their bottom line. In fact, the change in public perception, combined with
innovative high value products such as mushroom skin bags or organic cork shoes, is expected to be
one of the primary drivers of industry growth in the medium to long term.
35
Source: BSR, The Luxonomist, The Upsider, Vogue

Brands use technology to provide
personalized products
Mass customization
Historically, customization in luxury products meant not only long delivery times due to constant
interaction between the consumer and the artisan but also higher prices, putting the product
beyond the reach of many. However, the advent of digital technologies, the rise of eCommerce and
the overall increase in the number of people consuming luxury products, is changing all that.
Luxury companies are now not only using technologies such as data analytics to measure exactly
what each individual wants but are also developing capabilities through automated production
methods to provide it. This is especially important in today’s times when fast fashion and eCommerce
are gradually eroding the consumer’s relationship with the luxury brand, thereby creating a detached
shopping experience.
One of the first attempts at mass customization by a luxury brand was in 1998 when BMW launched
its Customer Oriented Sales and Production (COSP) online ordering system. This allowed
personalized cars to be delivered only after 12 days of the order being placed and has been
responsible for much of the company’s success over the last decade. In 2011, British luxury company
Burberry made its first attempt at mass-customization by launching Burberry Bespoke, a program
that allowed customers to personalize their trench coats.
Consumers – and not just Gen-X and Millennials, although they are
certainly helping to drive it – want 360 degree, fun, unique brand
experiences. Their focus is not just on buying something, but on being part
of something, while still being treated as an individual.
Anant Sharma, CEO, Matter of Form
Since then, Louis Vuitton has launched the Haute Maroquinerie service in 2013 which allows clients
to work closely with in-house experts to customize the style, color, leather and finish of their bags.
Other brands such as Brioni, Tod’s, Alexander McQueen, Gucci, Fred, Bottega Veneta, and Salvatore
Ferragamo have also launched mass-customization programs for men’s shoes, watches, jewelry,
shirts, and suits, at relatively low prices.
Interestingly, mass-customization is not only restricted to products but is also making its way into a
consumer’s overall shopping experience. Luxury brands are increasingly using data analytics and
artificial intelligence (AI) to ensure that when a customer walks into a store, he/she is immediately
recognized not just physically but also with respect to other aspects such as their size and product or
shopping preferences. A good example of this is Sephora, which uses an AI powered algorithm to
make customized recommendations to each customer. AI-powered chatbots to enhance customer
interaction are another burgeoning trend with companies such as Burberry, Tommy Hilfiger, and
Dior, having already incorporated it into their existing processes.
36

Casual clothing dominates the
collections of many luxury brands
Casual clothing
The Autumn-Winter 17-18 collection at the Paris Fashion Week was dominated by trainers, puffer
jackets, and jogging shorts. Two of the biggest fashion houses in the world, Balenciaga and Louis
Vuitton have hired Demna and Virgil as their head designers and their collections are heavily inspired
by casual clothing and street wear. These are just a couple of examples of casualization, one of the
most pronounced trends in the luxury goods market currently, especially in categories such as
apparel and shoes. In fact, according to a 2018 Boston Consulting Group (BCG) survey1, 73% of the
respondents preferred casual luxury wear instead of formal clothes.
One of the main drivers of this change is the recent growth of luxury menswear which, according to
Bain, has been growing nearly twice as fast as luxury womenswear over the last five years. Brands
such as Prada, Gucci, and Dolce & Gabbana, which traditionally have not been known for their
menswear lines, have opened stores focused only on men. Many modern high net-worth (HNW) men
of all ages such as the late Steve Jobs, Mark Zuckerberg, and most of the technology entrepreneurs,
are famous for their casual dressing sensibilities. This is contributing to the gradual domination of
street wear and athleisure in the emerging product categories of many luxury brands.
A changing demographic is another factor behind this shift. According to Bain forecasts, Millennials
and Generation Z who prefer casual clothing will account for 45% of the global personal luxury goods
market by 2025. Another study by research firm YouGov titled “Affluent Global Perspective Study”
found that 56% of millennials around the world were now spending more money on luxury items, as
compared to other consumer segments.
Amidst a crisis in formal wear, brands such as Moncler and Golden Goose
quickly carved out a place with luxury down jackets, jeans and sneakers.
Even established brands like Dior and Gucci have launched down-to-earth
streetwear-inspired lifestyle collections.
Olivier Abtan, Associate Director, Boston Consulting Group
Work clothing is another category which is witnessing increasing demand of relaxed casual wear with
established brands such as Luca Faloni, Brunello Cucinelli, and Moncler and newcomers such as Mr
& Mrs Italy, now offering a wide range of casual apparel.
The casualization trend has risen from the ground up over the last few years starting with the growth
of luxury sneakers. Once seen only in the gym or on teenagers, sneakers are now a dominant
product category in brands such as Bottega Veneta, Chanel, Dior, Louis Vuitton, Prada, and Valentino.
Moreover, digital born brands such as Net-a-Porter and Farfetch and luxury department stores such
as Harrods, have also increased their women’s sneaker offering by 101%, 97%, and 65%, respectively,
since 2016.
37
1: Over 12,000 respondents in 10 countries focusing on millennials and Chinese consumers
Source: BCG, L'Oréal, Retail Dive
Experiential luxury is increasingly
driven by millennials
Experiential luxury (1/2)
According to BCG estimates, spending on luxurious experiences such as hotels, food and travel,
comprises over 50% of the global luxury market, with the share expected to increase to about 70%
by 2022. The rise of experiential luxury is one of the most significant trends in the industry as it
represents a fundamental shift in consumer behavior from owning to being, with emotional fulfilment
taking precedence over just owning products. Affluent consumers are now increasingly seeking
personalized and unique experiences that are in sync with their ethical values
This trend is driven majorly by the growing dominance of millennials in the global luxury market. A
2017 study by Royal Bank of Canada estimates that millennials in North America and the UK will
inherit US$4 trillion in a generation. Another study conducted by Deloitte pegs this value at US$24
trillion over the next 15 years. We are currently witnessing one of the biggest wealth transfers in
history, which when combined with all the self-made millennials in Asia and other fast-growing
markets, sets the tone for further dominance in the years to come.
Interestingly, even though luxury brands have been creating special experiences for their customers
for many years now, they were often passed off as mere marketing gimmicks to support the main
business centered around luxury products. However their magnitude has increased to an extent that
they are now shaping the experience economy and increasingly being considered as whole and
independent businesses. A few key areas of luxury experiences are listed below:
In the modern world where three out of four millennials will spend their
money on experiences over branded goods, the luxury brands of today have
needed to revisit their strategies; repositioning their brands as ‘the
gateways to experiences’ in order to attain a deeper and more relevant
connection with their target audience.
Neil Stanhope, Founder at Underscore
Food
Even though Richemont owned Purdey and Alfred Dunhill have been operating dining rooms in
London for a while now, major luxury brands such as Armani, Prada, and Cartier are now venturing
into this space with the acquisition of existing restaurants. Prada acquired 80% of the 190-year-old
Marchesi pastry shop in Milan in 2014, while LVMH acquired the iconic Milanese cafe, Caffe Cova, just
a year earlier. Armani has 10 standalone restaurants around the world and Gucci has hired three-
starred Michelin chef Massimo Bottura to run its restaurant called the Gucci Osteria.
38
Source: Forbes, Luxury Society, Luxuo

To woo millennials, luxury brands
focus on the hospitality sector
Experiential luxury (2/2)
Wellness
Millennials are well known all over the world for their indulgences in different areas of wellness such
as spas, gyms, and health products and luxury brands are now tapping into this opportunity. Chanel,
Dior, Elemis, and Espa – all run spas at various locations in North America and Europe. Luxury
department stores such as Harrods and Saks Fifth Avenue have also opened ‘wellness clinics’ which
provide services such as DNA analysis for skincare and diet, LED facials, cryotherapy, and vitamin and
nutrient injections.
Hospitality
The pioneers of luxury hotels were Versace and Giorgio Armani who opened their properties in Gold
Coast, Australia – Palazzo (2000) and Dubai - Burj Khalifa (2010). Since then LVMH has launched its
hospitality spin off under the Bulgari brand and Roberto Cavalli has partnered with Saudi real-estate
developer Dar Al-Arkan to develop a hotel called Mirabilia in the gulf state.
39
Source: Forbes, Luxury Society, Luxuo

Modern consumers prefer
authentic luxury brands
Democratization of luxury
Bernard Arnault, the head of LVMH once remarked that the Louis Vuitton brand reflected the
elegance and nobility of France’s Ancien Régime and the Palace of Versailles. In doing so he was
trying to create an air of mystique, romance and opulence around the brand. His son Antoine on the
other hand believes in creating brand value through transparency in communication. These two
different ideologies are reflective of the changing values of today’s luxury consumer.
Modern culture is starting to value authenticity above all else, probably because it has become more
and more elusive. In fact, a study conducted by social content marketing platform Stackla found that
86% of consumers across multiple industries considered brand authenticity to be important when
deciding which brands to support. These findings were validated by another study by Cohn & Wolfe
in which 91% of the respondents said that they would reward a brand for its authenticity by either
making a purchase or investment or through endorsement.
The luxury industry is probably the most scrutinized by consumers for levels of authenticity primarily
because of the premium price its products command. In today’s business environment some of the
luxury brands have become too fixated with the bottom line and resort to aggressive marketing
strategies such as celebrity endorsement, which takes away from their authenticity. Furthermore, the
progressive democratization of luxury and the increasing imitation of a luxury-specific strategy by
mass product manufacturers is slowly blurring the boundaries between luxury and non-luxury.
We started authenticity. We trot it out all the time but if we have a

relationship with this generation it’s because we haven’t actively gone out
and targeted them. We don’t fake it, we don’t pay people. The design process
is so heartfelt at Stella McCartney. I don’t have to try too hard, I think
people believe when its honest and know when its not .
Stella McCartney, Fashion Designer
This can prove to be counter productive as today’s luxury consumers, most of whom are millennials,
consider themselves to be leaders and influencers who won’t use a luxury product simply because a
celebrity is endorsing it. In fact they are now inspired more by their peers and like to be associated
with real and authentic stories. A good example of this trend is L'Oréal’s acquisition of IT Cosmetics, a
brand made by Jamie Kern, a woman with real beauty issues such as Rosacea.
40
Source: Technologyreview.com, scmp.com, CB Insights

Rentals and subscription models
gain traction in the luxury business
Rentals and subscription models
Digitalization is disrupting the luxury industry much like Spotify and iTunes did the music industry.
The success of companies such as Rent the Runway and InstantLuxe is signaling a change in
consumption modes from owning luxury apparel and accessories to simply renting them out. For
example, consumers can now rent luxury handbags for as little as US$12 per day, with a higher end
product such as the US$5,000 classic Chanel black shoulder bag, on offer for just US$29 a day (plus
insurance). Among the disruptors, Rent the Runway is the most well funded with US$541.2 million
and is now valued at over US$1 billion.
According to InstantLuxe CEO Yann Le Floc’h, this trend first caught on in the vintage clothes industry
where people didn’t seem to mind wearing clothes previously worn by others. Now other companies
such as Dressing Avenue and Les Cachotières (renting among private consumers), Le Closet (clothes-
box renting), L'Habibliothèque (targeting the young), Sac de Luxe (for leather goods), and 1 Robe
pour 1 Soir (event-based clothing), have also joined the bandwagon.
One of the major drivers of this trend is the democratization of luxury products. Over the last
decade, increasing incomes and changing life values have encouraged middle-income consumers to
buy products that previously seemed unattainable. Having already bought a few luxury products,
these consumers are willing to give in to the yearning of trying out other products, which are now
more easily available through the renting or subscription models. Another driver is that apparel has
gradually become a fast-moving industry with many people changing their wardrobes more often
than before. These consumers are beginning to realize the cost-efficiencies derived from renting,
while at the same time keeping up appearances.
When we launched [the site], many people were suspicious of this solution.
Nowadays, it's regarded as a smart, contemporary one. We also observed
that some customers rent a product to test it, and eventually buy it. In 2008,
luxury products were chiefly bought with the idea of handing them down.
Now, the purchase is seen more as an investment. Renting shows exactly
how the concept of 'possession' is disappearing, in favour of 'usage
Yann Le Floc’h, Founder & CEO, InstantLuxe
Luxury brands who were earlier skeptical about letting third parties rent out their clothes for fear of
their image getting tarnished, are also beginning to open up to the idea as it helps them not only to
tap into new consumer segments but also offers outlets for showcasing some of their extravagant
items. In fact, Kering has gone as far as testing its own in-house rental service based on a
subscription model. However, going forward, renting is expected to be limited to fashion accessories
and apparel and not extend to high luxury, according to Julie El Ghouzzi, Director of the Centre du
Luxe et de la Création, a strategy consulting firm in Paris.
41
Source: Fashion Network, McKinsey

Online sales eat into the brick-and-
mortar share
Online sales
In the past most luxury companies were reluctant to sell their products online as they believed it
took away from their exclusivity and high status. There was a general belief In the industry that only
the low and middle range products were sold online with luxury consumers preferring the
personalized and tactile shopping experience of mono brand brick-and-mortar stores. That thinking
has changed over the last decade as is evident from the success of Net-A-Porter1 and Farfetch which
sell luxury items at undiscounted prices. In fact according to Statista’s estimates, the share of online
luxury sales increased from 8% in 2017 to 11% in 2020 and is likely to reach 14% in 2023.
According to a 2017 study conducted by IE Premium and Prestige Business Observatory2 in
association with Mastercard and Condé Nast3, almost 30% of luxury consumers used the online
channel in 2016, up from 24% in 2012. Digital is also making a significant impact in the decision-
making process of the consumers with nearly 80% of luxury sales today being ‘digitally influenced’,
according to a McKinsey study. What is particularly interesting in this is that the digitalization of luxury
is not only a result of the tech-savvy millennials but almost all luxury shoppers.
Digitalization is mostly affecting three aspects of the industry’s value chain.
Manufacturing: technologies such as big data, IoT and additive manufacturing have enabled
manufacturers across industries to not only respond quickly to changes in consumer demand, but
also to reduce cost and create new business models. PVH Corporation and Xcel Brands, which own
labels like Isaac Mizrahi, are already using 3D software to decrease their production windows. Gucci
also launched its ArtLab in the beginning of 2018, which makes use of in-house prototyping and
sampling of leather goods.
Retail: According to a McKinsey study, the contribution of online sales to the global luxury market will
increase by over 300% by 2025. This is why many luxury goods companies are increasing their
eCommerce exposure. In June 2017, LVMH launched its own multibrand eCommerce portal, 24
Sèvres that features not only its own portfolio of brands but also curates fashion, accessories and
beauty products outside of the group. Even the notoriously digitally-averse companies Celine and
Chanel launched their eCommerce sites in December 2017 and July 2018, respectively.
Customer experience: Even though it seems paradoxical to use machines to personalize customer
experience, technologies such as big data and machine learning are gradually bringing authenticity
back into the brands relationship with the consumer. A great example of this is Chanel which
partnered with Farfetch, an online luxury fashion retail platform, to digitally augment its brick-and-
mortar stores and enhance the boutique experience.
1: Net-A-Porter has since been acquired by Richemont, a Swiss luxury company 2: an initiative 42
launched by IE Business School located in Madrid, Spain 3: an American mass media company
Source: Luxe Digital, McKinsey, Vogue
Accessories assume more
importance among luxury brands
Importance of accessories
Historically, fashion houses such as Chanel, Prada, and Gucci, single handedly controlled how most of
the wealthy people across the world dressed. It was not uncommon to see women dressed from
head to toe in either of these brands. Moreover, fashion shows held by luxury fashion companies
have for long been famous for their outlandish opulence. For example, for Chanel’s 2017 catwalk
show in Paris, designer Karl Lagerfeld created a huge replica of the Eiffel Tower inside Paris's Grand
Palais, where models wore clothes with very expensive jewelry. Meanwhile, Louis Vuitton showcased
its collection on a hundred-meter-long ramp suspended in the sky.
Yet, despite this past dominance and current opulence, the share of ready-to-wear clothing in a
company’s revenues has been falling quite dramatically. In fact, according to a study by Business of
Fashion and McKinsey, some of the top fashion houses have scaled down their collections so
significantly, that it now makes up only 10% of their overall business. Among the factors driving this
change include cutbacks on discretionary spending due to an uncertain economic environment, the
exorbitant price of luxury fashion, falling spending power in major luxury consuming countries such
as Russia and Mainland China and the growth of the luxury fashion renting industry.
A pair of designer shoes that once would have set you back between £250
and £300 now hit the £600 to £700 mark. Unless you belong to the richest
0.01 per cent of the world's elite, how on earth do you begin to justify
parting with that sort of cash?
Fiona Mcintosh, Fashion Editor at The Daily Mail
Instead, brands are now focusing more on selling accessories. Chanel with its tennis racquet
(US$1,754), a set of four tennis balls (US$445), a set of beach racquets and balls (US$3,755) and a
boomerang (US$1,484) and Versace with its own line of bath towels (US$546), ashtrays (US$424) and
a porcelain dog bowl (US$768), are examples of this trend catching on with the luxury companies
increasing their line of accessories.
Instead of spending thousands of dollars on designer clothes that are not even worn regularly,
consumers are willing to satiate their desire for luxury products by buying these relatively cheaper
accessories which carry an unmistakable brand. According to a study by the NPD Group, sales of
designer accessories grew by 10% in 2017 and now constitute as much as 12% of the market’s total
sales.
43
Source: Luxe Digital, McKinsey, Vogue

Drivers
Spending by millennials from Mainland China, both at home and overseas, is
one of the main drivers of the global luxury market. Mainland China currently
has around 400 million millennials, five times more than the U.S., and they are
expected to make up around 65% of Mainland China’s consumption growth
through 2020.
International tourism is another driver with a 2017 Deloitte study showing
global tourists to account for almost 47% of luxury goods purchases.
The recent rise of luxury menswear has resulted in brands such as Prada,
Gucci, and Dolce & Gabbana, which traditionally have not been known for
their menswear lines, to open stores focused only on men.
44
Millennials from Mainland China
drive the market
Chinese millennials
Mainland China’s rapid economic expansion over the last two decades has created many wealthy
consumers who are keen to flaunt their newfound status. Statista pegs Mainland China’s luxury
market at US$42.3 billion in 2019, the second largest in the world after the U.S. However, its not the
value of the market that is as important as the number of Chinese people buying luxury products.
As per a McKinsey study in 2016, 7.6 million Chinese households purchased luxury goods. To put this
number in perspective, this was more than the total number of households in Malaysia and the
Netherlands. Further, each of these 7.6 million households spend on average RMB71,000 on luxury
goods per year, which is double of what they do in either France or Italy. A more recent study by Bain
& Company in 2020, found that Chinese consumers currently make up about 35% of the market in
terms of both domestic and international purchases and accounted for 90% of global growth in
2019. This growing dominance of Chinese luxury spending, both at home and abroad is driven
majorly by the country’s millennials. Mainland China currently has around 400 million millennials
which is five times more than the U.S. BCG estimates this consumer segment to make up around
65% of Mainland China’s consumption growth through 2020.
In 2008, when China hosted the Olympics in Beijing, Chinese consumers

accounted for only 12% of global luxury spending. In the eight years that
followed, we estimate that more than 75% of the total growth in global
luxury spending, over $65 billion, could be attributed to purchases made by
Chinese consumers, either at home or abroad.
Lambert Bu et al., authors of the McKinsey study titled Chinese Luxury

Consumers: The 1 trillion renminbi opportunity
One of main differentiating characteristics of Chinese millennials according to Bain is that they start
buying luxury products at a much younger age and do so more frequently than those in any other
country. In fact, when Global Times, an English language Chinese daily, interviewed local millennial
shoppers, it found that some of them started as young as 12. The Bain study also found Chinese
millennials capable of buying an average of eight luxury products a year, which is three more than its
baby-boomers.
They are also showing an increased willingness to spend on luxury items even if they cannot afford it,
according to Veronica Wang, associate partner of OC&C Strategy Consultants. This is mainly because
they believe that the use of luxury items can reflect one’s financial and social status. Another reason
for their dominance is that Chinese millennials are part of the country’s one-child generation in which
families made financial sacrifices to ensure a better life for their children. Therefore, compared to
their western counterparts, millennials in Mainland China do not have as many financial burdens
which leaves them with more disposable income to spend on luxury products.
45
Source: Bain & Co., BCG, Jing Daily, Luxion Media, McKinsey
Growth in HENRY population
provides future opportunities
HENRYs (High-Earners-Not–Rich-Yet)
According to a report published by Deloitte titled Global Powers of Luxury Goods (2019 edition),
HENRYs (High-Earners-Not–Rich-Yet) are individuals who earn an amount between US$100,000 and
US$250,000, and their average age is 43 years. Equifax states that HENRYs own less than US$1
million of investable assets. 13% of US households are HENRYs as suggested by IXI Services (a
division of Equifax) with an average of US$214,000 in assets and an income of US$136,000.
There are age differences in the HENRY consumer segment which can be categorized based on
average annual spending per household into Millennial HENRYs with US$ 86,000, Gen X HENRYs with
US$ 67,000 and Baby Boomer HENRYs with US$60,000. These demographics mainly undertake
cashless transactions and use mobile devices as payment methods. Credit/debit cards with rewards
such as cash back, airline miles, etc. are preferred along with an enormous appetite for spending on
car loans and mortgages.
HENRYs have the assured potential to amass vast wealth and become increasingly relevant in the
future. Their purchasing decisions are greatly influenced by social media, and they prefer to shop
online. Luxury companies have started to secure longstanding relationships with this growing
consumer segment. In 2015, Gucci through its #GucciGram initiative of collaborating with Instagram
artists to rework the brand’s patterns as per the styles of the artists; and through the #24HourAce
initiative in 2016 where artists participated in Gucci’s video project and took over the company’s
Snapchat account for an hour, engaged with HENRYs through the digital platform.
In India, a rise in this customer segment is one of the reasons for a high growth rate of the luxury
segment in the country.
It’s more than a buzz. It’s a deeper trend. There’s strong demand across the
men’s fashion industry, in all its shapes and forms, and which comes in part
from a younger clientele. We see it very clearly in the sales
Sidney Toledano, Chairman and CEO at LVMH
46
Source: Deloitte Global Powers of Luxury Goods 2019: Bridging the gap between the old and the
new, Equifax, Digiday
International tourism drives global
luxury sales
International tourism
Despite the current slowdown in international tourism due to the Covid-19 pandemic, it remains one
of the major drivers of global luxury sales. The growing global travel and tourism market, especially in
Mainland China, is increasingly blurring the lines between domestic and international purchases.
According to a 2017 Deloitte study, global tourists account for almost 47% of luxury goods
purchases, with 31% doing so in foreign countries and 16% when they pass through an airport. This
figure rises to as much as 60% if only consumers from emerging markets such as Mainland China
and the UAE are considered.
Citing the reasons, 65% said that the ability to buy products not available in the home market was
the main benefit associated with luxury shopping abroad, while 43% mentioned greater affordability.
Data from BenchMarque, Deloitte’s luxury pricing analytics suite clearly shows that despite increased
internationalization, U.S. dollar–adjusted prices for equivalent items are on average over 50% higher
in Mainland China than in Italy or France. The highest price difference of around 55% is seen in the
watches and jewelry segment, while the lowest is for bags (40%).
Therefore it is no surprise that Mainland China is again at the forefront of this trend with its tourists
accounting for the highest share of luxury shopping while travelling internationally. In fact, Chinese
travelers are the main catalyst for growth for the Japanese and South Korean luxury goods market.
While budget-conscious middle-class Chinese consumers shop abroad to take advantage of price
differences and tax exemptions, the wealthy class enjoys the better customer service and wider
product range.
Tourism and luxury goods purchases
Total Mature markets Emerging markets Millennials
Travelling at airport Home country Abroad
16% 15% 20% 18%

31% 26%
33%
39%
53% 41% 48%

59%
Source: Deloitte luxury multicounty survey for Global Powers of Luxury Goods 2017
47
Source: Bain & Co., Deloitte

Luxury menswear grows twice as
fast as womenswear
Luxury men’s wear
Historically, luxury fashion for men has played second fiddle to womenswear which received most of
the attention from brands and media alike. However, the last few years have signaled a shift in the
way men dress and experiment with new styles. In fact a 2017 study by data analytics company
Edited estimates menswear to grow at a faster rate that womenswear till 2020, increasing at 14%.
Another study by Bain & Co. has pegged this market to be growing nearly twice as fast as luxury
womenswear over the last five years.
According to Tammy Smulders, global managing director of LuxHub, a division of Havas Media
Group, this change in consumer behavior can be attributed mainly to the role played by social media
in building visibility around men’s luxury fashion. With more and more men now becoming interested
in new fashion trends, social media influencers are now creating an ‘always on’ environment, thereby
driving men to focus more on their looks.
Alexa Tonner, co-founder of influencer network Collectively, brings out an important point when she
says that even though fashion magazines have been highlighting men’s fashion for quite some time
now, social media platforms such as Instagram provide men with a more user friendly option with
access to a lot more variety that was previously available in print publications.
It’s more than a buzz. It’s a deeper trend. There’s strong demand across the
men’s fashion industry, in all its shapes and forms, and which comes in part
from a younger clientele. We see it very clearly in the sales
Sidney Toledano, Chairman and CEO at LVMH
This increased activity has resulted in brands such as Prada, Gucci, and Dolce & Gabbana, which
traditionally have not been known for their menswear lines, to open stores focused only on men,
with Stella McCartney debuting her first men’s styles in November 2016. Louis Vuitton showcased its
men’s line designed by its new designer Virgil Abloh in June 2018 which consisted of casual anoraks,
holster-style accessories and trench coats. Even though LVMH hasn’t released any information, an
article in Reuters points out that menswear now accounts for about 7% of Louis Vuitton’s revenues.
Balenciaga also considers men's fashion to be among its top growth drivers according to the
company’s CEO Cedric Charbit.
48
Source: Bain & Co., Deloitte

Technological impact
Brands are now adopting digital technologies to not only mimic the in-store
shopping experience on their eCommerce platforms but to also enhance the
physical store experience. Artificial intelligence (AI) is currently the most
sought-after technology, as it enhances customer experience and helps
brands reach a wider audience.
Immersive technologies such as virtual and augmented reality (VR/AR) are
also experiencing increasing use due to their ability to enhance the overall
shopping experience and create high quality content for digital marketing.
3D printing is used mainly in luxury fashion as it enables the creation of
shapes without molds, thus resulting in elements with extreme intricacy.
49
Brands use AI for personalization
Use of AI (1/2)
The last few tears have witnessed increased online penetration in the global luxury market primarily
due to the growing dominance of millennials and Generation Z, who are expected to constitute 45%
of global luxury shoppers by 2025, according to a Bain & Co. study. Brands are therefore rushing to
adopt digital technologies to not only mimic the in-store shopping experience on their eCommerce
platforms but to also enhance the physical store experience. Artificial intelligence (AI) is currently the
most sought-after technology.
One of the main reasons for this is that AI, especially deep learning, not only helps in enhancing
customer experience but also helps brands reach a wider audience due to its unique ability to create
new data and identify novel patterns throughout the consumer purchase life cycle. AI can be used to
track a consumer’s preferences and apply it to predictive algorithms to create highly personalized
online shopping experiences.
Burberry
It has been one of the pioneers of AI in the luxury goods industry. Products in its stores are now
fitted with RFID tags which can communicate with the consumers’ mobile devices giving information
on how the product can be used or how it was produced. In 2015, Burberry announced that its
investment in personalized customer management programs had resulted in a 50% increase in
repeat customers. The company also experienced a 100% sales increase for a particular bag, simply
by changing its picture online, an insight derived from AI powered analytics.
Luisa Via Roma (LVR)

A luxury fashion retailer that sells famous brands such as Balmain, Gucci, and Dolce & Gabbana, has
partnered with Dynamic Yield, an AI powered eCommerce personalization platform, to improve its
personalization capabilities. It’s customers now receive personalized search results that are
automatically sorted by price depending on the customer's spending history. This has resulted in a
significant increase in its conversion rates and a 15% jump in average revenue per user.
Cosabella
Another example is luxury lingerie retailer Cosabella that used AI powered marketing campaigns to
double its online subscription base and achieve a 60% increase in email marketing revenue.
50
Source: Appear Here, Business Insider, Forbes, WWD

Customer interaction is another
area for brands to use AI
Use of AI (2/2)
Another area where AI is witnessing increasing use is in customer interaction. Emotion-recognition

technologies are beginning to recognize facial responses and identify emotional states in order to
deliver a more personalized shopping experience. One example is Dior’s Insider AI tool that it aimed
at aspirational buyers who may never become actual consumers. The tool’s messaging service not
only sends out personalized marketing communication but also shoppable slideshows and links to
the eCommerce site. Louis Vuitton has also launched an AI powered chatbot on Facebook
Messenger that communicates with shoppers using natural language processing and offers not only
personalized recommendations on products but also additional services including information on its
stores worldwide and access to product care instructions.
If 2017 was the year of mulling AI’s potential, 2018 may very well be the
time that potential is realized. While luxury retailers have started to
embrace AI capabilities, the industry is still exploring what AI means to
them, and more importantly, how it will view and speak to their customers.
Sean Brady, President at Emarsys America
51
Source: Appear Here, Business Insider, Forbes, WWD

Brands using AR for enhanced
customer experience
Use of AR
Immersive technologies such as virtual reality (VR) and augmented reality (AR) are witnessing
increasing use by luxury brands who combine them with their physical retail stores to enhance the
overall shopping experience. Even though, the main objective of this is to enable customers to get a
virtual feel of the product before making a purchase, many brands are also using it for digital
marketing purposes.
In fact a study by data intelligence company L2 on the Chinese market, found that traditional content
such as images was no longer sufficient to win the attention of followers of luxury brands on social
media platforms such as WeChat. Instead, consumers were more likely to respond to a marketing
message if the content was dynamic and interactive, as is the case with AR campaigns. Below are a
few examples of the technology’s adoption by luxury brands.
Burberry:
It is using Apple’s AR platform called ARKit to enable the users of its mobile app to edit their pictures
with Burberry-inspired drawings made by artist Danny Sangra, before posting them on social media.
Estée Lauder:
In July 2017, Estée Lauder launched the conversational AY enhanced lipstick advisor to help
customers select the ideal shade. The chatbot that works on Facebook Messenger was created in
partnership with AR company ModiFace and allows users to get personal shade recommendations
based on a quiz they take.
L'Oréal:
The company acquired Modiface in March 2018 and has partnered with Facebook to create AR
powered make up try-on experiences for brands such as Maybelline, L’Oréal Paris, NYX Professional
Makeup, Lancôme, Giorgio Armani, Saint Laurent, Urban Decay, and Shu Uemura.
Gucci:
Gucci has partnered with Spanish surrealist artist, Ignasi Monreal to create an AR experience -
#GucciHallucination, on its app. This is part of a marketing campaign to support its Spring 2018
collection.
Swarovski:
Swarovski has created a VR shopping app for customers of its Atelier Swarovski home decor line, a
collection of functional and decorative crystal home accessories. The VR headset allows consumers
to browse all designs, look at the stories behind each piece, check the pricing and finally make a
purchase.
52
Source: Bloomberg, Market Wired

3D Printing is being used for
production, prototyping, and design
3D printing
Even though the use of 3D printing to manufacture luxury goods has traditionally been frowned
upon by purists, the technology is now making rapid progress. Over the last few years it has been
used not only for production and prototyping of various luxury products but also in the creative
process. According to a 2018 McKinsey survey of 100 luxury managers, 30% of them believe that
they will start offering 3D printed products in their stores in the next three to five years while another
30% believe it will happen within five to 10 years.
The fashion industry is where 3D printing is witnessing extensive use. This is mainly because it makes
it possible to create shapes without molds, thus resulting in the production of elements with extreme
intricacy that could otherwise not be accomplished. It was in 2011 that 3D printing for fashion began
to take off with an Haute Couture runway show at that year’s Materialise World Summit, featuring
collections by Iris van Herpen, Elvis Pompilio, Daniel Widrig, and Niccolo Casas. Since then brands
such as Balenciaga have used the technology to produce its seamless jackets for its Autumn/Winter
2018 collection, while Gucci even had its models carry 3D replicas of their own heads during its
Autumn/Winter 2018 show. Iris van Herpen more recently used the PolyJet technique1 to
manufacture ornaments for her dresses during the Spring Summer 2018 fashion show at the Paris
Fashion Week.
For me, it represents what I love about tailoring and what Balenciaga
stands for in terms of architectural garments. We started quite artisanally,
then worked with 3D scanning body moulding specialists — we worked with
people who aren’t used to working in fashion. I hope it’s the beginning of a
long collaboration.
Demna Gvasalia, Creative Director at Balenciaga
Luxury watches is another industry where 3D printing has made rapid advancements with
companies such as Parmigiani Fleurier using it to improve efficiency and ergonomics and create
innovative designs that were earlier impossible to make using milling machines.
Many parts of the super luxury US$400,000 Parmigiani Bugatti Type 370 watch are now 3D printed.
There are yet other manufacturers that are using the technology not only for product development
but also for production. Panerai’s Pam 578 Lo Scienziato Luminor 1950 Tourbillon GMT Titanio,
which was launched in 2017 and retails for over US$120,000 is one such example. It has a titanium
case which is hollowed out using the direct metal laser sintering technology which builds the case
layer by layer with a fiber optic laser using powdered titanium.
1: A rapid prototyping process where printers have two or more jetting heads that spray outlines 53
of the part, layer by layer
List of tech start-ups disrupting the
luxury retail space (1/2)
Tech start-ups (1/2)
Focus Funding in
Company Description areas million US$
A platform on which users can rent luxury clothes
Rent the Apparel &
and accessories such as handbags and jewels on 541.2
Runway accessories
a monthly basis
Diamond A diamond start-up that provides an ethical and
Jewelry 150
Foundry eco-friendly alternative to mined diamonds
Uses artificial intelligence to recognize fake

Red Points All 67.6
products and to refine searches on marketplaces
Modern
Produces animal-free lab-grown leather Handbags 53.5
Meadow
Provides an online boutique where women &
Bag Borrow
men borrow, collect, and share luxury Handbags 41.9
or Steal
accessories.
Eleven
A luxury watches subscription platform Watches 40
James
Apparel &
Provides artisanal luxury fashion consisting of
Maiyet accessories, 39
apparel, accessories and jewelry
jewelry
Provides a smart cloud data warehouse that
Apparel &
Panoply automates the collection, modelling, and scaling 14.3
accessories
of any data
Apparel &
Unmade Develops solutions to offer personalized clothing. 13.2
accessories
Develops and operates a jewelry subscription

Flont Jeweler 7
platform
An online platform that rents luxury clothes and Apparel &

Armarium 6
accessories accessories
Offers tailored fragrances for men based on the

Hawthorne
customers’ diet, body temperature, and work Fragrance 5.2
Labs
environment, among other parameters
54
Source: CB Insights, Company information, Crunchbase

List of tech start-ups disrupting the
luxury retail space (2/2)
Tech start-ups (2/2)
Focus Funding in
Company Description areas million US$
Provides an in-store browsing experience to
Cappasity Jewelry 4.9
online retailers through interactive 3D images.
A start-up that uses artificial intelligence to help

Entrupy All 2.7
brands identify fake goods
Allows customers to customize the color and

1Atelier Handbags 1.5
hardware of their leather handbags
Uses artificial intelligence to help brands identify

Cypheme All 1.5
fake goods
Uses blockchain technology to help brands

Block Verify All 0.053
identify fake goods
MemoMi Develops solutions to integrate new technologies Apparel &

NA
Labs such as AR/VR in luxury stores accessories
Offers makeup, skin, and hair product Acquired by

Modiface All
visualization services to shoppers L'Oréal
Tracks smartphone signals across the store to
Euclid
help its clients understand how customers move NA NA
Analytics
inside the store
55
Source: CB Insights, Company Websites

Country analysis
The U.S., Mainland China, and Japan are projected to be the three biggest
markets for luxury goods in 2020 with a market size of US$65.0bn, US$38.1bn
and US$27.4bn respectively. The dominance of these markets can be gauged
from the fact that they are projected to account for 46% of the global luxury
goods sales in 2020.
Even though the U.S. retains the leading position for luxury goods globally,
factors such as economic and political uncertainty, cutbacks on discretionary
spending, and low sales to international tourists, are affecting market growth.
56
The U.S. luxury goods market is
about to witness sluggish growth
U.S. (1/3)
According to Statista’s CMO, the U.S. luxury goods market is expected to increase from US$65 billion
in 2020 to US$81.5 billion in 2025, at 4.6%. Revenues are expected to dip sharply in 2020 due to the
economic and social impact of the Covid-19 pandemic, only to recover in the ensuing period. Even
though the U.S. is the number one market for luxury goods globally, other factors such as political
uncertainty, cutbacks on discretionary spending, especially in the wake of the Covid-19 pandemic,
and low sales to international tourists due to the strong dollar, are expected to affect market growth.
According to Cara David, managing partner at research company YouGov, the current situation feels
a lot like 2007, when the global economic meltdown begun. Even though people now have more
money to buy luxury products the enthusiasm to do so is on the wane. According to a global survey
conducted by YouGov, even though the number of affluent U.S. consumers participating in luxury
purchases increased from 64% in 2017 to 68% in 2018, only 25% planned to spend more on luxury
in the future, as compared to 31% in 2016. Additionally, President’s Trump’s proposed economic
policies such as the 25% tariffs on products such as luxury cars, perfume, handbags, wine, spirits,
and cheese, are expected to impact the import of luxury products which mainly come from Europe.
Fashion is the largest luxury segment in the country with revenues of US$24 billion in 2020, followed
by cosmetics & fragrances (US$13 billion), leather goods (US$10.6 billion), watches & jewelry (US$8.8
billion), and eyewear (US$8.6 billion). PVH, Luxottica, LVMH, L'Oréal, and Estée Lauder are the top five
selling luxury brands in the country. The U.S. luxury market is expected to witness considerable
digital adoption with online sales expected to increase from 10.5% in 2020 to over 14% in 2023.
4.6%1
79.2 80.3 81.5

76.6
73.1 72.0
68.0 68.7 67.8 68.8
65.8 65.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
57
Luxury fashion to account for the
largest share in 2020
U.S. (2/3)
Eyewear
13,2%
Fashion
Watches & Jewelry 37,0%
13,5%
16,2%
Leather Goods
20,0%
Market share by leading brands in 2020
PVH
10,0%
Luxottica
10,0%
10,0% LVMH
60,0%
Others
5,0%
L’Oréal
5,0%
Estée Lauder
58
Average revenue per capita to
register moderate growth
U.S. (3/3)
4.0%1
235,3 237,3 239,3

222,3 228,8
211,8 212,6 210,5 216,3
206,6 208,4
196,4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
8% 9% 11% 12% 13% 14%
92% 91% 90% 88% 87% 86%
2018 2019 2020 2021 2022 2023

59
Mainland China’s luxury goods
market to reach US$57 bn in 2025
Mainland China (1/3)
The Chinese luxury goods market has suffered over the last few years owing primarily to President Xi
Jinping’s anti-corruption drive which started in 2012. However, the market rebounded in 2017 to
register the highest growth in 5 years of 7.3%. The reduction of import duties levied on foreign luxury
brands, the rapid rise of a more affluent and fashion-savvy middle class, and the government’s fight
against the parallel market run by the daigu2, are the major factors that stimulated industry growth.
However, the Covid-19 pandemic is expected to result in a sharp dip in revenues from US$42.3
billion in 2019 to US$38.1 billion 2020. The market is likely to recover in 2021 and beyond, mainly on
the back of strong spending by the millennials who have rapidly emerged as the major consumer
segment. According to Bruno Lannes, a partner at Bain, the average age of the luxury consumer in
Mainland China is 35, which is about 10 years younger than in developed economies. A 2018 Bain
study also showed that 93% of these millennials were expected to purchase more luxury goods over
the next three years.
The composition of Mainland China’s luxury spending is also changing slowly as a result of the anti-
corruption initiative. Watches, primarily for males, used to account for most of the market earlier.
However, the emphasis is slowly switching to spending by women on products such as designer
handbags, perfumes, and other cosmetics. According to the Federation of the Swiss Watch Industry,
watch exports to Hong Kong SAR, a favorite destination for Mainland Chinese buyers, fell 25% in
2016. Even so, watches & jewelry are the largest category followed by cosmetics & fragrances,
fashion, leather goods, and eyewear. In terms of per capita spending, Mainland China is one of the
leading countries, thanks to the rising purchasing power of young millennials and Generation Z. It is
also because of this young customer base that online luxury sales are expected to rapidly increase
from 33% in 2020 to 40% in 2023.
8.5%1
57.3
55.1
52.8
49.4
44.6
42.3
37.0 38.1
33.1
29.4 29.6 30.9
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
60
LVMH and Swatch Group to lead
the market in 2020

Eyewear
2.1%
Leather Goods
19,0%
Watches & Jewelry

38,6%
19,7%
Fashion
20,6%
LVMH
15,0%
Swatch Group
10,0%
5,0% Lao Feng Xiang

60,0%
Others
5,0%
Kering
5,0%
Chow Tai Fook
61
Online share to reach 40% by 2023
in Mainland China
8.2%1
39,1
37,7
36,2
34,0
30,7
29,3
25,8 26,3
23,2
20,9 20,9 21,8
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
27% 30% 33% 35% 38% 40%
74% 70% 68% 65% 62% 60%
2018 2019 2020 2021 2022 2023

62
Japan’s luxury goods market to
reach US$36.1 billion by 2025
Japan (1/3)
With Mainland China’s massive consumer appetite for luxury products and South Korea’s image as a
trendsetting nation, Japan has often been overlooked as a major force in the Asian and global luxury
goods market. It’s falling economic condition probably had a lot to do with this in the past, but times
are now different. Japan’s economy has rebounded after almost two decades of recession mainly due
to Prime Minister Shinzō Abe’s economic program and monetary policy which started in 2013. This
growth is reflected in the resurgence of the country’s luxury market from both domestic and foreign
consumers. According to Statista’s CMO, Japan is the third largest luxury goods market globally with
estimated revenues of US$27.4 billion in 2020, a moderate drop as compared to 2019, due to the
Covid-19 pandemic. Other factors expected to contribute to the market’s subsequent growth are a
devalued yen which is driving foreign consumption especially from Mainland China, an increase in
household spending, the reinforced role of the millennial consumer, changing consumption habits of
the country’s female population and the Tokyo Olympics in 2021.
Surprisingly, digital penetration in Japan’s luxury goods market is still quite low as compared to other
countries, reflecting a lack of digital savviness among luxury consumers and the limited online
presence of important local companies like department stores. However, according to Statista’s
CMO, online sales are expected to grow from 12% in 2020 to 14% in 2023, thereby pointing towards
an increased role for digital touchpoints in the luxury consumer’s buying journey. Japan’s peculiarity
lies in the fact that it discriminates clientele, focusing more on domestic consumers. For example,
Chanel tries to keep local customers physically separated from tourists and has gone as far as to
make a separate cosmetics and perfume section reserved for top Japanese customers, to keep them
away from the nouveau riche crowd.
5.7%1
35.1 36.1
34.2
32.7
29.4 30.5
27.5 27.4
25.1 26.2
23.0 23.5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
63
Cosmetics & fragrances segment to
lead the luxury market in Japan
Japan (2/3)

Eyewear
Leather Goods
1.4%
9,9%
Watches & Jewelry

12,0%
47,6% Cosmetics & Fragrances
29,1%
Fashion
Pola Orbis
15,0%
Kosé
10,0%
Others 55,0%
10,0%
LVMH
5,0%
5,0% Chanel
Onward
64
The Japanese online share is
expected to 14% by 2023
Japan (3/3)
6.1%1
282,2 291,2
273,2
260,2
241,7
231,9
216,1 216,5
196,3 205,1
179,3 183,7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
10% 11% 12% 13% 13% 14%
90% 89% 88% 88% 87% 86%
2018 2019 2020 2021 2022 2023

65
France has the richest legacy in the
global luxury market
France (1/3)
France’s importance as a key market for luxury goods can be gauged from the fact that nine French
companies1, including the world’s largest luxury group LVMH, feature in Deloitte’s 2018 annual list of
Top 100 luxury goods companies. What is more interesting though is that these companies
represent almost 25% of the total sales in the sector.
Another report by real estate company Savills found that Paris enjoyed the highest share of all luxury
store openings worldwide in 2017 with 5.9%. One of the main drivers of the French luxury goods
industry is the rich legacy of its past, with its products widely regarded as symbols of quality and
high-status.
According to Statista’s CMO, the French luxury goods market is expected to increase from US$15.2
billion in 2020 to US$20.6 billion in 2025, at a CAGR2 of 6.2%. Luxury fashion is expected to be the
largest product category with sales of US$5.2 billion in 2020, followed by leather goods (US$3.5
billion), cosmetics & fragrances (US$3.4 billion), Watches & Jewelry (US$2.2 billion) and eyewear
(US$879.5 million).
LVMH is the largest player in the market with a share of (25%), followed by Kering (5%), Hermès (5%),
Richemont (5%), and Chanel (5%). Online penetration is expected to increase from 11.3% in 2020 to
13.8% in 2023.
6.2%2
20.0 20.6
19.4
18.5
16.7 17.1
15.5 15.2
13.6 14.3
13.2 13.2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
66
1: Christian Dior, Clarins, Hermès, Kering,, L'Oréal, Longchamp, LVMH, Nuxe, SMCP 2: CAGR:
Compound Annual Growth Rate/ average growth rate per year
LVMH dominates the French luxury
market with a 25% market share
France (2/3)

Eyewear
5,8%
Watches & Jewelry
14,7% Fashion
34,4%
22,3%
22,9%
Leather Goods
LVMH
25,0%
Others 55,0% 5,0% Kering
5,0%
Hermès
5,0%
5,0% Richemont
Chanel
67
Average revenue per capita to reach
US$312 by 2025
France (3/3)
6.0%1
303,6 311,7
295,5
281,7
257,0 261,4
239,2 233,4
210,6 219,9
205,0 204,5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
10% 11% 11% 12% 13% 14%
90% 90% 89% 88% 87% 86%
2018 2019 2020 2021 2022 2023

68
The UK luxury market to surpass
US$16 billion by 2025
UK (1/3)
The UK is a natural and structural hub for luxury products owing to its established customer base,
pool of creative talent and the legacy and heritage of many British brands, such as Burberry and
Harrods. Other factors such as London being one of the global finance capitals, the importance of
the London Fashion Week, and a strong and diversified university system across arts, fashion and
design, all contribute to making the UK one of the most important markets for luxury products in the
world. Additionally, over the last few years new brands such as Victoria Beckham, Orlebar Brown, and
Emilia Wickstead have emerged and are making impressive sales in both domestic and international
markets, in spite of slow GDP growth.
However, the Brexit induced political and economic uncertainty, devaluation of the pound, the
resultant rise in import prices and of course the Covid-19 pandemic, are negatively impacting market
growth. According to Statista’s CMO, the UK luxury goods market is expected to fall to US$12.5 billion
in 2020 before recovering to value US$16.1 billion in 2025, at a CAGR1 of 5.3%. The upside however
is that many international tourists are travelling to the UK due to the weak pound which is expected
to positively impact luxury sales. Domestic consumers are also preferring to buy in the home market
due to unfavorable exchange rates overseas.
Fashion is the largest category with sales of US$5.1 billion in 2020, followed by cosmetics &
fragrances (US$2.7 billion), leather goods (US$2.3 billion), watches & jewelry (US$1.6 billion), and
eyewear (US$706 million). LVMH and Kering are the two largest brands in terms of sales in the
country with shares of 15% and 10% respectively
5.3%1
15.8 16.1
15.5
14.9
13.9 13.9
12.7 12.3 12.7 12.5
12.1
10.7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
69
Fashion leads the luxury goods
market in the UK
UK (2/3)

Eyewear
5,7%
Watches & Jewelry
13,0%
Fashion
41,0%
Leather Goods 18,4%
22,0%
LVMH
15,0%
Kering
10,0%
Others 50,0%
5,0% Estée Lauder
5,0%
PVH
5,0%
5,0% Richemont
5,0%
Chanel
L’Oréal
70
The online share is expected to
increase to 20% in 2023
UK (3/3)
4.9%1
226,0 229,4 232,8

218,0
205,9 204,3
183,7 190,8 184,7 188,5 183,5
164,2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
15% 16% 17% 18% 19% 20%
85% 84% 83% 82% 81% 80%
2018 2019 2020 2021 2022 2023

71
Hong Kong SAR’s luxury market is
expected to increase
Hong Kong SAR (1/3)
Historically, Hong Kong SAR has been a hub for luxury products, with the market increasing at a
double-digit growth rate every year from 2010 till 2014, according to Statista’s CMO. This growth was
mainly driven by Chinese tourists who visited Hong Kong SAR in large numbers from 2003 after the
government launched the Individual Visit Scheme1. In fact, a study by asset management company
Schroder found that Hong Kong SAR mall sales to tourists ranged from 30% to 70%, with the Chinese
representing close to 80% of the total. Factors such as geographical proximity, much lower taxes on
luxury goods and a wide selection of luxury products, made Hong Kong SAR an ideal market for
wealthy Chinese consumers looking for authentic luxury products.
However, after nearly a decade of increasing revenues, Hong Kong SAR’s luxury goods market fell for
the first time in 2015, also because of a decline in the number of Chinese visitors. Various factors
such as the Chinese government’s anti-corruption campaign, currency fluctuations, cultural tension
between the two nations, the maturing of the Chinese domestic market and shifting consumer
preferences to luxury experiences, an area where Hong Kong SAR hasn’t developed, were
responsible for this. According to Statista's CMO, the market is expected to increase further from
US$5.4 billion in 2020 to US$7.6 billion in 2025, at a CAGR2 of 7.0%.
International brands have responded accordingly and are decreasing their presence in Hong Kong
SAR. For example, in the famous Pacific Place mall, Burberry and Louis Vuitton have reduced the size
of their stores, while Coach has closed down completely. Landlords are thus looking to refresh their
tenant mix to cater to new spending habits and have therefore begun to target lifestyle companies
and food outlets.
7.0%2
7.4 7.6
7.2
6.9
6.3 6.3
5.8
5.3 5.4 5.4
4.7 4.7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
1: After the scheme, the number of tourists increased from 7 million in 2003 to 44 million in 72
2013 2: CAGR: Compound Annual Growth Rate/ average growth rate per year
Source: schroders.com, South China Morning Post, Schroders
Watches & Jewelry segment leads
the luxury market
Hong Kong SAR (2/3)

Cosmetics & Fragrances Eyewear
7.4%
0.8%
Watches & Jewelry

22.8% 39.7%
Leather Goods
29.3%
Fashion
LVMH
15.0%
Swatch Group
10.0%
5.0% Chow Tai Fook

60.0%
Others 5.0%
Kering
5.0%
Richemont
73
Hong Kong SAR has one of the
lowest rates of digital penetration
Hong Kong SAR (3/3)
6.3%1
963,9 983,0
943,4
900,9
847,7 830,4
815,6
733,5 732,6 725,4
647,6 645,2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Offline Online
6% 7% 7% 7% 7% 8%
94% 94% 93% 93% 93% 92%
2018 2019 2020 2021 2022 2023

74
High concentration of HNIs1 makes
Singapore an attractive market
Singapore (1/4)
The luxury goods market in Singapore is expected to increase from US$2.1 billion in 2020 to US$3.1
billion in 2025, at a CAGR2 of 8.0%. One of the main factors driving the market is that it has one of the
highest GDPs in the world resulting in a strong concentration of high-net-worth individuals who
spend on luxury products.
Singapore also attracts many foreign tourists with the highest being from Mainland China. In fact,
according to the Singapore Tourism Board (STB), Chinese tourists, who are well known for their
affinity towards luxury goods, have been the highest spenders in Singapore during 2017-2019 with a
total spend of over US$3 billion.
Moreover, Singapore’s reputation as one of the best places to live and work globally makes it a highly
sought-after market for investors and businesses looking to tap into the latest consumer and lifestyle
trends, especially in the high-end segment where spending power is greater. The country also
benefits due to its location which is at the heart of the booming Asian region which is seen as the
new growth frontier for luxury products and experiences.
Luxury fashion is the largest category followed by Luxury Watches & Jewelry, leather goods,
cosmetics & fragrances and eyewear. This is why LVMH has the highest market share with 25%
followed by Richemont (10%), Kering (10%) Swatch Group (5%), and Chanel (5%).
Online sales are expected to grow from 16.8% to 24% during the period 2020- 2023.
8.0%2
3.1
3.0
2.9
2.8
2.5
2.4
2.1 2.1
1.9
1.7 1.7 1.7
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
75
1: High net-worth individuals 2: CAGR: Compound Annual Growth Rate / average growth rate
per year
Luxury watches are very popular in
Singapore
Singapore (2/4)
Luxury fashion is the single largest category in the market in 2020 with a total spending of US$757.6
million, followed by watches and jewelry.
According to a study of 1,000 Singaporean consumers conducted by research company Kadence

Singapore, watch companies Patek Philippe and Rolex figured among the top five luxury brands in
the country that consumers would like to own, with the other three being automotive companies
Porsche, Bugatti, and Rolls-Royce1. The survey found that the main reason why consumers preferred
these products was due to their perception as status brands. In fact, consumers mentioned the
biggest strength for Patek Philippe to be a brand that one “would be proud to be seen to own” while
for Rolex it was it was the brand’s ability to enhance one’s status.
Another factor driving the purchase of luxury watches and jewelry is high disposable incomes for an
average wage earner in Singapore. The combination of high incomes, low taxes and the lower need
for more expensive items such as cars2, has created an economic environment conducive to
spending on luxury watches.
Strong cultural heritage is another reason. Singapore was home to Timezone.com, the world’s first
internet forum on watches which started in 1994. Other renowned platforms such as The Purist178
which later evolved into Purist Pro and Revolution, one of the leading print publications on watches
globally, have their roots in Singapore.
Cosmetics & Fragrances Eyewear

6.2%
0.9%
Fashion
Leather Goods 35.4%
26.3%
31.2%
Watches & Jewelry
1: Cars are not included in Statista’s luxury market study 2: Import and special duties have made 76
Singapore one of the most expensive places to own a car in the world
Source: deployant.com; Forbes, Singapore Business Review.
LVMH dominates the luxury goods
market in Singapore
Singapore (3/4)
LVMH
25.0%
Others 45.0%
10.0%
Kering
10.0%
5.0% 5.0% Richemont
Chanel Swatch Group
7.2%1
503.6 517.5
489.0
462.8
410.2 422.6
361.5 366.2
315.3 324.2
304.0 306.5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
77
Singapore’s online share to reach
24% by 2023
Singapore (4/4)
Offline Online
11%
14%
17%
20%
22% 24%
89%
86%
83%
80%
78% 76%
2018 2019 2020 2021 2022 2023
78

Consumer insights
Clothing accessories and glasses/sunglasses are the most preferred luxury
categories by respondents from both the U.S. and the UK, whereas Germans
preferred perfumes. Chanel is the most preferred cosmetics brand, whereas
Rolex leads the chart for luxury watches and Gucci is preferred for luxury
fashion and accessories.
Majority of the luxury purchases are associated with gifts for someone.
However, while making the purchase decisions, quality remains the prime
factor.
Germans prefer online shopping channels for luxury goods whereas
Americans and Britons prefer department stores or physical store.
79
50% of the population shop for less
than 3 times in the past two years
Overview (1/2)
A Statista survey on luxury goods shopping in 2019 focused on the residential online population in
the U.S., the UK and Germany, who go shopping at least once a year online or offline and who have
bought at least one personal luxury item (new or used) by a popular luxury brand in the past 2 years.
It covers the following topics: attitude towards luxury products, shopping behavior, luxury brand
awareness and ownerships, perception and awareness of luxury brands, and channels used for
shopping.
More exciting results of this survey can be found for the U.S., the UK and Germany.
Frequency of shopping in %
U.S. UK Germany
51 51 50
25
22 22
15 14
13 12 12 13
less than 3 times 3 up to 5 times 6 up to 10 times more than 10 times
"How often have you bought premium or luxury products in a physical store or on the internet in the past 2 years?"; Single
Pick; Statement; U.S.: n=1,165, UK: n=1,012, Germany: n=1,063
Source: Statista Global Consumer Survey, as at 6th Nov 2019
The survey revealed that 51% of Americans and Britons shopped for clothes, fragrances, accessories,
or other consumer goods, both online and offline for less than three times in the past two years,
whereas around 25% of Germans shopped for the same goods several up to five times in the same
time period.
80
Outstanding services is the most
associated term with luxury
Overview (2/2)
Outstanding service is the prime characteristic associated with the purchase of luxury items in the
eyes of the surveyed population in both the U.S., the UK, and Germany with 50%, 50%, and 49%
response, respectively. In addition, 41% each of Germans and Britons associate ‘design and esthetics’
as the second most important attribute to luxury goods, while it’s the ‘inspiring’ feelings that 43% of
Americans associated with luxury goods.
Terms associated with luxury in %
U.S. UK Germany
Inspiring
75
Social
60 Knowledge
responsibility
45
30
design and
Sustainable 15
esthetics
0
Outstanding
Invaluable
service
Unique
Enjoyment
experience
"Here are further statements. Which of these statements do you agree with?"; Multi Pick; U.S.:
n=1,165, UK: n=1,012, Germany: n=1,063; respondents, who go shopping at least once a year
online or offline and who have bought at least one personal luxury item (new or used) by a 81
popular luxury brand in the past 3 years
Americans prefer clothing,
accessories, and sunglasses
Interest in luxury goods (1/3)
The survey also revealed that a maximum of 50% and 44% of Americans are interested in clothing
accessories and glasses/sunglasses, whereas only 17% are interested in wines and spirits. Jewelry
and footwear are each preferred by 40% of the respondents, while cosmetics and personal care and
luxury watches are preferred by 36%.
Interest in types of luxury goods – U.S.
Clothing accessories 50
Glasses/sunglasses 44
Everyday clothes 42
Jewelry 40
Footwear 40
Cosmetics and
36
personal care
Watches 36
Perfume 34
Sophisticated clothes 33
Electrical appliances /
29
cellphone / gadget
Backpacks/bags 22
Food 21
Passenger cars 20
Furniture 19
Wines and spirits 17
“In which of these categories are you interested in luxury articles? ”; Multi Pick; U.S.: n=1,165;
respondents, who go shopping at least once a year online or offline and who have bought at 82
least one personal luxury item (new or used) by a popular luxury brand in the past 3 years
Britons too prefer clothing
accessories and sunglasses
Like the Americans, clothing accessories and glasses/sunglasses are the two most popular luxury
items among British consumers as well. They are followed by perfumes, everyday clothes, footwear,
cosmetics and personal care, and luxury watches.
Interest in types of luxury goods – UK
Perfume 41
Everyday clothes 40
Footwear 37
Cosmetics and
36
personal care
Watches 36
Jewelry 34
33
cellphone / gadget
Backpacks/bags 23
Food 21
Furniture 20
Passenger cars 17
“In which of these categories are you interested in luxury articles? ”; Multi Pick; UK: n=1,012;
respondents, who go shopping at least once a year online or offline and who have bought at 83
least one personal luxury item (new or used) by a popular luxury brand in the past 3 years
Germans prefer perfumes while its
clothing accessories for Americans
Although clothing accessories and glasses/sunglasses are the top two luxury categories as cited by
the American and British respondents, the Germans prefer perfume, everyday clothes, and footwear,
with a response rate of 46%, 39%, and 38%, respectively.
Interest in types of luxury goods – Germany
Perfume 46
Everyday clothes 39
Footwear 38
Cosmetics and
38
personal care
Watches 36
Jewelry 33
32
cellphone / gadget
Backpacks/bags 25
Passenger cars 21
Furniture 20
Food 15
“In which of these categories are you interested in luxury articles? ”; Multi Pick; Germany:
n=1,063; online population, who go shopping at least once a year online or offline and who have
bought at least one personal luxury item (new or used) by a popular luxury brand in the past 3 84
years
Glasses/sunglasses tops the list of
fashion and accessories owned
Luxury fashion & accessories (1/2)
The survey by Statista revealed that ‘glasses/sunglasses’, ‘footwear’, and ‘jackets/coats’ are the three
key fashion and accessories items that majority of respondents from all the three countries possess.
A maximum of 50% respondents from the U.S. own ‘glasses/sunglasses’ whereas it is 45% each for
respondents from the UK and Germany.
Type of luxury fashion and accessories owned in %
U.S. UK Germany
Glasses/sunglas
ses
75
Sophisticated
Footwear
60 clothes
45
30
Scarves Billfold/wallet
15
Backpacks/bags Belts
Headgear Jackets/coats
Ties
“In which of these categories do you own fashion items or accessories from premium or luxury
brands?”; Multi Pick; U.S.: n=1,165, UK: n=1,012, Germany: n=1,063; online population, who go
shopping at least once a year online or offline and who have bought at least one personal luxury 85
item (new or used) by a popular luxury brand in the past 3 years
Gucci, Burberry, and Giorgio Armani
are the most preferred brands
Luxury fashion & accessories (2/2)
Gucci, Burberry, and Giorgio Armani are the top three preferred luxury fashion and accessories
brands in all the three countries, i.e. the U.S., the UK and Germany. Gucci leads the chart in the U.S.
with 28% followed by Louis Vuitton and Burberry with 25% and 24%, whereas Burberry lead the UK
list with 23% and Giorgio Armani leads the German list with 22%.
Top 5 luxury fashion and accessories brands owned in %

U.S. UK Germany
28% 23% 22%
25% 22% 21%
24% 22% 20%
21% 18% 18%
21% 18% 18%
“And from which of these high-priced luxury brands do you own clothes or accessories?”; Multi Pick; U.S.: n=961, UK: n=860,
Germany: n=891; online population, who go shopping at least once a year online or offline and who have bought at least one
personal luxury item (new or used) by a popular luxury brand in the past 3 years
Rank 6-10 goes to:

▪ U.S.: Dior (17%), Dolce & Gabbana (17%), Prada (16%), Balenciaga (13%), Fendi (11%)
▪ UK: Dolce & Gabbana (18%), Louis Vuitton (17%), Prada (12%), Saint Laurent (12%), Alexander
McQueen (10%)
▪ Germany: Channel (16%), Dior (16%), Bulgari (14%), Prada (12%), Hermès (11%)
86
Chanel remained as the most
preferred luxury cosmetic brand
Luxury cosmetics
Chanel leads the table as the most preferred luxury cosmetics brand in all three countries, followed
by Dior and Giorgio Armani.
Top 5 luxury cosmetics brands owned in %

U.S. UK Germany
36% 34% 33%
26% 28% 26%
23% 25% 24%
15% 23% 18%
11% 17% 12%
“And which of these high-priced luxury brands in the cosmetics and beauty segment do you use at least occasionally?”; Multi
Pick; U.S.: n=923, UK: n=854, Germany: n=862; online population, who buy luxury cosmetic products and know at least one
luxury cosmetics brand
Rank 6-10 goes to:

▪ U.S.: Dermalogica (10%), Shiseido (10%), La Mer (9%), Decléor (5%), Dermatologic Cosmetic Lab
(5%)
▪ UK: Givenchy (16%), Dermalogica (11%), Decléor(8%), Guerlain (8%), La Mer (7%)
▪ Germany: Clarins (11%), La Mer (9%), Helena Rubinstein (8%), Dermalogica (7%), Guerlain (6%)
87
Rolex, Cartier, and Omega lead the
list of most preferred brands
Luxury watches
Rolex, Cartier, and Omega are the top three preferred luxury watch brands in all the three countries,
i.e. the U.S., the UK and Germany. Rolex leads the chart in the U.S. with a share of 40%, followed by
Cartier and Omega with 22% and 14%.
Top 5 luxury watches brands owned in %

U.S. UK Germany
40% 31% 27%
22% 17% 20%
14% 15% 13%
08% 09% 12%
07% 06% 09%
“And from which of these brands for luxury watches do you own a watch?”; Multi Pick; U.S.: n=585, UK: n=600, Germany:
n=615; online population, who own at least one watch with the price over €500/$650/£500 and know at least one luxury
watch brand
Rank 6-10 goes to:

▪ U.S.: Montblanc (6%), Baume & Mercier (5%), Zenith (5%), Hublot (4%), IWC (4%)
▪ UK: Audemars Piguet (5%), Baume & Mercier (5%), Chopard (5%), Blancpain (4%), Montblanc (4%)
▪ Germany: Montblanc (6%), Hublot (5%), Jaeger-LeCoultre (5%), Audemars Piguet (4%), Baume &
Mercier (4%)
88
Tiffany & Co is the most preferred
jewelry brand in the U.S.
Luxury jewelry
Unlike the other categories such as luxury watches and cosmetics, where a single brand dominated
in all the three countries, the top brand in luxury jewelry is different for the Americans, the Britons,
and the Germans. Tiffany & Co is rated as the top choice by 37% of the Americans, whereas
Swarovski leads the chart in the UK with 27% and Cartier in Germany with 22%. However, brands
such as Tiffany & Co, Cartier, Chanel and Dior managed to be in the top five most preferred brand
across all three countries.
Top 5 luxury jewelry brands owned in %

U.S. UK Germany
37% 27% 22%
24% 25% 19%
20% 22% 18%
19% 17% 16%
13% 15% 16%
“And from which of these luxury brands do you own jewelry?”; Multi Pick; U.S.: n=884, UK: n=758, Germany: n=765; online
population, who own jewelry with the price over €300/$400/£300 and know at least one luxury jewelry brand
Rank 6-10 goes to:

▪ U.S.: Bulgari (BVLGARI) (11%), David Yurman (7%), Boucheron (6%), BY KIM (4%), Chopard (4%)
▪ UK: Bulgari (BVLGARI) (10%), Chopard (5%), David Yurman (4%), Piaget (4%), Boucheron (3%)
▪ Germany: Chopard (8%), Wempe (7%), BY KIM (4%), David Yurman (4%), Niessing (4%)
89
Majority of the luxury purchases are
associated with gifts for someone
Purchase behavior
Occasion for luxury purchases in %
U.S. UK Germany
49 50 48
45 45
42 43 43
40 41
37 38 38 38
32 33
30
26 27 27 28
19
17 18
Gift Gift by Reward by Self-treat Due to Souvenir For special Quality

partner something social/professional occasions purchase
expectations
Way of coming into possession of luxury products in %
U.S. UK Germany
54
51 51
45 44
41
3 4 3 1 1 1
I buy all my luxury I buy some of my All of my luxury Don’t know

articles myself. luxury articles myself articles were gifts.
and some are gifts.
“On which occasions do you buy luxury products? Multi-pick; “Did you buy your luxury articles
yourself or were they gifts?” Single-pick: U.S.: n=826, the UK: n=741, Germany: n=772; online 90
population, respondents who bought at least one luxury product in the last two years
Quality is the prime factor for a
luxury goods purchase
Purchase decisions (1/2)
The survey by Statista revealed that ‘quality’ is the prime factor for selecting any luxury item by
around 70% of the respondents from the U.S., the UK, and Germany. In addition, more than 60% of
the respondents from the U.S., the UK, and Germany also considered ‘design’ as the second most
important aspect for selecting a luxury item.
Purchase factors for a specific luxury product in %
U.S. UK Germany
brand
75
seals/certificates emotion
60
45
popularity of the
30 design
product
15
0
exclusivity quality
timelessness functionality
price-performance
innovation
ratio
“Which of these aspects do you pay particular attention to when deciding on a specific luxury
article? Please select all aspects relevant to you.”; Multi Pick; U.S.: n=826, the UK: n=741, 91
Germany: n=772; population, who bought at least one luxury product in the last two years
Appeal and high standard are the
prime reasons to choose a brand
Purchase decisions (2/2)
The survey revealed that brand ‘appeal’ and ‘high standard (e.g. of quality)’ are the two prime reasons
for selecting a particular brand by majority of respondents from all the three countries, i.e. the U.S.,
the UK and Germany. 59% and 49% of Americans prefer brands with ‘appeal’ and ‘high standard’ (e.g.
of quality)’ respectively, while its 56% and 49% for the Britons and 53% and 49% for Germans,
respectively.
Purchase factors for a specific luxury brand in %
U.S. UK Germany
Everybody knows
75
Spontaneous decision I know well
60
45
suits my values and my 30

Already own brands
lifestyle
15
Suits personality Apeeal
high standards Reputation
tradition/history
“Based on which aspects do you decide on a certain luxury brand? I choose a brand …”; Multi
Pick; U.S.: n=826, the UK: n=741, Germany: n=772; population, who bought at least one luxury 92
product in the last two years
Germans prefer online channels to
buy luxury goods
Sales channels (1/2)
Majority of the respondents from the U.S. and the UK prefer to purchase luxury goods either from
department stores or from physical stores of a luxury brand, whereas a majority of the Germans
prefer online shopping channels including online store that sells all kinds of products (e.g., Amazon)
and online store of a luxury brand for the same. 39% and 36% of respondents from the U.S. and the
UK buy luxury goods from department stores. In addition, around 38% and 37% of the respondents
from the two countries prefer to shop for luxury goods from the physical store of a luxury brand.
Interestingly, 27% and 26% of the German respondents prefer online store that sells all kinds of
products (e.g., Amazon) and online store of a luxury brand, respectively.
Channels used to purchase luxury items in %
U.S. UK Germany
online store (luxury

brand)
75
online store (second- physical store (luxury
hand luxury retailer) 60 brand)
45
second-hand luxury trading platforms (e.g.,
store 30 eBay)
15
0
luxury store abroad department store
online store (luxury

luxury factory outlets
products)
duty-free luxury store online store (all

(e.g., at the airport) products)
“Where have you bought luxury articles in the past 2 years?”; Multi Pick; U.S.: n=815, the UK:
n=734, Germany: n=756; respondents who looked at and bought at least one luxury product in 93
the last two years
Luxury stores are browsed several
times a month
Sales channels (2/2)
Frequency of browsing luxury stores online in %
U.S. UK Germany
27 26
24 25
20 19 20 19
18
14 14
12 12
10 10 10
5 5 4 4
2
Several Several times Once a Once every Once every Rarely Never
times a week a month month 3 months 6 months
Frequency of browsing luxury stores offline in %
U.S. UK Germany
26
23
22 21
20 20
19
18 18 18
15
14
13 13
11
9
6
5 4
3
2
Several Several times Once a Once every Once every Rarely Never
times a week a month month 3 months 6 months
“How often do you inform yourself about or browse for luxury products – in physical stores as
well as on the internet?”; Matrix; U.S.: n=826, the UK: n=741, Germany: n=772; respondents who 94
bought at least one luxury product in the last two years
Statista Global Consumer Survey:
Statista Survey Luxury 2019
About the study
This survey among internet users 18 years or older on luxury products shopping in 2019 focused on
the residential online population in the U.S., the UK and Germany who go shopping at least once a
year online or offline and who have bought at least one personal luxury item (new or used) by a
popular luxury brand in the past two years. It covers the following topics: attitude towards luxury
products, shopping behavior, luxury brand awareness and ownerships, perception and awareness of
luxury brands and channels used for shopping.
More exiting results of this survey can be found here:
▪ U.S.: https://surveys.statista.com/surveys/4384582/329719
▪ UK: https://surveys.statista.com/surveys/4384582/319719
▪ Germany: https://surveys.statista.com/surveys/4384582/119719
Statista’s Consumer and Business Insights Team carries out quantitative online and telephone
surveys among consumers and industry experts around the world with a focus on Germany, the USA,
and the United Kingdom. We comply with the guidelines set up by the professional associations
ESOMAR, BVM, ADM, and DGOF to, in particular, maintain scientific standards pertaining to the
collection, analysis, and protection of data as well as the processing of personal information.
Questions? U.S.: support@statista.com EU: eu.support@statista.com
Method Online Survey

Source Statista
Panel provider Cint
Number of respondents U.S.: 1,165, UK: 1,012, Germany: 1,063
Age of respondents 18 years and older
Type of respondents Internet users, who go shopping at least
once a year online or offline
and who have bought at least one personal
luxury item (new or used) by a popular luxury brand in
the past 2 years
Survey time period U.S.: 23th Oct to 6th Nov 2019
UK: 23th Oct to 6th Nov 2019
Germany: 5th February to 20th Sep 2019
95
Competitive landscape
France leads in the number of leading luxury goods companies globally.
Specifically, most of the prominent French luxury goods companies are
located in Paris. We have a closer look at some of those prominent French
companies: LVMH, L'Oréal, Kering, and Hermès along with other global leaders
including Burberry, Swatch, Estée Lauder, and Coty.
Most of the luxury goods companies followed inorganic growth path by
acquiring competitor companies to increase their business presence. A few of
them opted for licensing and distribution arrangements to support their
bottom line.
96
Leading luxury goods companies
are mainly located in Paris
Company comparison
Location of leading luxury goods companies
Headquarter and revenue of leading luxury goods companies
Company Headquarter Revenue in billion US$

LVMH Paris, France 60.11
L’Oréal Paris, France 33.51
Kering Paris, France 17.81
Estée Lauder New York, U.S. 14.92
Coty New York, U.S. 8.62
Swatch Group Biel, Switzerland 8.51
Hermès Paris, France 7.71
Burberry London, UK 3.33
97
1: As of Dec 31, 2019 2: As of Jun 30, 2019 3: As of Mar 31, 2020
Source: Company information
LVMH forayed into eCommerce in
2017
LVMH: overview
The LVMH (Louis Vuitton Moët Hennessy) group operates as a luxury products company. The
company operates through six major segments including wines and spirits, fashion and leather
goods, perfumes and cosmetics, watches and jewelry, selective retailing, and other activities. It has 70
brands including Marc Jacobs, Sephora, Fendi, DKNY, Hermès, and the most recently acquired
Christian Dior.
LVMH forayed into eCommerce in May 2017 with the launch of its website 24 Sèvres. Since then it
has invested over US$60 million in an online fashion search business Lyst to expand its online
presence and capture younger shoppers.
The company was formed in 1987 through the merger of Louis Vuitton and Moët Hennessy and is
headquartered in Paris, France.
▪ Year founded: 1987

▪ Number of Employees: 163,309 (31 Dec 2019)
▪ Number of Stores: 4,896 (31 Dec 2019)
▪ Revenue: US$60.1 billion (31 Dec 2019)1
Business segments and selected brands
Business segments Key brands
Wines and Spirits
Fashion & Leather Goods
Perfumes & Cosmetics
Watches & Jewelry
Selective retailing
Other activities
98
1: Converted from EUR to US$, exchange rate: EUR-US$ 1.11986 as of 31st Dec 2019 (Oanda)
Celebrity endorsement and no-
discount strategy catalyzed growth
LVMH: strategies
LVMH has the most aggressive celebrity endorsement strategy

Luxury brands have for long used celebrity endorsements as the primary marketing tool. In fact,
Charles Worth, the man who invented haute couture, used the services of Princess Von Metternich
who was a high society influencer and close friend of Napoleon’s wife Empress Eugenie, to promote
his fashion house La Maison Worth.
Louis Vuitton is probably the most persistent among all luxury brands when it comes to celebrity
endorsements – having worked with Diane Kruger (2004), Uma Thurman (2005), Gisele Bündchen
(2006), Pharrell Williams (2006), Scarlett Johanssen (2007), Kate Moss (2008), Kanye West (2008),
Madonna (2009), Angelina Jolie (2011), Muhammad Ali (2012), Michelle Williams (2013), Gisele
Bündchen (2014), Michelle Williams (2016), and most recently Emma Stone (2017).
In fact, according to an August 2018 Forbes article, LVMH spent 38.4% of its overall revenue on
marketing and selling activities, with this number increasing to 42.9% for Louis Vuitton alone. By
contrast Hermès spent only 5% of its overall revenues on marketing. However, one area where the
brand lacks is multicultural marketing as a very small percentage of celebrities and models who
endorse LVMH products or walk their runway shows, are of African descent. According to Janet
Comenos, CEO of marketing company Spotted, luxury brands such as LVMH need to urgently
address the non-Caucasian segment, otherwise they run the risk of losing out market share to
brands such as Dolce & Gabbana and MCM.
A no-discount strategy helps to maintain exclusivity and enjoy higher margins

When steel baron Henri Recamier married into the Vuitton family in the 1970s, he noticed that
retailers were adding a mark up of as much as 100% to the company’s products and keeping the
money for themselves. This resulted in him implementing a policy of vertical integration which laid
down the rule that the brand would henceforth not only own its factories but also all its stores and
any other outlets.
LVMH has enforced that rule till today and therefore never sells its products wholesale to a
department store, which means the store in turn cannot sell the products at a discounted rate. In
fact according to reports in several trade magazines, the company allegedly destroys products at the
end of each season rather than discount its unsold stock1. This strategy has not only resulted in
higher margins but has also reinforced the brands exclusivity which in turn allows it to command a
higher price than most other luxury brands.
1: LVMH has never commented on this practice and hence these reports remain unconfirmed 99
till now
Source: Forbes, Zapyle
LVMH relied on acquisitions to fuel
growth
LVMH: timeline (1/4)
1854 Louis Vuitton founded in Paris.
1885 Louis Vuitton expands internationally by opening a store in London
1947 Christian Dior launches Miss Dior perfumes
1969 Louis Vuitton enters the Asian market with a store in Tokyo
1971 Moët et Chandon merges with Jas. Hennessy & Company, the largest
cognac producer in France, and is renamed Moët-Hennessy
1984 Louis Vuitton goes public
Louis Vuitton and Moët-Hennessy merged to create LVMH in a US$4

1987
billion deal
1992 Louis Vuitton opens its first store in Beijing, Mainland China
1993 Acquired the Kenzo company from SEBP and Financiere Truffaut for
about US$80 million in August
1996 Acquired Fred Joaillier, a French jewelry brand in January
Invested US$2.6 billion for 61% share in DFS Group Ltd., a specialty
1997 retailer that catered to international travelers
Acquired Sephora, the French retailer of perfumes and beauty
products, for US$267 million
1998 Purchased Le Bon Marché, an exclusive specialty retailer in Paris
Acquired Krug, the premium champagne brand from Rémy Cointreau
Invested in four American beauty products companies: Hard Candy,

1999 Bliss Spa, BeneFit Cosmetics, and Make Up For Ever
100

LVMH established its watch and
jewelry division in 1999
Acquired luxury watch makers Tag Heuer for US$740 million in

1999 September.
Purchased a majority interest in Thomas Pink, a British shirt maker, in
September
Sephora launches sephora.com, one of the very first online shopping
sites in October
Partnered with Italian fashion company Prada, to acquire a majority
stake in Italian fashion design house Fendi in October
Established new watch and jewelry division in November
Increased its stake in Inter Parfums Inc., a perfume manufacturer,

from 6.3 percent to 20 percent.
Acquired Swiss watch manufacturer Zenith International S.A. in
November
2000 Acquired Urban Decay, an American cosmetics company in February
Acquired 67% interest in Italian fashion house Emilio Pucci in

February
2001 Acquired Fendi, the Italian fashion house in November
2005 The Watches & Jewelry division becomes a member of the

Responsible jewelry Council (RJC)
2008 Acquired luxury watch maker Hubolt in April
2011 Acquired ArteCad, one of its main suppliers of Swiss watch dials in
November
2013 Opened Hélios, its new Perfumes and Cosmetics research center in
France
Acquired 80 percent of Italian luxury cashmere clothing brand Loro
Piana for US$2.57 billion in July
101

LVMH launched its multi-brand
eCommerce website in 2017
Launched the Institut des Métiers d'Excellence, a vocational training

2014 program to pass on unique skills and savoir-faire to new generations
Inaugurated a new shoes and leather goods manufacturing facility in
2015
Ferrare, in northern Italy in August
TAG Heuer launched its first luxury smart watch in November
Sold out the loss-making fashion company Donna Karan International

2016
to US design and licensing specialist G-III Apparel in July
Acquired suitcase maker Rimowa for US$716 million in October
2017 Created a venture fund, LVMH Luxury Ventures, to invest in small,

promising fashion, cosmetics or accessories companies in February
Acquired majority stake in perfume maker Maison Francis Kurkdjian in
March
Gained full control over Christian Dior for US$13.1 billion in April
Launched a multi-brand eCommerce website in May
Launched Clos19, an experimental online drinks shopping platform in

May
Louis Vuitton introduced upscale smartwatch to compete with Apple
in July
Louis Vuitton launched its eCommerce site In Mainland China in July
LVMH's Celine launched its eCommerce venture in December
Invested over US$60 million in an online fashion search business Lyst

2018 in May to expand online presence and capture younger shoppers
Introduced Tambour Horizon connected watch and Horizon wireless
2019 earphones in February
102

LVMH to manufacture
hydroalcoholic gel in France
LVMH and Stella McCartney have reached an agreement in July to

2019 further develop the Stella McCartney House
Announced to acquire the luxury jewelry maker, Tiffany & Co for
US$16.2 billion in November
Stockholders of Tiffany & Co. approved the acquisition by LVMH in
2020
February
Secured an order with a Chinese industrial supplier to deliver around
40 million masks in France in March
Announced that its Perfumes & Cosmetics business would begin
manufacturing hydroalcoholic gel to address its shortage in France
103

L'Oréal’s presence in all distribution
format drives business growth
L'Oréal: overview
L'Oréal SA is a personal care company that specializes in the areas of hair color, skin care, sun
protection, make-up, perfume, and hair care.
L'Oréal is present across all distribution networks including mass market, department stores,
pharmacies and drugstores, hair salons, travel retail, branded retail and eCommerce. The company
has a dedicated team of nearly 4000 people for research and innovation who are working to meet
beauty aspirations all over the world.
L'Oréal is headquartered in Clichy, France and is listed on Euronext Paris.

▪ Number of Employees: 88,000 (31st Dec 2019)
▪ Revenue: US$33.5 billion (31st Dec 2019)1
▪ Market Capitalization: US$164.3 billion (31st Dec 2019)
Business divisions and selected brands
Business divisions Key brands
Luxe2
Consumer products
Professional products
Active cosmetics
1: Converted from EUR to US$, exchange rate: EUR-US$ 1.11986 as of 31st Dec 2019 (Oanda) 104
2: Luxe business division deals with skin care, make-up and perfume
Focus on active cosmetics drives
growth
L'Oréal: strategies
The global active cosmetics or cosmeceuticals market is poised for robust growth mainly because it is
aligned with existing trends such as the desire for health, safety, well-being, authenticity and
naturalness. L'Oréal is one of the leading companies in this product segment globally. 2017 was a
landmark year for the company’s business as it crossed €2 billion in revenues for the first time ever,
with a 5.8% increase as compared to 2016. One of L'Oréals major strengths in this division is that it
has a portfolio of complementary brands from aesthetic medicine (SkinCeuticals) to dermatology (La
Roche-Posay), to accessible skincare (CeraVe), and natural skincare (Vichy).
In North America, the fastest growing market for active cosmetics in the world, the segment
performed well, bolstered by the acquisition of CeraVe, AcneFree, and Ambi from Valeant
Pharmaceuticals for a sum of US$1.3 billion. These acquisitions were especially important as they are
expected to strengthen the company’s relationships with health professionals who are vital towards
developing products in the cosmeceuticals market. In Latin America the division achieved double
digital growth in 2017, mainly because of the strength of the Lancôme and La Roche-Posay brands.
In 2Q2018 the company’s 6.3% increase in sales was also mainly attributed to the strong
performance of the active cosmetic division which posted double digit growth driven by the success
of its La Roche-Posay and SkinCeuticals brands and the impetus provided by Vichy and CeraVe.
105
Source: Trefis
L'Oréal was publicly listed in 1963
L'Oréal: timeline (1/4)
1909 The company was founded
1928 Acquired the company Savons Français
Expanded business operations to Brazil by forming FAPROCO (Fábrica

1959 Produtos Cosméticos S.A.)
1963 The company got listed in Paris Stock Exchange
1964 Entered the luxury goods market by acquiring Lancôme, a perfume,

skincare and make-up brand
1965 Acquired the then leading hair care products manufacturer, Garnier
Partnered with Guy Laroche, a major French couturier to create a

1966
number of fragrances for luxury segment
Acquired Biotherm, a skincare specialist company to complement its
1970 existing Lancôme and Vichy brand
1973 Acquired the French pharmaceutical company, Synthelabo to

research on remedial dermatology
Made an agreement with Nestle to enter certain international
1974 markets, particularly Japan
Acquired the mascara brand Ricils and merged it with Gemey to
1976 expand its offer in all make-up segments.
1984 Acquired Paloma Picasso’s beauty license to market its products
1985 Acquired Ralph Lauren beauty license to market its products
L’Oréal acquired Helena Rubinstein, the American brand of skincare

1988 products in October
Acruired La Roche-Posay
106
106
L'Oréal adopted an inorganic
growth strategy
L'Oréal: Timeline (2/4)
1993 L’Oréal acquires Redken for an undisclosed amount in June
1994 Acquired a controlling stake in Cosmair in June
Acquired a controlling stake in Maybelline for US$508 million to gain a

1996 greater presence in the American mass market in December
1998 L’Oréal acquires SoftSheen in July
2000 Acquired Matrix, Carson, Kiehl’s, Respons and a stake in Shu Uemura
2001 Acquired Biomedical, an American brand of professional corrective

cosmetic products, used and sold by dermatologists
In association with Nestle, L'Oréal entered the market for nutritional
2002
supplements for cosmetic purposes with the creation of Innéov in Oct
Acquired Mininurse, the mass-market skincare product company in
2003 Mainland China to help gain market share for Garnier
Formed alliance with Mr. Shu Uemura, the renowned make-up artist
to enter the strategic Japanese market
Acquires Yue Sai, an affordable luxury skincare and make-up brand
2004 from Mainland China to improve its brand presence in the country
Acquires Skinceuticals, a premium American beauty care brand for
2005 professionals
Opened L'Oréal Hairdressing Academy, largest hairdresser training
2006 center in the world
Entered a licensing agreement with Diesel to launch a line of
fragrances for the 18-35 age group worldwide in January
Acquired the French pharmaceutical company Sanoflore, a company
that produce natural cosmetics by organic farming in October
Acquired SkinEthic, one of the major international specialists in tissue
engineering to develop alternative methods to animal testing
107

L'Oréal continued to fuel its growth
through acquisitions
Acquired PureOlogy, a high-end American professional haircare brand

2007 that targets hair colorists and sales through hair salons in May
2008 Acquired French luxury brand YSL Beauté for US$1.7 billion in January
Acquired Essie Cosmetics, an American brand known for its ultra-

2010 trendy nail varnishes in April
Acquired Pacific Bioscience to position itself in the market for sonic
2011
devices and technologies in the field of skin care in December
Opened a new subsidiary in Nairobi, Kenya in December to serve as
the development center for the Group's activities in East Africa
2012 Launched its World Hair Research Center in Saint-Ouen, Paris to meet
the hair beauty needs of a wide variety of consumers in April
Acquired the Cadum company, to enter the hygiene products market
in April
Acquired Colombian Vogue group, the market leader in mass-market
make-up products to strengthen its position in the region in October
Acquired Urban Decay, an American specialty make up brand, to
increase its market presence in November
Acquired Cheryl's Cosmeceuticals, that specializes in skin care
2013 products and treatments in beauty salons across the country
Acquired Decléor and Carita, two emblematic and complementary
skincare brands in the U.S. in October
Acquired NYX, a leader in the massive color cosmetics industry to
2014 provide high-quality, professional makeup at accessible prices
Launched digital innovation application called “Makeup Genius” to
enable consumers to test makeup products using their mobile phone
Acquired Niely Cosmeticos, the largest independent hair coloration
2015 and hair care company in Brazil in March
Signed a licensing agreement with Proenza Schouler in June for the
creation and development of fine fragrances
108

Further growth was achieved
through partnerships
Launched My UV Patch, the first-ever stretchable skin sensor

2016 designed to monitor UV exposure in January
Partnered with Poietis to conduct an exclusive research on bioprinting
hair follicles
Announced to acquire Atelier Cologne, a company that specialized in
niche perfumery in June
Acquired Modiface, a company that expertise in the creation of
2018
custom augmented reality beauty apps in March
Acquired Pulp Riot, a professional hair color brand in May
Signed a worldwide license agreement with Valentino in May to

develop and distribute fine fragrances and luxury beauty
Acquired Korean lifestyle company Nanda Co. Ltd in June
Collaborated with Facebook in August to provide new AR powered

make up try-on experience through Facebook camera products
Acquired German natural beauty company Logocos Naturkosmetik
AG in August
Launched “My Skin Track UV”, a wearable sensor to help users track
their personalized exposure to UV, pollution, pollen and humidity
Acquired Mugler brands and Azzaro fragrances brands from Clarins
2019 Group in October
Signed a long-term license agreement with Prada to develop and
distribute luxury beauty products.
Finalized the acquisition of the Mugler brands and Azzaro fragrances
2020 from Clarins Group in March
Signed an agreement to acquire Thayers Natural Remedies, a US-
based natural skincare brand from Henry Thayer Company
Finalized the sale of its Roger & Gallet brand to Impala in June
109

Kering entered the luxury market in
1999
Kering: overview
Kering SA is an international luxury products company that owns brands including Alexander
McQueen, Balenciaga, Bottega Veneta, Boucheron, Brioni, Gucci, and Yves Saint Laurent. The
company was established in 1963 as Pinault S.A. which was initially into timber trading and entered
the luxury market in 1999 with the acquisition of 42% share in Gucci. The company changed its name
to Pinault-Printemps-Redoute in 1994, PPR in 2005 and to Kering in 2013.
Kering operates under three business divisions such as Luxury, sports & lifestyle, and eyewear. The
company made a spin off of 70% shares of Puma to its shareholder in May 2018 to solely focus on
luxury brands.
The company is headquartered in Paris, France and is listed on Euronext Paris.

▪ Number of Stores: 1,381 (31st Dec 2019)
▪ Revenue: US17.8 billion (31st Dec 2019)1
Luxury
Sports & lifestyle2
Eyewear
1: Converted from EUR to US$, exchange rate: EUR-US$ 1.11986 as of 31st Dec 2019 (Oanda) 2: 110
Puma was a part of the division till May 2018
Michele-Bizzarri’s leadership and
social media focus drive growth
Kering: strategies
A millennial-focused social media strategy pivotal to Gucci’s recent success

Gucci makes up around 40% of Kering’s total corporate revenues and around 60% of its luxury
activities. What is even more interesting though is that 50% of the company’s sales are coming from
millennials, and social media and digital marketing have a pivotal role to play in this. In fact according
to research firm L2 Intelligence, Gucci has been the best performing digital fashion brand for two
years running in 2016 and 2017, outranking other digital-savvy brands such as Michael Kors, Fendi,
Burberry, and Louis Vuitton. At 27.9 million, Gucci has more Instagram followers than Louis Vuitton,
Dior, and Hermès, with only Chanel (29.9 million) ahead of it. It’s Facebook likes (17 million) are also
more than Dior and Hermès.
Gucci’s recent resurgence can be attributed mainly to creative director Alessandro Michele and CEO
Marco Bizzarri, who have laid a strong emphasis on creating millennial focused social media content
in collaboration with many contemporary artists of today. The brand has also strengthened its appeal
with the millennials by partnering with people like photographer, model, artist and filmmaker Petra
Collins, who at her current age of 25 has designed many of Gucci’s successful campaigns and enjoys
a large following on social media. Gucci was also one of the first brands to engage on Flipboard, a
social network and social news aggregator. One of Gucci’s recent meme-inspired campaigns to
launch its new collection of luxury watches in collaboration famous meme artists such as
@youvegotmale, and @textsfromyourexistentialist, sparked controversy over whether the brand was
trying too hard. However, the campaigns resonated with the brand’s younger and aspirational fan
base, making two of the posts the top performing posts of all time.
Changes made by the Michele-Bizzarri team resulted in immediate success

Marco Bizzarri took over at Gucci’s CEO in 2014 when the brand was on the verge of bankruptcy. He
appointed Alessandro Michele as creative director and the two of them made sweeping changes in
terms of the brand’s image, design and digital adoption.
Firstly, they stopped Gucci’s association with past celebrities such as Grace Kelly and Jacqueline
Kennedy Onassis and instead focused on contemporary celebrities and style icons such as Rhianna,
Blake Lively, Brad Pitt, and Rachel McAdams. They also resurrected the iconic GG logo which had
been deemphasized by the previous team of Patrizio di Marco (CEO) and Frida Giannini (Creative
Director). These strategies have paid rich and immediate dividends with six out of seven of Gucci’s
best-selling and high-margin accessories of all time, having been created by the Michele-Bizzarri
team.
Digital adoption is another big area of focus for Gucci. Its boutiques are getting revamped with
around 25-30% of its 550 stores having already been remodeled under its “New Store Concept,”
which integrates the in-store shopping experience with its digital platform. The brand plans to
increase its eCommerce sales by 300% in the next few years as it launches new platforms in various
countries including New Zealand and Mexico.
111
Source: Forbes, Medium, Raidió Teilifís Éireann

Kering entered the luxury market
with the acquisition of Gucci
Kering: timeline (1/3)
1963 The company was established as Pinault S.A.
1988 Company got listed in Paris Stock Exchange
Acquired CFAO, a company that specialized in trading with Africa and

1990 in electrical equipment distribution
1991 The company entered into retail business
1992 Acquired the department store group Au Printemps, and owned

majority share of the mail order clothing retail chain, La Redoute
1994 Group renamed as Pinault-Printemps-Redoute
Acquired Fnac company in June
Entered the Luxury Goods sector with the acquisition of 42% of Gucci
1999 Group in April
Gucci acquired luxury brands Yves Saint Laurent and YSL Beauté in
November
Gucci acquired Paris-based luxury watch and jewelry firm Boucheron
2000 from Schweizerhall Holding AG for US$145 million in May
Gucci acquired 66.67 percent interest in Italian leather goods House,
2001 Bottega Veneta for US$60.6 million in February
Gucci acquired 91 percent stake in the luxury fashion House,
Balenciaga in July
Gucci signed partnership agreements with Stella McCartney and
Alexander McQueen
Sold out Pinault Bois & Matériaux to the British group, Wolseley in
2003 May
2004 Raised its stake Gucci Group to 99.4% in April
112

It’s name was changed from PPR to
Kering in 2013
2005 The group name changed from Pinault-Printemps-Redoute to PPR
Sold out majority of France Printemps to RREEF and the Borletti group
2006
in June
Acquired 62.1 percent stake in Puma in July (27.1 percent stake in
2007 April)
2008 Sold out YSL Beauté to L’Oréal in June
Acquired minority stake in luxury watch Manufacture, Girard-

Perregaux
2011 Sold out the multichannel retailer of discount home furnishings to

Steinhoff International Holdings Ltd. for US$1.65 billion in February
Acquired a majority stake in Girard-Perregaux in July
Acquired luxury Italian menswear House, Brioni in November
Formed a joint venture with Yoox dedicated to eCommerce for several

2012
Luxury brands of the Group in August
Acquired of a majority stake in Chinese fine jewelry brand, Qeelin in
December
Acquired a majority stake in the luxury designer brand, Christopher
2013 Kane in January
Acquired Tannerie de Périers in Normandy, a tannery specialized in
precious skins in March
The group name changed from PPR to Kering in March
Acquired a majority stake in Italian jewelry brands Pomellato and

Dodo in April
2014 Sold out its multi channel retailer brand La Redoute in June
113

Kering created a new division for
luxury and lifestyle
2014 Acquired the watch Manufacture Ulysse Nardin in July
Created two new divisions, luxury and sports & Lifestyle in May
Launched Kering Eyewear, specialized in the high-end eyewear sector

2015
in June
Kering Eyewear and Cartier signed a strategic agreement to develop,
2017
make and market Cartier eyewear in March
2018 Partnered with London College of Fashion, Kering launched world’s

first Massive Open Online Course (MOOC) for luxury fashion in Feb
Kering made a spin off of 70% shares of Puma in May to solely focus
on luxury brands
Completed the sale of its US sports and lifestyle brand Volcom to
2019
Authentic Brands Group (ABG).
114

Estée Lauder has a presence in
more than 150 countries
Estée Lauder: overview
The Estée Lauder Companies Inc., established in 1946, manufacturers and markets skin care,
makeup, fragrance, and hair care products in more than 150 countries. The company markets its
products under various brand names including Estée Lauder, Aramis, Clinique, Prescriptives, Lab
Series, Origins, Tommy Hilfiger, M·A·C, Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY,
Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, and others.
The Company launched its first eCommerce sites for Clinique and Bobbi Brown in 1996 and created
the ELC Online division for all brands in 1999. It now has nearly 1500 eCommerce/m-Commerce sites
in about 40 countries around the world
The Estée Lauder Companies Inc. is headquartered in New York and listed on New York Stock
Exchange (NYSE).

▪ Number of Employees: >48,000 (30th June 2019)
▪ Revenue: US$14.9 billion (30th June 2019)
Skincare
Makeup
Fragrance
Haircare
115

Acquisitions form the cornerstone
of the company’s success
Estée Lauder: strategies
Inorganic growth, one of the keys pillars of Estée Lauder’s growth strategy
One of the pillars of Estée Lauder’s success has been its inorganic growth strategy. For many years
now the company has acquired small brands that are popular with the younger generation and then
expanded their operations by either doing brand extensions or making new products.
The company made its first acquisition in 1995, the same year it went public, when it bought Bobbi
Brown, a brand that is now sold in over 60 countries around the world. Since then, the company’s
acquisitions have witnessed a significant uptick with multiple purchases in the same year. A few of
them include skincare brands RODIN olio lusso and GLAMGLOW (2014), fragrance brand Le Labo
(2014), fragrance house By Killian (2016) and makeup brands BECCA Cosmetics and Too Faced
(2016) and Deceim (2017). Below are the rationales of a few of the company’s acquisitions.
Too Faced: helped Estée Lauder to capture a greater share of the U.S. color cosmetics and makeup
dupe market, along with delivering market share in prestige makeup, multichannel distribution and
millennial consumers.
By Killian: helped the company establish itself in the niche fragrances market, which has been
growing rapidly due to customers moving towards unique and customized products.
BECCA Cosmetics: helped Estée Lauder break into the Generation Z and non-Caucasian markets.
Reallocating resources as part of the Leading Beauty Forward program

In May 2016, Estée Lauder launched a multi-year initiative called Leading Beauty Forward in order to
better leverage its cost structure and free resources to fuel growth in the future. The initiatives which
began in the fourth quarter of 2016 are expected to go on till 2021 and will include restructuring of
certain business functions and investments in new products, social media, communications, in-store
merchandising, point-of-sale activities, and advertising.
The company expects to spend up to US$700 million on this program in order to realize annual net
benefits of between US$200 million and US$300 million before tax. The key initiatives of Leading
Beauty Forward include:
▪ A net reduction of about 2.5% of its workforce, amounting to around 1,200 positions globally
▪ Optimizing its supply chain and product development process in order to lower inventory levels
and bring down the time taken for an idea to go to market from 18 months to 12 months, with
small changes taking only five or six months.
▪ Shifting focus from traditional to social and digital marketing strategies and develop a more robust
omnichannel offering.
116
Source: Global Cosmetic Industry magazine, The Motley Fool, Travel Markets Insider
Estée Lauder entered the
eCommerce business in 1996
Estée Lauder: timeline (1/3)
1946 The company Estée Lauder Co. was founded
Introduced Re-Nutriv, the first ever luxury skincare collection for

1956
women
1960 Opened its first counter outside of the U.S. in Harrods, London
1962 Introduced the first make-up color collection in the industry
1963 Launched Aramis, the first prestige men's fragrance and treatment
brand of grooming products
1968 Launched Clinique, a dermatologist-guided, allergy-tested, fragrance-

free cosmetic brand
1976 Launched a separate line called 'Skin Supplies for Men'
1981 Started selling products in Russia
1990 Launched 'Origins', the first wellness brand in U.S. department stores
Entered the Chinese market with Estée Lauder and Clinique brands
1993 launch in the Isetan department stores in Shanghai
Signed agreement with fashion designer Tommy Hilfiger for global
distribution
1994 Acquired a majority stake in Toronto-based M·A·C Cosmetics
1995 Acquired Bobbi Brown Cosmetics in October
Acquired La Mer, skincare and cosmetics company
1996 Launched its first eCommerce sites for Clinique and Bobbi Brown.
117

Acquisition and licensing
agreements fostered growth
Acquired Sassaby Inc (of Jane brand) in September to enter mass

1997 market for cosmetics
Signed a licensing agreement with Donna Karan Intl. in September to
manufacture and market beauty-related products
Acquired Aveda, an ayurveda based cosmetics company for US$300
million in November
1998 Acquired the complete stake in M.A.C. cosmetics in February
Launched ELC Online division for all brands under Estée Lauder
1999 Group
Acquired Jo Malone Ltd, a beauty products manufacturer in October
Acquired majority stake in Bumble & Bumble L.L.C. hair salon and
2000 products company to expand its beauty-shop network in June
Acquired Laboratoires Darphin, a company which was into
2003 manufacturing and marketing of prestige skin care products in April
Acquired Michael Kors L.L.C., a high-end fragrance company in May
Sold out Jane cosmetics line, responsible for mass market cosmetics
2004 products of the company in February
Signed an alliance with fashion designer Tom Ford in April, to create
2005 both an exclusive line of fragrances and related products
2006 Acquired luxury watch maker Hubolt in April
Acquired the privately held makeup brand Smashbox Beauty

2010 Cosmetics in May
Signed global licensing agreement with Ermenegildo Zenga to market
2011 fragrances under the Ermenegildo Zegna Group’s brands in March
Signed a multi-year agreement for the exclusive worldwide license of
the Tory Burch fragrance business in October
118

Estée Lauder continues its
acquisition spree
Introduced AERIN Beauty, a luxury lifestyle beauty and fragrance

2012
brand that develops luxurious makeup, fragrance and body products
Acquired RODIN olio lusso, a selective line of premium, sensorial
2014
products company in October
Acquired Le Labo, the high-end fragrance and sensory lifestyle brand
in October
Acquired Glamglow, the skin care brand focused on fast-acting
2015 treatment masks in January
Acquired By Kilian, the Paris-based prestige fragrance brand in
2016 February
Acquired Becca Cosmetics for about US$200 million in October
Acquired makeup brand Too Faced for US$1.45 billion in December
Announced to invest in DECIEM, a vertically integrated multi-brand

2017
skin care cosmetics company to expand its skincare segment in June
Started using advanced 3D printing technology to modernize
2018 manufacturing processes and prototyping in November
Signed an agreement to acquire global skin care company Dr Jart+ in
2019
November
119

Coty is present in both consumer
and professional beauty segments
Coty: overview
Coty Inc is an international beauty products company that operates in three segments: Luxury,
Consumer Beauty, and Professional Beauty. The Luxury segment offers prestige fragrances, and
skincare and cosmetics products, whereas the Professional Beauty segment offers hair and nail care
products to nail and hair salons, nail and hair professionals, and the Consumer Beauty segment
offers color cosmetics, retail hair coloring and styling products, mass fragrance, and mass skin care,
and body care products. The company markets its products under renowned brands including
Alexander McQueen, Balenciaga, Burberry, Bottega Veneta, Calvin Klein, Cavalli, Chloe, Davidoff,
Escada, Gucci, Hugo Boss, Jil Sander, Joop!, Lacoste, Lancaster, Marc Jacobs, Miu, philosophy, Stella
McCartney, and Tiffany & Co.
Coty Inc was founded in 1904 and is headquartered in New York city, U.S.

▪ Number of Employees: 19,000 (30th Jun 2019)
▪ Revenue: US$8.6 billion (30th Jun 2019)
Luxury
Professional beauty
Consumer beauty
120

Inorganic growth and eCommerce
expansion help the business grow
Coty: strategies
Inorganic growth key to Coty’s push into the beauty market

Coty has made its transition from a pure-play fragrance maker to the beauty industry on the back of
several strategic acquisitions. The most important among them was that of nearly 40 brands
including Clairol, Wella, Max Factor, and CoverGirl, from Procter & Gamble in 2017, which have
resulted in boosting the company’s top line by over 100% in the first quarter of 2018.
It also expanded the company’s product suite to include the lucrative ‘salon professional’ and hair
coloring segments. Coty now plans to rebrand its CoverGirl, Clairol and Max Factor products, to
attract a younger audience and compete with affordable and social media popular brands like NYX,
Winky Lux and ColourPop.
The company’s other acquisitions include a 60% stake in Younique, an online peer-to-peer social
selling platform in beauty and the takeover of international license rights for Burberry’s fragrances
and cosmetics business. Younique has been an important addition to Coty’s portfolio with CEO
Camillo Pane crediting the acquisition to the company’s stellar 2Q2018 results. Younique’s sellers
increased from 80,000 at the time of the acquisition in January 2017 to over 230,000 in December
the same year. It’s deal with Burberry will not only help the company to leverage the brand’s
favorable position in many markets across the world but also give it access to Burberry’s vast
distribution network.
eCommerce expansion, an integral part of Coty’s digital strategy

eCommerce is a major focus area for Coty with the company appointing industry veteran Sean Foster
as Global Senior Vice Present of eCommerce in April 2017. Building out better omni-channel
capabilities and expanding to new markets with enhanced investments in digital are the two
immediate areas of emphasis. Putting the plan to action, Coty acquired peer-to-peer social selling
platform Younique in January 2017 and this is already starting to pay off with increased revenues and
sellers.
The company also opted to enter the Chinese market through the BC platform Tmall, instead of
opening physical stores.
121

An inorganic growth strategy
enhanced Coty’s market presence
Coty: timeline (1/3)
1904 The company was founded by François Coty
1925 Coty Inc became a publicly traded company
The five foreign Coty companies are reorganized in Coty International

1939 Corp
Chas. Pfizer & Co acquired Coty and Coty International for about
1963
US$26 million
1992 Joh. A. Benckiser GmbH, a German company acquired Coty
1999 Introduced Adidas Moves, a men's fragrance, to the United States
Signed Jennifer Lopez and launched her first fragrance, Glow by JLO in
2002
April
2003 Acquired Kenneth Cole and Marc Jacobs
2006 Coty Prestige is created to manage Coty’s premium brands
Acquired Del Laboratories, which makes Sally Hansen nail care

2007 products for US$800 million in December
Sold out Orajel and other over-the-counter drug brands to Church &
2008 Dwight Co for US$380 million
Signed a deal with Gemini Cosmetics to distribute Coty Beauty’s
prestige brands to department and specialty stores in the U.S.
Entered a license agreement with GUESS Inc to develop and market
2009 new GUESS fragrance lines
Partnered with Calvin Klein, Inc, to develop and market a makeup line
2010 for launch in 2012
Acquired the German cosmetics firm Dr. Scheller Cosmetics AG in
November
122

Continued acquisitions in the midst
of a listing on the NYSE
Acquired Philosophy, inc., a premier skincare and cosmetics company

2010 in November
Acquired OPI Products, a company dealing with skin care and nail
polish in November
Acquired TJoy Holdings Ltd, a Chinese skin care company for about
US$400 million in December
Acquired StarAsia, a distributor of beauty products in Southeast Asia
2013 in May
The company got listed in New York Stock Exchange in June
Acquired Bourjois cosmetics brand from CHANEL for US$239 million

2015 in April
Acquired Beamly, a digital marketing firm based in New York and
London in October
Acquired the personal care and beauty business unit of Brazil’s
Hypermarcas SA for about US$1 billion in November
Closed the deal to acquire 41 beauty brands from Procter & Gable for
2016 US$12.5 billion in July
Acquired GHD, manufactures of hair-care styling products and
accessories from Britain in October
Acquired Younique LLC, a Utah based cosmetic products company for
2017 US$600 million in January
Acquired the exclusive long-term global license rights for Burberry
Beauty luxury fragrances, cosmetics and skincare in October
Launched digital accelerator start-up program in February focused on
2018 Artificial Intelligence companies to allow AI uses in its brands
Introduced virtual reality (VR) based fragrance discovery experience
for customers to find their perfect match of scent in December
Unveiled augmented reality (AR) enabled Wella Professionals Smart
2019 Mirror to improve hair color selection experience in January
123

Entered into partnerships to
enhance brand presence
2019 Renewed partnership with Lacoste for fragrances in July
Partnered with MARV Studios to launch a new line of Kingsman

fragrances for men in October
Partnered with Kylie Jenner to jointly build and further develop Kylie’s
existing beauty business in November
Announced a strategic partnership with Kim Kardashian West to
2020 develop more product lines
Announced the launch of Kylie Skin at Douglas, a brand by Kylie
Jenner, in Europe
124

Swatch makes luxury watches for all
segments of the market
Swatch Group: overview
Swatch Group AG, founded in 1983, is a Switzerland based manufacturer of luxury watches and
jewelry. The company was formed through the merger of Allgemeine Gesellschaft der
Schweizerischen Uhrenindustrie (ASUAG) and Société Suisse pour l'Industrie Horlogère (SSIH). The
company was initially named as SSIH/ASUAG Holding Company and changed it name to SMH in 1986
and to Swatch Group Ltd in 1998.
The Swatch Group markets its products through eighteen watch brands that address all segments of
the market. The company also developed a strong vertically integrated organization, producing the
full range of watches and watch components, including batteries and microprocessors.
Swatch Group is headquartered in Biel, Switzerland and listed on SIX Swiss Exchange, Zurich.

Divisions Key brands
Prestige and luxury range
High range
Middle range
Basic range
125
1: Converted from CHF to US$, exchange rate: CHF-US$ 1.02976 as of 31st Dec 2019 (Oanda)
Swatch fueled growth through
acquisitions
Swatch: timeline (1/2)
The company formed as SSIH/ASUAG Holding Company with the

1983 merger of ASUAG and SSIH
1986 SSIH/ASUAG Holding Company changed its name to SMH
Acquired Blancpain S. A. that manufactures, commercializes, and

1992 repairs watches and timepieces for men and women
1998 The company changed its name from SMH to the Swatch Group
1999 Acquired Groupe Horloger Breguet, one of the oldest luxury watch
manufacturer in the world in September
2000 Acquired watch manufacturer Montres Jaquet Droz in April
Acquired Glashütter Uhrenbetrieb GmbH, a Germany based luxury

mechanical watch manufacturer in October
Acquired Rubattel et Weyermann, a company that manufactures and
2002 distributes watch dials in April
2006 Acquired watch dial manufacturer MOM Le Prélet S.A. in October
2008 Acquired the watch components division of Burri SA in July
Acquired the Dubai based lifestyle luxury goods retailer, Rivoli Group
in July
Acquired Novi SA, the manufactures of finished watches and
2010 assembling watch movements in December
Acquired Simon & Membrez SA, the manufactures high quality watch
2012 cases for the top price segment in April
Acquired HW Holding Inc., a jewelry and luxury watch company based
2013 in New York for US$1 billion in March
Tissot became the first official timekeeper of the National Basketball
2015 Association (NBA) in October
126

Swatch launched NFC-enabled
analog watches in 2015
Swatch: timeline (2/2)
Launched an NFC-enabled analog payments watch called the Swatch

2015 Bellamy in Mainland China in October
Partnered with Visa Inc to provide tap and pay feature with Swatch’s
new 'pay-by-the-wrist" watch, Swatch Bellamy in November
Swatch and Safilo Group announced five-year collaboration
2016 agreement in February to co-design eyewear collections in February
2017 Swatch Group created the world’s smallest Bluetooth chip in March
OMEGA became the official timekeeper of the Volvo Ocean Race in

September
Omega announced the launch of its online shopping platform in
2020 Europe
127

Hermès restructured its retail
network in 2017
Hermès: overview
Hermès International, founded in 1837, designs, produces, and distributes personal luxury
accessories and apparel. The Company operates a chain of boutiques under the Hermès name that
sells items including leather, scarves, men's clothes, ties, women's fashions, perfume, watches,
stationery, shoes, hats, gloves, and jewelry.
Hermès restructured its retail network all over the world in 2017 closing down two boutiques in
France in Avignon and Rouen. The company also closed down its store in Charlotte, North Carolina as
well as its concession outlet dedicated to watches and jewelry at Harrods in London. However, these
closures have been followed by new openings in growth markets such as Istanbul, Sao Paulo, and
Changsha (Mainland China).
Hermès International is headquartered in Paris and listed on Euronext, Paris.

▪ Number of stores: 311 (As of Dec 2019)
Business divisions Product categories

Leather Bags, luggage, and accessories
Lifestyle accessories Scarves, silk accessories, shoes, equestrian, ties
Home furnishing Textiles, tableware, furniture, lighting, wallpaper, gifts
Perfumery Fragrances, refills
Jewelry Silver, gold, enamel, leather, lacquered metal, horn jewelry
Watches Collection for men and women and Apple watches
128
1: Converted from EUR to US$, exchange rate: EUR-US$ 1.11986 as of 31st Dec 2019 (Oanda)
Hermès does not follow mass
production to retain exclusivity
Hermès: strategies
Hermès is perceived as one of the most luxurious brands in the world and is known for its traditional
craftsmanship, brand exclusivity, and superior manufacturing. One of Hermès’ main USPs is that
unlike other luxury brands it has never compromised on its traditional values. Till now, the brand
shuns mass production, manufacturing lines, and outsourcing with each product made by hand in
French workshops (Ateliers Hermès). The only exception to this are the segments for which it lacks
expertise such as ready-to-wear and watches. The company also has a limited online presence and
distributes mainly through its directly operated stores, thereby maintaining total control.
According to Axel Dumas, it is the brand’s desire to maintain its exclusive status and remain in the
ultra-premium luxury category, that is the driving force behind this strategy.
129

Hermès became a public limited
company in 1993
Hermès: timeline (1/2)
1837 The company was founded in Paris by Thierry Hermès
1922 Introduced first line of handbags with patented zipper in its design
1924 Started selling products in the U.S. market
1929 Introduced the first women’s couture apparel collection
1937 Introduced its line of silk scarf, the Carré
1950 The perfume division of Hermès was established
1951 Launched the first perfume Eau d'Hermès
1956 Introduced the iconic Kelly bag
1961 Launched the new line of perfume for women, Calèche
1972 Introduced first Hermès shoes for women
1976 Acquired the shoemaker company John Lobb
1993 The company got listed in Paris Stock Exchange
1996 The company entered the Chinese market with a new store in Beijing
1997 Introduced first Hermès shoes for men
1999 Acquired 30% of Jean Paul Gaultier
130

LVMH acquired 20% stake in
Hermès in 2010
Hermès: timeline (2/2)
Introduced its eCommerce website to facilitate customers shop

2001 online
Acquired 28 Rue Faubourg Saint-Honore to expand its flagship store
2007
in Paris
2010 LVMH acquired 20% stake in the company in October
Acquired d’Annonay tannery, one of its key providers of calf leather to

2013 ensure uninterrupted supply in January
Partnered with Apple to create a collection of new Apple Watches in
2015 September
Acquired a stake in Maison Pierre Hardy, a French footwear and
2016 accessory design company in July
Announced in October to open two new leather-goods production
2017
facilities in France in the next two years
Launched its new European website with integrated online store in
2018 April
Launched new fine jewelry collection in July
Launched its Chinese e-Commerce website in October
Announced the reopening of its store in Taikoo Hui Guangzhou,

2020
Mainland China
Announced the opening of its new store in Kuwait
131

Burberry sells all its products through
a single brand name
Burberry: overview
Burberry Group plc is a luxury products company that serves men, women, and children under the
Burberry brand name. The company operates in two segments: Retail/Wholesale and Licensing.
It markets its products through Burberry mainline stores, concessions, outlets, digital commerce,
Burberry franchisees, department stores, and multi-brand specialty accounts, as well as an online
platform Burberry.com and third-party wholesale customers. The company has an established digital
presence with burberry.com which is into 47 countries and available in 11 languages.
Burberry Group plc was founded in 1856 and is headquartered in London, the United Kingdom.

▪ Number of Employees: 10,161 (31st Mar 2020)
▪ Number of Stores: 421 (31st Mar 2020)
▪ Revenue: US$3.3 billion (31st Mar 2020)1
Business segments and product categories
Business segments Product categories
Women’s Clothing, bags, scarves, accessories, shoes, makeup, fragrance, gifts
Men’s Clothing, scarves, accessories, shoes, fragrance, gifts
Children’s Clothing, shoes, accessories, gifts
132
1: Converted from GBP to US$, exchange rate: GBP-US$ 1.23926 as of 31st Mar 2020 (Oanda)
Repositioning as an upmarket
brand helped the bottom line
Burberry: strategies
In November 2017, Burberry’s new CEO Marco Gobbetti announced plans to reposition the brand as
more premium and upmarket, in order to achieve higher prices and profit margins. This was widely
seen by industry experts as a strategy to define Burberry’s slightly ambiguous position which varies
from accessible to premium luxury. The brand now aims to target more affluent consumers who
have a taste for a distinctive British look.
In order to achieve this, he announced aggressive investment plans to make all its stores more
luxurious, while enhancing the brand’s exclusivity by stopping the sale of its iconic trench coats and
handbags through some department stores in the U.S. and Europe. Additionally, the company will
bring in new fashion ranges each season and also increase the price of most of its products. Citing an
example, Gobbetti said that the polo shorts which retailed for around £275 each, now needed to be
priced at least 50% higher.
Burberry has also stepped up cost cuts and is on track to deliver cumulative savings of £100 million
by the end of 2018. Earlier in 2017, the brand also announced that it was relocating 300 jobs from its
more expensive London offices to West Yorkshire as part of the cost savings measures. This strategy
now seems to be paying off with the company’s 2017 profits having edged up 4% as compared to the
year before.
By re-energizing our product and customer experience to establish our

position firmly in luxury, we will play in the most rewarding, enduring
segment of the market.
Marco Gobetti, CEO at Burberry
133

Burberry partnered with Farfetch to
improve its eCommerce presence
Burberry: timeline (1/2)
1856 Burberry was founded by Thomas Burberry
1888 The weatherproof fabric, gabardine was patented by Burberry
First Burberry store opened in the West End of London at 30

1891 Haymarket
The iconic trench coat was introduced to the War Office to be worn by
1912
military personnel during the First World War
1924 Burberry's iconic Haymarket Check is first introduced in the lining of

the trench coat
1970 Opened a New York flagship store at East 57th Street
2000 Burberry-Touch, the new fragrance for men and women was launched
2001 Burberry launched its first children’s wear collection
2010 Bought out its Chinese business partner for £70 million in July to
expand its luxury brand further in Mainland China
Completed acquisition of its Chinese retail business from Sparkle Roll
2016 Holdings Limited in August
Partnered with Coty in October to accelerate the growth and
2017 development of the Burberry Beauty business
Partnered with Farfetch, a technology platform for the fashion
2018 industry to further strengthen its eCommerce presence in February
Entered into an agreement in May to acquire a luxury leather-goods
business from CF&P to have greater control over quality and costs
partnered with UN Climate Change to launch the Fashion Industry
Charter for Climate Action in December
Partnered with online marketplace ‘The RealReal’ to increase its
2019 presence online in October
134

Partnered with Tencent to develop
social retail in Mainland China
Burberry: timeline (2/2)
Launched its first online game called B Bounce, bringing the gaming
2019 experience to customers globally on Burberry.com in October
Partnered with Tencent to develop social retail in Mainland China in
November
Launched a new flagship store at the exclusive Ginza Marronnier
building in Tokyo.
Announced the launch of a curated edit of 26 styles from the
2020 Spring/Summer 2020 collection, all made from sustainable materials
Launched a new Augmented Reality (AR) shopping tool through
Google Search technology.
135

Appendix
136
Glossary
Term Abbreviation Explanation

Generation Z or Gen Z is the demographic
cohort after the Millennials. There is no
precise date for when Generation Z begins,
Generation Z Gen Z
but demographers and researchers typically
use the mid-1990s to mid-2000s as starting
birth years.
High net worth individuals are generally those

that have a diverse portfolio of assets and
High Net worth Individuals HNI
would benefit from professional management
to secure and grow future wealth.
Includes handbags, suitcases and briefcases

Luxury leather -
as well as small leather goods such as wallets.
Includes only sales of luxury brands; trend

Luxury watches & jewelry -
watches and fashion jewelry are excluded.
Includes only apparel and footwear made by

Luxury fashion - luxury brands; mass-market products are
excluded.
Includes only luxury eyewear frames and

Luxury eyewear - sunglasses; lenses and contact lenses are
excluded.
Includes only prestige skin care, fragrances

and decorative cosmetics; hair care, oral care,
Prestige cosmetics and
- personal hygiene, and professional products
fragrances:
produced for hair salons or cosmetic parlors
are not included.
137
Authors
Dev Mehta
Founder and Director, AgileIntel Research
Dev Mehta has over 10 years of experience working for market

research, legal, and consulting companies. He worked in various
sectors such as Defense, Digital Marketing, FinTech, Insurance,
and Consumer Goods.
Dev Mehta completed his Post Graduate Diploma from Massey
University New Zealand, majoring in Business Management and
a Masters in Marketing Management from Middlesex University,
London.
Ann-Kristin Hamke
Chief Data Officer, Statista
Ann-Kristin Hamke is the Chief Data Officer at Statista and is in

charge of the production of exclusive own Statista content.
After graduating in Business Mathematics, she worked as a
consultant with the Boston Consulting Group and contributed to
the build-up of the German online fashion retailer About You as
a project manager and by heading the business intelligence
department.
Leonie Senn
Project Manager, Statista
Leonie Senn studied Business Information Systems (B.Sc.) at the

DHBW in Stuttgart and Business administration with the major
Strategy & Information at the University of Augsburg (M.Sc.).
Before joining Statista, she worked as a consultant with EY for
the Transaction Advisory Services, where she worked on large
Carve-out and Integration projects.
W W W . S T A T I S T A . C O M in cooperation with:
Authors
Simon Lüdemann
Analyst Consumer Goods
Simon Lüdemann studied Economics and International

Economics with a focus on the European Union at the University
of Göttingen including a stay abroad in Florence. He gained a
comprehensive understanding of market structures working as a
market researcher and analyst. In the Consumer Market Outlook
he is mainly responsible for fashion and luxury.
Madeleine Brinckmann
Team Lead Consumer Market Outlook
Madeleine Brinckmann studied Sociology, Economics, Political

Science and Law at the University of Hamburg.
Before joining Statista, she worked as a Business Partner in
Category Management and later in Retail Environment
Management at CP GABA GmbH (formerly Colgate-Palmolive).
W W W . S T A T I S T A . C O M in cooperation with:

Statista InDepthReport LuxuryGoods 2020

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In-depth: Luxury Goods 2020

Statista Consumer Market Outlook

Questions? U.S.: support@statista.com EU: eu.support@statista.com

Global luxury goods market 08

▪ Prestige cosmetics & fragrances 14

▪ Luxury watches & jewelry 16

▪ Luxury leather goods 18

▪ Luxury goods as investments 22

Deep dive: luxury retail & online shopping 23

▪ Luxury men’s wear 48

▪ Hong Kong SAR 72

▪ Interest in luxury goods 82

▪ Luxury fashion & accessories 85

▪ About the study 95

▪ Estée Lauder 115

▪ Swatch Group 124

▪ Statista Global Consumer Survey , Statista Consumer Market Outlook 138

▪ Statista Content & Design , Statista Research & Analysis 139

Luxury goods market in billion US$

Luxury goods market segment shares in 2020

Source: Statista Consumer Market Outlook 2020

Luxury goods market: average revenue per capita in US$

Luxury goods average revenue per capita by top 5 countries in US$

Hong Kong SAR Singapore Luxembourg Switzerland Iceland

2015 2020 2025

Luxury fashion goods market in billion US$

Luxury fashion market in top 5 countries in billion US$

U.S. Japan Mainland China Italy France

7.7 8.0 7.5 7.3 7.3

2015 2020 2025

Luxury fashion market share by top 5 countries

U.S. Japan Mainland China Italy France Others

42% 47% 49%

2015 2020 2025

Prestige cosmetics & fragrances market in billion US$

Prestige cosmetics & fragrances market in top 5 countries in billion US$

U.S. Japan Mainland China France UK

2015 2020 2025

Prestige cosmetics & fragrances market share by top 5 countries

U.S. Japan Mainland China France UK Others

46% 47% 47%

21% 17% 16%

2015 2020 2025

Luxury watches & jewelry market in billion US$

Luxury watches & jewelry market in top 5 countries in billion US$

Mainland China U.S. Japan France Italy

2015 2020 2025

Luxury watches & jewelry market share by top 5 countries

Mainland China U.S. Japan France Italy Others

37% 38% 38%

27% 29% 32%

2015 2020 2025

Luxury leather goods market in billion US$

Luxury leather goods market in top 5 countries in billion US$

U.S. Mainland China France Japan UK

2015 2020 2025

Luxury leather goods market share by top 5 countries

U.S. Mainland China France Japan UK Others

39% 42% 43%

28% 23% 22%

2015 2020 2025

Luxury eyewear market in billion US$

22.5 22.7 22.8

Luxury eyewear market in top 5 countries in billion US$