eLuxuryGoodsReport In-DepthMarketInsights&DataAnalysis

INDUSTRIES & MARKETS
Luxury Goods – In-depth

Market Insights & Data Analysis
August 2022
Management summary (1/3)
The global luxury goods market is expected to increase from US$349.1 billion in The luxury industry has been associated with excessive consumerism and a general
2022 to US$419 billion in 2027, at a CAGR of 3.7%. Even though cutbacks on lack of respect for the environment. However, with the growing influence of
discretionary spending and an uncertain economic climate triggered by the COVID- Millennials and Generation Z who deeply consider the social impact of their luxury
19 pandemic resulted in a sharp fall in demand in 2020, the resurgence in Chinese purchases, the industry is gradually moving towards ethical and sustainable
and American spending, the increasing dominance of millennials and Generation Z products and experiences.
and the consistent strength of the online channel, have led to a strong revival in the
Casualization of apparel, the growing demand for experiential luxury, rentals, and
market which is expected to continue over the medium to long-term as well. Asia is
the rising share of online sales and accessories are other important market trends.
expected to witness the highest spending, riding the crest of Mainland China’s
resurgence, followed by Europe, North America, South America, Africa, and Spending by millennials from Mainland China, both at home and overseas, is one of
Australia and Oceania. the main drivers of the global luxury market. Mainland China currently has around
400 million millennials, five times more than the U.S. International tourism is
Even though luxury online sales are gaining market share worldwide, the
another driver with a 2017 Deloitte study showing global tourists to account for
importance of the physical store continues to increase. Companies follow different
almost 47% of luxury goods purchases. The recent rise of luxury menswear has
strategies to augment their retail experience in the days of eCommerce.
resulted in brands such as Prada, Gucci, and Dolce & Gabbana, which traditionally
Interestingly, digital-born luxury companies are now opening physical stores to
have not been known for their menswear lines, to open stores focused only on
increase traffic to their eCommerce stores, enhance brand legitimacy, provide the
men.
touch and feel lacking in an online store, and improve local community
engagement.
2
Demand for mass-customization of luxury products has forced the leading brands In addition, the Russia-Ukraine war has prompted many luxury brands including
to revisit their existing manufacturing process. Although, luxury manufacturers Hermès, LVMH, Chanel, Kering, Prada, Richemont, Net-a-Porter and MyTheresa to
have historically been technology laggards, they are now integrating advanced suspend their operations in the country indefinitely that eventually hurting the
digital technologies such as additive manufacturing, analytics, material science, overall market.
augmented reality and AI, into their manufacturing processes.
Although eCommerce has permeated almost every industry over the last decade or
Resale of luxury products, NFTs and social gaming present growth opportunities for so, luxury brands have been wary of selling online, relying instead on their brick-
the luxury manufacturers. Historically, luxury brands have been averse to reselling and-mortar stores. This was mainly to maintain their exclusivity, craftsmanship and
their products in order to protect their brand identities and margins. However, the authenticity. However, COVID-19 has changed the scenario drastically, driving
last few years have witnessed a surge in the sales of pre-owned luxury products, luxury online sales past the tipping point. Pure-play multi-brand retailers such as
thanks mainly to specialized digital trading platforms and fast-changing consumer Farfetch, Tmall Luxury and JD.com Luxury, that offer both multi-brand
behavior. Licensing has started to present growth opportunities for brands in terms marketplaces and mono brand eCommerce websites, have been the biggest
of increased product and geographical reach, while maintaining product quality winners in terms of revenues and number of users.
control and brand exclusivity.
Chinese and Indian cities such as Guangzhou, Beijing, Shanghai, Hong Kong, Delhi
Even though Chinese spending on luxury products has been one of the key drivers and Mumbai, have been luxury hotspots in the two countries for many years.
of the industry’s post-pandemic recovery, challenges including unfavorable However, their saturation along with the COVID-19-induced migration of a large
demographics, nationalistic sentiments, indigenous brands and geopolitical part of the working population to a work-from-home model and the sharp increase
tensions threatens to slow down the global market. in online shopping, has put the spotlight on tier-2 and tier-3 cities.
3
Brands are now adopting digital technologies to not only mimic the in-store France leads in the number of leading luxury goods companies globally. Specifically,
shopping experience on their eCommerce platforms but to also enhance the most of the prominent French luxury goods companies are located in Paris. We
physical store experience. Artificial intelligence (AI) is currently the most sought- have a closer look at some of those prominent French companies: LVMH, L'Oréal,
after technology, as it enhances customer experience and helps brands reach a Kering, and Hermès along with other global leaders including Burberry, Swatch,
wider audience. Estée Lauder, and Coty.
Immersive technologies such as virtual and augmented reality (VR/AR) are also Most of the luxury goods companies followed inorganic growth path by acquiring
experiencing increasing use due to their ability to enhance the overall shopping competitor companies to increase their business presence. A few of them opted for
experience and create high-quality content for digital marketing. 3D printing is used licensing and distribution arrangements to support their bottom line.
mainly in luxury fashion as it enables the creation of shapes without molds, thus
resulting in elements with extreme intricacy.
The U.S., Mainland China, and Japan are projected to be the three biggest markets
for luxury goods in 2022 with a market size of US$74.7bn, US$53.3bn and
US$29.9bn respectively. These markets are projected to account for 47% of the
global luxury market in 2022. 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.
4
Table of contents (1/2)
Management Summary Luxury Online Shopping 36 Best Performing Influencers 2021 64

Gen Z and Luxury Goods 65
Table of Contents 03 Trends Chinese Millennials 66
Sustainable Luxury 43 HENRYs (High-Earners-Not–Rich-Yet) 68
01 Global Luxury Goods Market Mass-customization 46 International Tourism 70
Overview 08 Casual Clothing 48 Luxury Men’s Wear 72
Luxury Fashion 13 Experiential Luxury 50
Luxury Leather Goods 16 Democratization of Luxury 53 05 Opportunities
Luxury Watches & Jewelry 19 Rentals And Subscription Models 55 Manufacturing 75
Prestige Cosmetics & Fragrances 22 Online Sales 57 New Revenue Streams 76
Luxury Eyewear 25 Importance of Accessories 58 Licensing 77
Luxury Goods As Investments 28 Metaverse 60
Digital Fashion Houses 61 06 Challenges
02 Deep Dive: Luxury Retail & Online Shopping China 79
Luxury Retail Shopping 31 04 Drivers Russia-Ukraine War 80
Omnichannel Strategy 34 Influencer Marketing 63
5
Table of contents (2/2)
Legacy Technology Infrastructure 81 U.S. 99 Hermès 162

Global Uncertainties 82 Mainland China 103 Burberry 166
Japan 107 Leading eCommerce Luxury Fashion Brands
Profiles 171
07 COVID-19 Impact France 111
Pure-play Multi-brand Retailers 84 UK 114
Hong Kong SAR 118 11 Appendix
Demand From Small Cities 85
Singapore 122 Glossary 173
Discounting Strategies 86
Statista Global Consumer Survey 174
Sustainability 87
Statista Consumer Market Outlook 175
10 Competitive Landscape
Statista Content & Design 176
08 Technological Impact Company Comparison 128
Statista Q 177
Use of AI 89 LVMH 129
Authors 178
Use of AR 92 L’Oréal 135
3D Printing 93 Kering 142
Tech Start-ups 95 Estée Lauder 148
Coty 154
09 Country Analysis Swatch Group 159
6
CHAPTER 1
Global Luxury Goods Market
The global luxury goods market is expected to increase from US$349.1 billion in 2022 to US$419 billion by
2027, at a CAGR of 3.7%. Even though cutbacks in discretionary spending and an uncertain economic
climate triggered by the COVID-19 pandemic resulted in a sharp fall in demand in 2020, the resurgence in
Chinese and American spending, the increasing predominance of Millennials and Generation Z, and the
consistent resilience of the online sales channel have led to a strong revival in the market, which is
expected to continue over the medium to long-term as well. Asia is expected to witness the highest
spending, riding the crest of Mainland China’s resurgence, followed by Europe, North America, South
America, Africa, and Australia and Oceania.
COVID-19 pandemic resulted in a sharp fall in demand in 2020
Overview (1/5)
The global luxury market covers many segments but for the purpose of this report Asia will likely witness the highest spending, with total predicted sales of US$133.2
we have: billion in 2022, followed by Europe (US$109.1 billion), North America (US$84.4
billion), Australia and Oceania (US$8.4 billion), Africa (US$5.8 billion), and South
Included: Personal luxury goods such as watches and jewelry, apparel and
America (US$5.1 billion). The U.S. (US$74.7 billion) is expected to become the
footwear, eyewear, cosmetics, and fragrances.
largest market, followed by Mainland China (US$53.3 billion), Japan (US$29.9
Excluded: Wine and spirits, food, designer furniture, hospitality and travel, luxury billion), France (US$18 billion), and Germany (US$15 billion).
cars (this is available in Statista's Mobility Market Outlook), artisanal, and small-
The online sales channel will likely continue to gain ground as the boundaries with
scale production.
the traditional physical channels are blurred, accounting for 20.8% and 26% of total
According to Statista’s Consumer Market Outlook, cutbacks on discretionary sales in 2022 and 2025, respectively.
spending and an uncertain economic climate triggered by the COVID-19 pandemic
resulted in a sharp fall in demand in 2020. However, the resurgence in Chinese and
American spending, the increasing predominance of Millennials and Generation Z,
and the consistent resilience of the online sales channel have led to a strong revival
in the market, which is expected to continue over the medium to long-term as well.
The global luxury goods market is expected to increase from US$349.1 billion in
2022 to US$419 billion by 2027, at a CAGR(1) of 3.7%.
8 Notes: (1) CAGR: Compound Annual Growth Rate / average growth rate per year
Sources: Statista Consumer Market Outlook 2022

Luxury goods market is estimated to exceed US$400bn by 2026
Overview (2/5)
Luxury goods market in billion US$
4%(1) 419
407
395
382
368
349
306
286 294
274 265
253 255 259
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Luxury fashion to bring in the highest revenues globally in 2022
Overview (3/5)
Statista Consumer Market Outlook has segmented the global luxury goods market However, in terms of the cumulative average growth over the period from 2022 to
into five categories: 2027, prestige cosmetics and fragrances and leather goods lead with 4.4% each,
followed by fashion (3.7%), watches and jewelry (2.8%), and eyewear (2.1%).
• 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; haircare, oral care, personal hygiene, and professional
products produced for hair salons or cosmetic parlors are not included.
According to the Outlook, luxury fashion continues to dominate the market in

terms of revenues, followed by watches and jewelry, leather goods, prestige
cosmetics and fragrances, and eyewear.
10

Luxury fashion to bring in the highest revenues globally in 2022
Overview (4/5)
Luxury goods market segment shares in 2022
6%
20% 31%
21%
21%
Fashion Leather Goods Eyewear

Watches & Jewelry Cosmetics & Fragrances
11

Luxury goods average revenue per capita to register a moderate growth
Overview (5/5)
Luxury goods market: average revenue per capita in US$ Luxury goods average revenue per capita by top 5 countries in US$
1,988
3%(1)
52 53
50 1,695
48 49
46 1,528
41
39 39 39
36 36 37
35
764
677 669 693
606
487 484 529 503
465
378
250
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2015 2021 2027
Hong Kong SAR Switzerland Luxembourg
Singapore Iceland

Luxury fashion market to surpass US$130 billion by 2027
Luxury Fashion (1/3)
The total luxury fashion market, which includes apparel and footwear, is expected products, are the two main factors responsible for this.
to increase from US$109.7 billion in 2022 to US$131.8 billion by 2027, at a CAGR(1)
Another important trend in this market segment is the rapid emergence of
of 3.7%. The U.S. is expected to have the largest market in this category, with
accessories and shoes as the new driving forces, replacing ready-to-wear clothes,
cumulative sales of US$167.9 billion from 2022 to 2027, followed by Mainland China
the previously dominant category. In fact, a study conducted by French bank BNP
(US$71.1 billion), Japan (US$58.9 billion), Italy (US$50.1 billion), the UK (US$47.7
Paribas and the fashion consultancy company VR Fashion Luxury Expertise found
billion), France (US$44 billion), and Germany (US$38.1 billion).
that ready-to-wear collections now make up only up to 10% of the business for
However, the luxury fashion market in Georgia is expected to have the highest most fashion houses.
growth rate, with 6.3% over the period from 2022 to 2027, followed by Ireland
(6.2%), Thailand (6%), and the Netherlands, Bosnia and Herzegovina, Slovakia,
Austria, Romania, Portugal, and Switzerland, with 5.7% each. The U.S. and Italy are
expected to lose market share until 2025, while Mainland China gains 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

Luxury fashion market to surpass US$130 billion by 2027
Luxury fashion goods market in billion US$
4%(1) 132
128
124
120
116
110
96
91 93
86 83 86
78 80
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

The U.S., Mainland China and Japan lead the luxury fashion market
Luxury fashion market in top 5 countries in billion US$ Luxury fashion market share by top 5 countries
29.1
43% 45% 46%

23.2
22.6
13.2
7% 6%
10.9 7%
8% 7%
8.9 8.8 7%
8.0 7.7 7% 8% 8%
6.3 5.9 7%
5.4 5.7 5.9 5.2 9% 10%
29% 25% 22%
2015 2021 2027 2015 2021 2027

U.S. Mainland China Japan Italy UK U.S. Mainland China Japan Italy UK Others
15

Luxury leather goods market is the second largest segment
Luxury Leather Goods (1/3)
The global market for luxury leather goods is expected to grow from US$74 billion In order to meet this growing demand, brands are either partnering with or
in 2022 to US$91.5 billion by 2027, at a CAGR(1) of 4.4%. With a cumulative spending acquiring leather suppliers. For example, LVMH has partnered with Tannerie
of US$499.8 billion, it is expected to become the second largest category after Masure in Belgium and acquired crocodile skin supplier Heng Long (Singapore) and
fashion. Les Tanneries Roux (France). Other acquisitions include Tanneries d’Annonay
(France) by Hermès, France Coco by Kering, and Bodin Joyeux by Chanel.
The U.S. is by far the largest market for luxury leather goods in the world, with an
expected cumulative spending of US$118.4 billion from 2022 to 2027, followed by
Mainland China (US$61.9 billion), Japan (US$46.4 billion), France (US$32 billion), and
the UK (US$21.3 billion). With a CAGR(1) of 6.4% each, Ireland and Georgia are the
fastest-growing markets from 2022 to 2027, followed by Mauritius (6.3%), Togo,
Japan, Chad and Cameroon (6.2% each), Ivory Coast (6.1%), Slovakia (6.1%), and
Romania (6%).
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.

Luxury leather goods market to exceed US$90 billion by 2027
Luxury leather goods market in billion US$
4%(1) 92
89
85
82
79
74
62 63
57
50 52
49 47
46
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Despite its increase in market size, the share of the U.S. to decline
Luxury leather goods market in top 5 countries in billion US$ Luxury leather goods market share by top 5 countries
21
42% 44% 44%

16
14
12 4% 4% 4%
6% 6% 6%
9 8% 9% 10%
7 10%
6 6 11% 13%
4
4 4
3
3 3 30%
2 26% 23%
2015 2021 2027 2015 2021 2027

U.S. Mainland China Japan France UK U.S. Mainland China Japan France UK Others
18

Market for luxury watches & jewelry to value US$85 billion by 2027
Luxury Watches & Jewelry (1/3)
The global luxury watches and jewelry market is expected to increase from US$74.4 In fact, according to Apple’s CEO Tim Cook, the sales of Apple Watches in the U.S.
billion in 2022 to US$85.4 billion by 2027, at a CAGR(1) of 2.8%. Mainland China is the have surpassed the combined sales of the entire luxury Swiss watch industry.
dominant market in this category with a market size of US$24.6 billion in 2022,
Japan is expected to become the fourth-largest market, with a total spend of
which is estimated to increase to US$28.3 billion by 2027, at a CAGR(1) of 2.9%. One
US$28.2 billion from 2022 to 2027. Interestingly, Romania will likely witness the
of the main reasons for this growth is the sharp fall in revenues in 2020 due to the
highest growth in this segment, with a CAGR(1) of 6.2% from 2022 to 2027, followed
pressures exerted by the COVID-19 pandemic and the subsequent strong recovery
by Luxembourg (5.8%), Estonia (5.6%), Serbia, and Bulgaria and the Netherlands,
driven majorly by the Chinese millennials. To put the increasing influence of
with 5.5% each.
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.. Hong Kong
SAR is another important market for luxury watches and jewelry, with the second-
highest cumulative spending of US$57.5 billion over the period from 2022 to 2027,
following Mainland China (US$159 billion).
With a cumulative spending of US$52.1 billion over the period from 2022 to 2027,
the U.S. is the third-largest market. The market is expected to be worth US$8.9
billion in 2027, increasing at a CAGR(1) of 1.1% from 2022 to 2027. The 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.

Market for luxury watches & jewelry to value US$85 billion by 2027
Luxury watches & jewelry market in billion US$
3%(1) 85
82 84
80
77
74
67 67
63 64
61
59 59
55
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Mainland China and Hong Kong SAR lead the luxury watches & jewelry market
Luxury watches & jewelry market in top 5 countries in billion US$ Luxury watches & jewelry market share by top 5 countries
28
34% 34% 35%

21
20
3% 4% 4%
5% 6% 6%
12% 11% 10%
14% 13% 11%

10
8 8 9
7 7
5
4 3 32% 33% 33%
3 2
2
2015 2021 2027 2015 2021 2027

Mainland China U.S. Germany
Mainland China Hong Kong SAR U.S. Japan Germany Hong Kong SAR Japan Others
21

Prestige cosmetics & fragrances to value US$87 billion by 2027
Prestige Cosmetics & Fragrances (1/3)
The global prestige cosmetics and fragrances market is expected to be the fourth- established model, where brands focused on maximum category presence,
largest market in terms of cumulative spending from 2022 to 2027, growing from producing all products in their category. They are now instead operating a pick-and-
US$69.9 billion in 2022 to US$86.9 billion by 2027, at a CAGR(1) of 4.4%. Top line mix approach towards products, brands, and categories.
growth in prestige beauty has outperformed mass-market, beauty, and other
Sustainability is currently one of the biggest challenges facing the market. Even
consumer categories for many years now.
though Western consumers have started rejecting beauty products that are tested
The U.S. is predicted to have the largest market in the world in terms of cumulative on animals, Mainland China, which is one of the major markets in this category,
spending from 2022 to 2027 (US$79.8 billion), followed by Japan (US$72.6 billion), continues to use animal testing, which poses a challenge for global brands.
Mainland China (US$59.4 billion), France (US$23.2 billion), and the UK (US$22.8
billion). With a CAGR(1) of 6.7% each, Brunei Darussalam and Thailand are expected
to be the fastest-growing markets from 2022 to 2027, followed by Mainland China
(6.5%), Japan and the UK (6.2% each), Taiwan (6.1%), and South Korea and
Lithuania, with 6% each.
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 about 55% 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-

Prestige cosmetics & fragrances is the second largest segment
Prestige cosmetics & fragrances market in billion US$
4%(1) 87
84
81
78
74
70
61
57 57
54 53
49 50 51
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Top 5 countries account for over half of the global market
Prestige cosmetics & fragrances market in top 5 countries in billion US$ Prestige cosmetics & fragrances market share by top 5 countries
14.2 13.8
11.4 47% 45%

51%
10.3
9.8
8.5
5% 5%
4% 5% 5%
5.9 6.2
5%
11% 13%
7%
4.3 4.3
3.6 12% 15% 16%
2.8 2.6
2.3 2.2
20% 18% 16%
2015 2021 2027 2015 2021 2027

U.S. Japan Mainland China France UK U.S. Japan Mainland China France UK Others
24

Luxury eyewear market is the smallest among all categories
Luxury Eyewear (1/3)
The luxury eyewear market is the smallest among all categories in terms of In fact, EssilorLuxottica is so dominant that it accounted for 90% of all luxury
revenues, with an expected cumulative spending of US$134.7 billion from 2022 to eyewear sales in the U.S., followed by Safilo with a paltry market share of 5%,
2027. The market is estimated to increase from US$21.9 billion in 2022 to US$23.5 according to the Statista Consumer Market Outlook in 2020. In addition to owning
billion by 2027, at a CAGR(1) of 2%. brands like Oakley, Ray-Ban, and Persol, EssilorLuxottica is also the parent
company of major distributors like Sunglass Hut, LensCrafters, Pearle Vision, and
The U.S. is by far the largest market for luxury eyewear, accounting for nearly 38%
Sears Optical.
of total estimated spending from 2022 to 2027, followed by Germany, France, Italy,
and Mainland China. At 7.8% each, Albania and Spain are expected to be the
fastest-growing markets from 2022 to 2027, followed by Taiwan (7.7%), Serbia
(7.3%), Senegal (7%), Ireland (6.6%), Sweden (6.5%), and Luxembourg (6.4%).
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 EssilorLuxottica, Safilo, and Marcolin
Eyewear, which have monopolized the market, representing brands such as Fendi,
Dolce & Gabbana, Cartier, and Gucci, among others.

Luxury eyewear market is the smallest among all categories
Luxury eyewear market in billion US$
2%(1)
23 23
22 23
22
21
20 19 20 20
19 19
18
16
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

The U.S. occupied 41% of the total market in 2021
Luxury eyewear market in top 5 countries in billion US$ Luxury eyewear market share by top 5 countries
8.7
8.5
39% 40% 42%
7.2 4% 4%
5% 4% 5%
1.6 3% 5% 4%
1.5 3% 6%
5%
7%
1.1
0.9 1.0 1.0
0.9 0.9
0.8 0.7
0.7 0.6 45% 41%
36%
2015 2021 2027 2015 2021 2027
U.S. Germany France Italy Mainland China U.S. Germany France Italy Mainland China Others
27

The luxury assets are soaring in value
Luxury Goods as Investments (1/2)
Demand for luxurious items has been rising steadily in line with dramatic growth in US$30 million. Wine (137%), watches (108%), handbags (78%), and art (75%) have
the number of extremely wealthy individuals worldwide. Even though millionaires also gained value steadily.
and billionaires love splurging on mega purchases such as yachts, private jets, and
property, they also splash the cash on a long list of other "investments of passion."
The 2021 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.
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 an
auction in October, and this was then swiftly beaten in November, when another
bottle went for a mind-blowing US$1.5 million. Moreover, in February 2021, a
private whiskey collection of 3,900 bottles of mostly single-malt Scotch created
history, fetching just over US$9 million at an online auction. Over the past decade,
the value of rare whiskey has soared 428%.
The relationship between the super rich and luxury cars needs no introduction.
Their value has gone up by 164% over the past ten years. The top three sales in
2020 were the 1934 Bugatti Type 59 Sports, the 1937 Bugatti Type 57S Atalante, and
the 1932 Bugatti Type 55 Super Sport Roadster, with a cumulative value of just over
28
Sources: Knight Frank; Classic Car; The Spirit Business

The luxury assets are soaring in value
Luxury Goods as nvestments (2/2)
Change in value of selected luxury assets from 2011-2021

428%
164%
137%
108%
78% 75%
64% 57%
23% 19%
Rare Whisky Cars Wine Watches Handbags Art Coins Jewellery Coloured Furniture
diamonds
29
Sources: Knight Frank

CHAPTER 2
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.
Store closures are a result of changing industry dynamics
Luxury Retail Shopping (1/3)
According to a report by the investment research and management company Burberry

Bernstein, which tracked 7,000 stores for 36 luxury brands across the world, the
Despite posting an increase in sales and earnings, Burberry announced the closure
number of net store openings for the one year starting July 2016, was in the
of its physical stores in many markets in 2017. This was part of the company’s
negative. But even though there is an existing trend of luxury eCommerce sales
strategy to remove focus from markets it considered ‘luxurious’ such as the U.S.
cannibalizing the brick-and-mortar share worldwide, it does not quite spell the end
and Europe and instead focus on the ultra-high-end markets dominated by luxury
of physical luxury retail. In fact, according to a Google-Ipsos survey, 87% of affluent
consumers mainly in the Asia-Pacific region. In 2019, Burberry also announced the
consumers in Japan and Western Europe preferred in-store purchases of luxury
closure of 10% of its stores around the world in order to make the brand more
goods because they want to see or touch the product (65%) or are afraid of buying
exclusive and upmarket.
counterfeit goods (22%).
Louis Vuitton
Store closures are either the result of some brands increasing their eCommerce
presence in favorable markets such as Mainland China, or simply changing their In 2015, the company shut several stores in Mainland China amidst a slowdown in
brick-and-mortar strategies to cater to evolving preferences of the modern luxury the country’s luxury market. This was followed by the closure of two more stores in
customers. 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
There are yet others who are readjusting their channel strategies on account of
owing to the growing dominance of tech-savvy Chinese millennial consumers. The
being overstored in the past and are thus switching from many small stores to
company also permanently closed its last store in Hong Kong in March 2021 due to
fewer larger stores in prime areas. This enables them to showcase their full product
the COVID-19 pandemic and a series of anti-government protests that started in
range, thereby allowing consumers to have a fully immersive shopping experience.
June 2019.
A few examples are mentioned below.
31
Sources: Burberry; Harvard Business Review; RWTH Aachen University

Store closures are a result of changing industry dynamics
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, the brand is closing small airport
concessions but is focusing on department stores, 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. By
primarily adopting an omnichannel strategy which offers a seamless click-and-
mortar experience for consumers, new opportunities exist for bridging the gap
between physical and digital luxury shopping.
32

Comparison of luxury stores in different countries
Mainland Mainland
Region U.S. UK Region U.S. UK
China China
LVMH Swatch
Burberry Lorem Ipsum Lorem Ipsum Estée Lauder
L'Oréal Hermès
Kering
33
Sources: Company website

Digital luxury eCommerce brands are opening physical stores
Omnichannel Strategy (1/2)
Even as the global luxury goods market gradually moves towards online retailing • Brand legitimacy: Legitimacy and consumer trust are probably the most
with digital revenues quickly outpacing brick-and-mortar, digital-born luxury important reasons for digital-born luxury companies to open physical store
companies such as Warby Parker, Bonobos, and Glossier are now opening physical fronts. This is especially true in today’s time when anybody can start a
stores of their own. Interestingly, these stores are not only temporary pop-ups but professional looking eCommerce website at a negligible cost, regardless of where
also permanent showrooms. Even though this move may seem to be they are present in the world. Having a physical presence is therefore
counterintuitive at first, there are many complementary benefits to be derived from increasingly being considered a clear metric of brand legitimacy. According to a
it. 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
• Touch and feel: Even though online shopping offers convenience for luxury
a physical store as opposed to an online one, with all things being equal. Over
shoppers; it doesn’t satiate their need to touch and feel a high-end product
33% also said that they don’t like to wait for items to ship, and 90% said they are
before buying. The stores provide a platform for consumers to have a more
more likely to make a purchase if they receive assistance from a shop assistant.
immersive brand experience than what is possible online, thereby enabling the
eCommerce companies to have control over the entire customer journey. • Local community engagement: A storefront is also one of the best ways to
engage with the local community and build brand awareness, whether through
• Increased eCommerce traffic: While online shopping remains highly
personal events, social media channels, CRM content or partnerships with other
transactional, it is the brick-and-mortar stores that are leveraging the
brands. It also helps in building out an influencer program and getting more
interpersonal interaction to drive conversion rates and enhance average
media coverage by hosting press briefings.
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.
34
Sources: Forbes; Luxe Digital; Pew Research Center

“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

Retail Prophet
35
The luxury 4.0 model is digitalizing the entire shopping journey
Luxury Online Shopping (1/6)
Even though luxury brands have historically been reluctant to sell their products Luxury goods market sales channel shares
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 13% 13% 14% 18% 19% 21% 22% 24% 26%
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 the Statista Consumer Market Outlook, the share of online sales of
luxury products is expected to increase from 21% in 2022 to 26% by 2025.
87% 87% 86%
According to a McKinsey study, an overall Luxury 4.0 model is emerging which is 82% 81% 79% 78% 76% 74%
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.
2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline
36
Sources: Statista Consumer Market Outlook 2022; CNBC; McKinsey

Around 80% of total luxury sales are digitally influenced
In addition to the increased penetration of the online channel for consumer with Google to create The Burberry Booth, where shoppers are filmed dancing to
purchases, digital is also having a huge influence on how luxury shoppers choose the T-Rex song Cosmic Dancer, as in the company’s TV ad. Upon completion, the
brands and products. The shopping journey of a typical luxury consumer today is clip is sent to the consumer for sharing on social media or email. In another
usually a mix of the online and offline channel. In fact, a 2018 study by McKinsey initiative Burberry also teamed up with DreamWorks Animation to create an
estimates that nearly 80% of all luxury sales are influenced by one or more digital interactive marketing campaign using 3D technology on Piccadilly Circus corner
touchpoints, meaning shoppers either researched online and bought at the store, screens. In this, pedestrians can use the interactive system to design their own
shopped in the store but bought online, or purchased online outright. Perhaps the scarves and up to five people at a time can interact and manipulate the movement
most interesting finding of the study was the gradual disappearance of the purely of the on-screen scarf on the big screen.
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
37
Sources: Cartonomy; McKinsey

Around 80% of total luxury sales are digitally influenced
Pure offline shopper (22%(1)) Pure online shopper (8%(1)) Online influenced shopper (70%(1))
Reference
Reference Social
Social Media from
from friends media Reference friends &
& family reference family
Previous
Trusted Trusted
experience bloggers bloggers
Shopper Shopper Shopper
Visits Visits
Visits
different company
company
website /
shops website
Offline Store Online Store stores Offline Store
38 Notes: (1) Estimates as of 2016
Sources: Cartonomy; McKinsey

Luxury brands partner with marketplaces to achieve rapid scale
As luxury fashion houses increase their online presence, they are beginning to their own currencies. Farfetch handles the customer service and arranges for
realize that they yet don’t have the digital expertise to replicate the white-glove express global delivery, including a same-day service in London, New York, Paris,
experience online that luxury consumers have become accustomed to in their and other major cities. In the U.S. it also offers free shipping and returns.
physical stores. This is why brands such as Louis Vuitton, Gucci, and Chanel have
Yoox Net-a-Porter: Provides an online platform for over 350 fashion designers
started partnering with specialized multi-brand portals such as Farfetch, Yoox Net-
including Bottega Veneta, Burberry, Cartier, Dolce & Gabbana, Emilio Pucci, Fendi,
A-Porter, and MatchesFashion.
Gucci, and Givenchy. However, it doesn’t yet have partnership agreements with
According to Denise Dahlhoff, research director at Wharton’s Baker Retailing some of the big brands such as Chanel and Louis Vuitton. Among its unique
Center, these online marketplaces not only have a global reach, thereby allowing offerings are a two-hour delivery window, fashion consultants who are available all
brands to scale their online operations quickly, but also a thorough understanding day and night, and a premier service called “You Try, We Wait” for its special
of how to replicate the physical luxury shopping experience online. Luxury brands customers. Swiss-based Richemont – which owns high-end brands such as Cartier,
are also more comfortable with these platforms as opposed to Amazon or eBay as Montblanc, and Dunhill London acquired Yoox Net-a-Porter (YNAP) in May 2018.
they are careful to maintain an upscale image and not sell counterfeit products. The company’s revenues totaled US$17.5 billion(1) in 2020, up 2% from 2019.
The three main players in this field are:
MatchesFashion: has partnered with over 450 luxury brands such as Gucci, Saint
Farfetch: Provides an online marketplace for 500 independent luxury boutiques Laurent, Valentino, Prada, Balenciaga, Acne Studios, and Balmain. The company
and 200 brands including Burberry, Chanel, Louis Vuitton, Dior, Paul Smith, and delivers its products to over 170 countries around the world and offers special
Alexander McQueen, among others. It also allows consumers all over the world to services such as its 24/7 stylist. The company reported US$576.2 million in
shop in revenues in 2021, up from US$562 million in the previous year.
39 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1 22840 as of 31st Dec 2020 (Oanda)
Sources: BusinessofFashion; CNBC; Digital Commerce 360; Wharton; FashionUnited UK

Beauty products have the highest online sales penetration
The top three luxury categories for online sales are beauty products, apparel month. In 2018, beauty-related content generated more than 169 billion views on
(ready-to-wear), and accessories (handbags, small leather goods etc.), with watches, the video platform, compared to 104 billion in 2017. Yuya, Jeffree Star, Musas,
and jewelry following them only because of their higher price points. According to Nikkie Tutorials, and Zoella have been the most popular beauty and style channels
an A.T. Kearney study on 800 American online beauty shoppers, luxury beauty on YouTube since March 2021.
products have almost twice the internet penetration as compared to mass-market
This is why luxury beauty brands are investing heavily in digital media and
cosmetics, suggesting that luxury consumers are more willing to embrace
influencer marketing and are working to foster engaging user-generated online
eCommerce. This is surprising for a product that usually requires detailed testing
content. For instance, since 2010, L’Oréal has hired 1,600 digital experts including a
and inspection to ensure that the desired colors and shades are indeed being
Chief Digital Officer. Moreover, it has also increased its digital marketing budget,
purchased.
from 50% pre-pandemic to 70%.
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 frequently
searched topics 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
40
Sources: Mckinsey; L'Oréal

Lóreal’s eCommerce share reached nearly 30% in 2021
Consolidated eCommerce shares of L'Oréal total sales worldwide
29%
27%
16%
11%
8%
7%
5%
2015 2016 2017 2018 2019 2020 2021
41
Sources: L'Oréal
CHAPTER 3
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 purchases, 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 other important market trends.
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 purchase.
of a group of luxury brands to discuss the current state of sustainability in the
Luxury brands have responded to this changing mindset by adopting stronger
luxury market. The brands reported that luxury customers were now starting to
environmental and social practices. One such example is jewelry company Tiffany,
focus more on topics such as the origin of ingredients and raw materials, animal
which came under fire for purchasing conflict diamonds from Africa. In order to
welfare, and social and environmental impacts of products. Another study by IFOP,
change public perception, the company now not only has a zero-tolerance policy
a market research company and Nelly Rodi, a trend forecasting agency, of 1000
for such diamonds but also actively supports the elimination of coral from its
global luxury consumers, showed that they no longer found traditional brands
jewelry while working to protect special places such as Bristol Bay in Alaska.
desirable, instead identifying more with new age brands such as Apple and
Cosmetic company Guerlain has pledged to reduce consumption of its iconic raw
Amazon.
materials such as orchids, vetiver, sandalwood, and lavender.
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 Millennials(1) 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 2020
McKinsey U.S. cohort survey, around 66% of the total respondents and 75% of the
millennial respondents agreed to considering sustainability before making a luxury
43 Notes: (1) A Nielsen study showed that 73% of Millennial respondents would spend more on a product if it comes from a sustainable or socially conscious brand
Sources: BSR; The Luxonomist; The Upsider; Vogue

“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
44
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. In fact, in December 2020, the
company stated that they purchased 100% Mink, Fox, and Finnraccoon pelts from
certified tanneries. Dolce & Gabbana is the latest luxury brand to announce fur free
collections from 2022 onward. 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.
45
Sources: BSR; The Luxonomist; The Upsider; Vogue; LVMH

Brands use technology to provide personalized products
Mass-customization
Historically, customization in luxury products meant not only long delivery times allowed customers to personalize their trench coats.
due to constant interaction between the consumer and the artisan but also higher
Since then, Louis Vuitton has launched the Haute Maroquinerie service in 2013
prices, putting the product beyond the reach of many. However, the advent of
which allows clients to work closely with in-house experts to customize the style,
digital technologies, the rise of eCommerce and the overall increase in the number
color, leather and finish of their bags. Other brands such as Brioni, Tod’s, Alexander
of people consuming luxury products, is changing all that.
McQueen, Gucci, Fred, Bottega Veneta, and Salvatore Ferragamo have also
Luxury companies are now not only using technologies such as data analytics to launched mass-customization programs for men’s shoes, watches, jewelry, shirts,
measure exactly what each individual wants but are also developing capabilities and suits, at relatively low prices.
through automated production methods to provide it. This is especially important
Interestingly, mass-customization is not only restricted to products but is also
in today’s times when fast fashion and eCommerce are gradually eroding the
making its way into a consumer’s overall shopping experience. Luxury brands are
consumer’s relationship with the luxury brand, thereby creating a detached
increasingly using data analytics and artificial intelligence (AI) to ensure that when a
shopping experience.
customer walks into a store, he/she is immediately recognized not just physically
One of the first attempts at mass-customization by a luxury brand was in 1998 but also with respect to other aspects such as their size and product or shopping
when BMW launched its Customer Oriented Sales and Production (COSP) online preferences. A good example of this is Sephora, which uses an AI-powered
ordering system. This allowed personalized cars to be delivered only after 12 days algorithm to make customized recommendations to each customer. AI-powered
of the order being placed and has been responsible for much of the company’s chatbots to enhance customer interaction are another burgeoning trend with
success over the last decade. In 2011, British luxury company Burberry made its companies such as Burberry, Tommy Hilfiger, and Dior, having already
first attempt at mass-customization by launching Burberry Bespoke, a program that incorporated it into their existing processes.
46

“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
47
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 A changing demographic is another factor behind this shift. According to Bain
trainers, puffer jackets, and jogging shorts. Two of the biggest fashion houses in the forecasts, Millennials and Generation Z who prefer casual clothing will account for
world, Balenciaga and Louis Vuitton hired Demna and Virgil (1), as their head 45% of the global personal luxury goods market by 2025. Another study by
designers and their collections were heavily inspired by casual clothing and street research firm YouGov titled “Affluent Global Perspective Study” found that 56% of
wear. These are just a couple of examples of casualization, one of the most millennials around the world were spending more money on luxury items, as
pronounced trends in the luxury goods market currently, especially in categories compared to other consumer segments.
such as apparel and shoes. In fact, according to a 2018 Boston Consulting Group
Work clothing is another category which is witnessing increasing demand of relaxed
(BCG) survey(2), 73% of the respondents preferred casual luxury wear instead of
casual wear with established brands such as Luca Faloni, Brunello Cucinelli, and
formal clothes.
Moncler and newcomers such as Mr & Mrs Italy offering a wide range of casual
One of the main drivers of this change is the growth of luxury menswear which, apparel.
according to Bain, has grown nearly twice as fast as luxury womenswear over the
The casualization trend has risen from the ground up over the last few years
past few years. Brands such as Prada, Gucci, and Dolce & Gabbana, which
starting with the growth of luxury sneakers. Once seen only in the gym or on
traditionally have not been known for their menswear lines, have opened stores
teenagers, sneakers are now a dominant product category in brands such as
focused only on men. Many modern high net-worth (HNW) men of all ages such as
Bottega Veneta, Chanel, Dior, Louis Vuitton, Prada, and Valentino. Moreover, digital-
the late Steve Jobs, Mark Zuckerberg, and most of the technology entrepreneurs,
born brands such as Net-a-Porter and Farfetch and luxury department stores such
are famous for their casual dressing sensibilities. This is contributing to the gradual
as Harrods, have also made significant advancements in their women’s sneaker
domination of street wear and athleisure in the emerging product categories of
offerings since 2016.
many luxury brands.
48 Notes: (1) Virgil Abloh has since passed away in 2021 (2) Over 12,000 respondents in 10 countries focusing on millennials and Chinese consumers
Sources: BCG; L'Oréal; Retail Dive

“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
49
Experiential luxury is increasingly driven by millennials
Experiential Luxury (1/2)
Spending on luxurious experiences such as hotels, food and travel, comprises a Interestingly, even though luxury brands have been creating special experiences for
large portion of the global luxury market, with the share expected to increase over their customers for many years now, they were often passed off as mere marketing
the short to medium term. In fact, according to a 2022 BCG study, even though gimmicks to support the main business centered around luxury products. However,
COVID-19 caused a loss of around 50% for the global experiential luxury market in their magnitude has increased to an extent that they are now shaping the
2020, it is expected to bounce back in 2022 and record an increase of as much as experience economy and increasingly being considered as whole and independent
70% as compared to 2020. The rise of experiential luxury is one of the most businesses. A few key areas of luxury experiences are listed below:
significant trends in the industry as it represents a fundamental shift in consumer
Food
behavior from owning to being, with emotional fulfilment taking precedence over
just owning products. Affluent consumers are now increasingly seeking Even though Richemont owned Purdey and Alfred Dunhill have been operating
personalized and unique experiences that are in sync with their ethical values 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
This trend is driven majorly by the growing dominance of millennials in the global
restaurants. Prada acquired 80% of the 190-year-old Marchesi pastry shop in Milan
luxury market. A 2017 study by Royal Bank of Canada estimates that millennials in
in 2014, while LVMH acquired the iconic Milanese cafe, Caffe Cova, just a year
North America and the UK will inherit US$4 trillion in a generation. Another study
earlier. Armani has over 20 standalone restaurants around the world and Gucci has
conducted by Deloitte pegs this value at US$24 trillion over the next 15 years. We
hired three-starred Michelin chef Massimo Bottura to run its restaurant called the
are currently witnessing one of the biggest wealth transfers in history, which when
Gucci Osteria.
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.
50
Sources: 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.
51
Sources: Forbes; Luxury Society; Luxuo

“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

Underscore
52
Modern consumers prefer authentic luxury brands
Democratization of Luxury
Bernard Arnault, the head of LVMH, once remarked that the Louis Vuitton brand endorsement, which takes away from their authenticity. Furthermore, the
reflected the elegance and nobility of France’s Ancien Régime and the Palace of progressive democratization of luxury and the increasing imitation of a luxury-
Versailles. In doing so he was trying to create an air of mystique, romance and specific strategy by mass product manufacturers is slowly blurring the boundaries
opulence around the brand. His son Antoine on the other hand believes in creating between luxury and non-luxury.
brand value through transparency in communication. These two different
This can prove to be counter productive as today’s luxury consumers, most of
ideologies are reflective of the changing values of today’s luxury consumer.
whom are millennials, consider themselves to be leaders and influencers who won’t
Modern culture is starting to value authenticity above all else, probably because it use a luxury product simply because a celebrity is endorsing it. In fact, they are now
has become more and more elusive. In fact, a study conducted by social content inspired more by their peers and like to be associated with real and authentic
marketing platform Stackla found that 86% of consumers across multiple industries stories. A good example of this trend is L'Oréal’s acquisition of IT Cosmetics, a
considered brand authenticity to be important when deciding which brands to brand made by Jamie Kern, a woman with real beauty issues such as Rosacea.
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
53
Sources: Technologyreview; Scmp; CB Insights

“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
54
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 Having already bought a few luxury products, these consumers are willing to give in
music industry. The success of companies such as Rent the Runway and to the yearning of trying out other products, which are now more easily available
InstantLuxe is signaling a change in consumption modes from owning luxury through the renting or subscription models. Another driver is that apparel has
apparel and accessories to simply renting them out. For example, consumers can gradually become a fast-moving industry with many people changing their
now rent luxury handbags for as little as US$12 per day, with a higher end product wardrobes more often than before. These consumers are beginning to realize the
such as the US$5,000 classic Chanel black shoulder bag, on offer for just US$29 a cost-efficiencies derived from renting, while at the same time keeping up
day (plus insurance). Among the disruptors, Rent the Runway is the most well appearances.
funded with US$546.2 million and is now valued at over US$1 billion.
Luxury brands who were earlier skeptical about letting third parties rent out their
According to InstantLuxe CEO Yann Le Floc’h, this trend first caught on in the clothes for fear of their image getting tarnished, are also beginning to open up to
vintage clothes industry where people didn’t seem to mind wearing clothes the idea as it helps them not only to tap into new consumer segments but also
previously worn by others. Now other companies such as Dressing Avenue and Les offers outlets for showcasing some of their extravagant items. In fact, Kering has
Cachotières (renting among private consumers), Le Closet (clothes-box renting), gone as far as testing its own in-house rental service based on a subscription
L'Habibliothèque (targeting the young), Sac de Luxe (for leather goods), and 1 Robe model. However, going forward, renting is expected to be limited to fashion
pour 1 Soir (event-based clothing), have also joined the bandwagon. 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
One of the major drivers of this trend is the democratization of luxury products.
in Paris.
Over the last decade, increasing incomes and changing life values have encouraged
middle-income consumers to buy products that previously seemed unattainable.
55
Sources: Fashion Network; McKinsey

“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
56
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 Digitalization is mostly affecting three aspects of the industry’s value chain
they believed it took away from their exclusivity and high status. There was a
Manufacturing: technologies such as big data, IoT and additive manufacturing have
general belief In the industry that only the low and middle range products were
enabled manufacturers across industries to not only respond quickly to changes in
sold online, with luxury consumers preferring the personalized and tactile shopping
consumer demand, but also to reduce cost and create new business models. PVH
experience of mono brand brick-and-mortar stores. That thinking has changed over
Corporation and Xcel Brands, which own labels like Isaac Mizrahi, are already using
the last decade as is evident from the success of Net-A-Porter(1) and Farfetch, which
3D software to decrease their production windows. Gucci also launched its ArtLab
sell luxury items at undiscounted prices. In fact, according to Statista’s estimates,
in the beginning of 2018, which makes use of in-house prototyping and sampling of
the share of luxury online sales increased from 12.6% in 2017 to 19.4% in 2021 and
leather goods.
will likely reach 26% by 2025.
Retail: According to a McKinsey study, the contribution of online sales to the global
According to a 2017 study conducted by IE Premium and Prestige Business
luxury market will increase by over 300% by 2025. This is why many luxury goods
Observatory(2) in association with Mastercard and Condé Nast(3), almost 30% of
companies are increasing their eCommerce exposure. In June 2017, LVMH
luxury consumers used the online channel in 2016, up from 24% in 2012. Digital is
launched its own multi-brand eCommerce portal, 24 Sèvres that features not only
also making a significant impact in the decision-making process of the consumers
its own portfolio of brands but also curates fashion, accessories and beauty
with nearly 80% of luxury sales today being ‘digitally influenced’, according to a
products outside of the group. Even the notoriously digitally-averse companies
McKinsey study. What is particularly interesting in this is that the digitalization of
Celine and Chanel launched their eCommerce sites in December 2017 and July
luxury is not only a result of the tech-savvy millennials but almost all luxury
2018, respectively.
shoppers.
57 Notes: (1) Net-A-Porter has since been acquired by Richemont, a Swiss luxury company (2) an initiative launched by IE Business School located in Madrid, Spain (3) an American mass media company
Sources: Luxe Digital; McKinsey; Vogue; Statista Consumer Market Outlook 2022
Accessories assume more importance among luxury brands
Importance of Accessories
Historically, fashion houses such as Chanel, Prada, and Gucci, single handedly Instead, brands are now focusing more on selling accessories. Chanel with its
controlled how most of the wealthy people across the world dressed. It was not tennis racquet (US$1,754), a set of four tennis balls (US$445), a set of beach
uncommon to see women dressed from head to toe in either of these brands. racquets and balls (US$3,755) and a boomerang (US$1,484) and Versace with its
Moreover, fashion shows held by luxury fashion companies have for long been own line of bath towels (US$546), ashtrays (US$424) and a porcelain dog bowl
famous for their outlandish opulence. For example, for Chanel’s 2017 catwalk show (US$768), are examples of this trend catching on with the luxury companies
in Paris, designer Karl Lagerfeld created a huge replica of the Eiffel Tower inside increasing their line of accessories.
Paris's Grand Palais, where models wore clothes with very expensive jewelry.
Instead of spending thousands of dollars on designer clothes that are not even
Meanwhile, Louis Vuitton showcased its collection on a hundred-meter-long ramp
worn regularly, consumers are willing to satiate their desire for luxury products by
suspended in the sky.
buying these relatively cheaper accessories which carry an unmistakable brand.
Yet, despite this past dominance and current opulence, the share of ready-to-wear Therefore, it is not surprising that accessories were the largest personal luxury
clothing in a company’s revenues has been falling quite dramatically. In fact, goods category in 2021, as was found in a study by Bain & Co.
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.
58
Sources: Luxe Digital; McKinsey; Vogue; Bain

“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

The Daily Mail
59
The luxury Metaverse market to value US$56 billion by 2030
Metaverse
Metaverse refers to a virtual world in which people can interact with each other Other examples of NFTs launched by luxury brands are listed below:
using technologies such as virtual reality and augmented reality (VR/AR).
• Louis Vuitton: To celebrate its founder’s 200th birthday, Louis Vuitton launched a
Interestingly, rapid advancements in these technologies over the past few years
game titled “Louis the Game,” which allowed players to not only play as Louis
have blurred the lines between interactions in the real world and the Metaverse,
Vuitton himself but also get access to the 30 NFTs embedded in the game.
thereby creating revenue-generating opportunities for brands across sectors. These
However, none of these NFTs were available for sale.
unique digital-only products, also called Non-Fungible Tokens (NFTs), are beginning
to shape a new immersive landscape. • Burberry partnered with gaming company Mythical Games to launch Blankos
Block Party, a game that housed 2,250 exclusive Burberry NFTs. These were sold
The luxury sector is at the forefront of this disruption, with Morgan Stanley pegging
out in just 30 seconds for a total of US$375,000.
the luxury Metaverse market’s value at US$56 billion by 2030. Brands such as Louis
Vuitton, Gucci, Burberry, Overpriced, and Balenciaga have already launched • Overpriced designed and sold a black hoodie as an NFT for as much as
multiple NFTs that are selling at a premium. US$26,000 through the digital art marketplace Blockparty.co.
For example, Gucci released an exclusive fashion film called “PROOF OF • Prada partnered with Adidas to create the Adidas for Prada re-source NFT
SOVEREIGNTY: A Curated NFT Sale by Lady PheOnix” as an NFT, which sold for collection that was sold for 30 Eurotheum, which translates to around
US$25,000. Italian fashion house Dolce & Gabbana (D&G) launched its first luxury US$100,000.
NFT collection called “Collezione Genesi” that fetched over US$6 million for just nine • Jacob & Co turned its SF24 Tourbillon watch into an NFT, which sold for
pieces. Further, collectible brand RTFKT, which was recently acquired by Nike, US$100,000 at an auction on the ArtGrails NFT platform.
launched its Fewo Sneakers NFTs that sold for over US$3 million.
60
Sources: Forbes; Bloomberg

Digital-only facilitators set to be the biggest disruptors of the luxury Metaverse
industry
Digital Fashion Houses
The rapid growth in the popularity of NFTs in the luxury industry has created a DressX is another example of a company disrupting this field. Launched in August
need for companies that specialize not only in the creation of those NFTs but also 2020, DressX is a fashion marketplace that houses digital-only collections made by
in making them compatible with the Metaverse. This is where digital-only contemporary luxury brands. It is not a part of the Metaverse yet, as its garments
companies, such as Internet Made, DressX, MetaDojo, UNXD, and Tribute come in, are not NFTs but custom-fit digital looks, mainly for Instagram. However, the
offering luxury brands the resources that they might not necessarily have. company established an NFT partnership with Crypto.com in August 2021 and
launched its own NFT marketplace in March 2022. XR couture is yet another
While most of these companies offer products and services in the form of NFTs,
example of such a company.
others act as industry facilitators. A good example of such companies is MetaDojo,
which provides virtual spaces for luxury consumers to shop. Their ready-to-use and
customizable 3D buildings can not only be integrated into any Metaverse but also
into different websites and social media channels. Brands can use these buildings
to display products much in the same way that they do in physical shops and to
host events such as fashion shows.
Yet, there are other companies like Internet Made that seek to provide a complete
digital ecosystem for luxury brands and consumers in the form of fashion
communities, virtual settings to display and sell goods, related software, and
avenues for funding. The company has grown rapidly since its launch in late 2021
and already has over 15,000 followers on Twitter.
61
Sources: Forbes; The Tech Fashionista

CHAPTER 4
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.
International tourism is another driver with a 2021 BCG study showing as many as 62% of luxury
travelers wanting to make shopping a part of their experience.
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.
Mid-tier influencers are essential to the luxury brand marketing strategy
Influencer Marketing
Influencer marketing has proven to be essential to the luxury brands’ marketing

strategies. As a matter of fact, more potential consumers can be reached by
collaborating with influencers.
Luxury brands are, by definition, aspirational, and partnering with celebrities allows
them to maintain a sense of exclusivity. However, the lifestyle they present can be
perceived as unobtainable. Mid-tier influencers come across as more authentic:
They have more control over the adopted tone of voice, and they give consumers
the feeling of being a part of a community. Furthermore, niche influencers produce
more targeted content.
Modeling the marketing strategy in this direction allows luxury brands to effectively
increase their brand awareness.
Instagram has carved a niche for inspirational fashion and trend-led content. The
platform generated a revenue of US$26 billion in 2021, and its influencer marketing
business is predicted to reach US$15 billion in 2022, proving that it is more effective
at engaging audiences than traditional advertising.
63
Sources: Launch metrics 2021; Vogue Business 2021; Daily Social 2022
Top influencers driving the luxury fashion industry
Best Performing Influencers 2021
Lena Mahfouf Xenia Adonts Leonie Hanne Emma Chamberlain
DIOR(1) – 4.7 million US$ GUCCI(1) – 2.13 million US$ Balenciaga(1) – 1.2 million US$ Louis Vuitton(1) – 2.3 million US$
Lea Elui Chiara Ferragni Tamara Kalinic Mariale Marrero
Givenchy(1) – 1.76 million US$ FENDI(1) – 457,000 US$ Bottega Veneta(1) – 681,000 US$ Saint Laurent PARIS(1) – 878,000 US$
64 Notes: (1) Media Impact value generated for the brand
Sources: Launch Metrics 2021; Instagram 2022

Gen Z is most influenced by social media when buying a product or choosing a
brand
Gen Z and Luxury Goods
Gen Z is the generation born online, with a strong belief in being unique and Influences on buying a product or brand in %
socially conscious. And contrary to popular belief, Gen Z does consume luxury
15%
goods and services. 23%
35% 28%
Gen Z loves vintage and second-hand shopping. For them, this means buying a 33%
product from a luxury brand whose name they have probably heard throughout 39% 25% 13%
their entire lives and that produces high-quality items, combined with the added 6%
28%
bonus of being more sustainable by extending the item’s life span. When choosing
a vintage item, they are buying unique pieces that reflect their personal style. 32% 30%
26% 32%
Authenticity is an important value for Gen Z. 17%
When deciding on a product or a brand, Gen Zers between the ages of 18 and 23 10% 8% 14% 16%
10%
mostly rely on social media recommendations. This brings us to the first finding 8% 10% 6% 8% 4%
about the influencers: Both go hand in hand. More than eight out of ten Gen Z Gen Zer, Gen Zer, Millennial Gen Xer Baby boomer
consumers and nearly two-thirds of Millennials say they follow luxury brands on age 13-17 age 18-23
social media platforms. 75% of Gen Z consumers say they have made a purchase
after discovering a product on a social network, with YouTube and TikTok in the Experts, celebrities, or influencers Social media
lead. Traditional media Friends or family
Online reviews, blogs, or websites
65
Sources: Velocitize 2021; McKinsey 2019; Fashion Network 2022

Millennials from Mainland China drive the market
Chinese Millennials
Mainland China’s rapid economic expansion over the last two decades has created frequently than those in any other country. In fact, when Global Times, an English
many wealthy consumers who are keen to flaunt their newfound status. Statista language Chinese daily, interviewed local millennial shoppers, it found that some of
pegs the value of Mainland China’s luxury market at US$43.9 billion in 2021, the them started as young as 12. The Bain study also found Chinese millennials capable
second largest in the world after the U.S. However, its not the value of the market of buying an average of eight luxury products a year, which is three more than its
that is as important as the number of Chinese people buying luxury products. baby-boomers.
As per a McKinsey study in 2016, 7.6 million Chinese households purchased luxury They are also showing an increased willingness to spend on luxury items even if
goods. To put this number in perspective, this was more than the total number of they cannot afford it, according to Veronica Wang, associate partner of OC&C
households in Malaysia and the Netherlands. Further, each of these 7.6 million Strategy Consultants. This is mainly because they believe that the use of luxury
households spend on average RMB71,000 on luxury goods per year, which is items can reflect one’s financial and social status. Another reason for their
double of what they do in either France or Italy. Also, a 2020 study by Bain & dominance is that Chinese millennials are part of the country’s one-child generation
Company found that Chinese consumers make up about 35% of the market in in which families made financial sacrifices to ensure a better life for their children.
terms of both domestic and international purchases and accounted for 90% of Therefore, compared to their western counterparts, millennials in Mainland China
global growth in 2019. This growing dominance of Chinese luxury spending, both at do not have as many financial burdens which leaves them with more disposable
home and abroad is driven majorly by the country’s millennials. Mainland China income to spend on luxury products.
currently has around 400 million millennials which is five times more than the U.S..
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
66
Sources: Bain & Co.; BCG, Jing Daily; Luxion Media; McKinsey
“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
67
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 through its #GucciGram initiative of collaborating with Instagram artists to rework
(2019 edition), HENRYs (High-Earners-Not–Rich-Yet) are individuals who earn an the brand’s patterns as per the styles of the artists; and through the #24HourAce
amount between US$100,000 and US$250,000, and their average age is 43 years. initiative in 2016 where artists participated in Gucci’s video project and took over
Equifax states that HENRYs own less than US$1 million of investable assets. 13% of the company’s Snapchat account for an hour, engaged with HENRYs through the
US households are HENRYs as suggested by IXI Services (a division of Equifax) with digital platform.
an average of US$214,000 in assets and an income of US$136,000.
In India, a rise in this customer segment is one of the reasons for a high growth
There are age differences in the HENRY consumer segment which can be rate of the luxury segment in the country.
categorized based on average annual spending per household into Millennial
HENRYs with US$ 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
68
Sources: Deloitte Global Powers of Luxury Goods 2019: Bridging the gap between the old and the new; Equifax; Digiday
“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

LVMH
69
International tourism drives global luxury sales
International Tourism (1/2)
Despite the current slowdown in international tourism due to the COVID-19 The highest price difference of around 55% is seen in the watches and jewelry
pandemic, it remains one of the major drivers of global luxury sales. The growing segment, while the lowest is for bags (40%).
global travel and tourism market, especially in Mainland China, is increasingly
Therefore, it is no surprise that Mainland China is again at the forefront of this
blurring the lines between domestic and international purchases.
trend with its tourists accounting for the highest share of luxury shopping while
According to a 2017 Deloitte study, global tourists account for almost 47% of luxury travelling internationally. In fact, Chinese travelers are the main catalyst for growth
goods purchases, with 31% doing so in foreign countries and 16% when they pass for the Japanese and South Korean luxury goods market. While budget-conscious
through an airport. This figure rises to as much as 60% if only consumers from middle class Chinese consumers shop abroad to take advantage of price
emerging markets such as Mainland China and the UAE are considered. Citing the differences and tax exemptions, the wealthy class enjoys the better customer
reasons, 65% said that the ability to buy products not available in the home market service and wider product range.
was the main benefit associated with luxury shopping abroad, while 43%
mentioned greater affordability.
A 2021 BCG study of 12,000 people across 10 countries globally, including the U.S.
and China, found that as many as 62% of them traveled to make luxury shopping a
part of their experience.
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.
70
Sources: Deloitte luxury multicounty survey for Global Powers of Luxury Goods 2017
International tourism drives global luxury sales
International Tourism (2/2)
Duty free and travel retail sales worldwide in billion US$

86
79
70
63 64
62
60
56
51
43 44
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
71
Sources: Generation research

Luxury menswear grows twice as fast as womenswear
Luxury Men’s Wear
Historically, luxury fashion for men has played second fiddle to womenswear, provide men with a more user-friendly option with access to a lot more variety that
which received most of the attention from brands and media alike. However, the was previously available in print publications.
past few years have signaled a shift in the way men dress and experiment with new
This increased activity has resulted in brands such as Prada, Gucci, and Dolce &
styles. In fact, a 2021 survey by Statista comprising over 1,000 luxury shoppers each
Gabbana, which traditionally have not been known for their menswear lines, to
in the U.S., UK, and Germany revealed that the number of male luxury shoppers
open stores focused only on men, with Stella McCartney debuting her first men’s
outweigh the number of female luxury shoppers. Another study by Bain & Co. has
styles in November 2016. Louis Vuitton showcased its men’s line designed by its
pegged this market to be growing nearly twice as fast as luxury womenswear over
new designer Virgil Abloh in June 2018 which consisted of casual anoraks, holster-
the past few years.
style accessories, and trench coats. Even though LVMH hasn’t released any
According to Tammy Smulders, global managing director of LuxHub, a division of information, an article in Reuters points out that menswear accounts for about 7%
Havas Media Group, this change in consumer behavior can be attributed mainly to of Louis Vuitton’s revenues. Balenciaga also considers men's fashion to be among
the role played by social media in building visibility around men’s luxury fashion. its top growth drivers according to the company’s CEO Cedric Charbit.
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 up 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
72
Sources: Bain & Co.; Deloitte

“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

LVMH
73
CHAPTER 5
Opportunities
Demand for mass-customization of luxury products has forced the leading brands to revisit their existing
manufacturing processes. Although luxury manufacturers have historically been technology laggards,
they are now integrating advanced digital technologies such as additive manufacturing, analytics,
material science, augmented reality, and AI into their manufacturing processes.
Resale of luxury products, NFTs, and social gaming present growth opportunities for luxury brands.
Historically, they have been averse to reselling their products in order to protect their brand identities
and margins. However, the last few years have witnessed a surge in the sales of pre-owned luxury
products, mainly because of specialized digital trading platforms and fast-changing consumer behavior.
Licensing has started to present growth opportunities for brands in terms of increased product and
geographical reach, while maintaining their product quality control and brand exclusivity.
Mass-customization of luxury products is ushering in the era of Luxury 4.0
Manufacturing
In May 2020, Karin Tracy, head of fashion, luxury, and beauty products at Facebook,
emphasized the ever-growing importance of speed in the luxury industry. She said:
“For luxury brands, whoever is the fastest right now, will have competitive
advantage, full stop.” In the ensuing period, rapidly changing industry dynamics,
including the COVID-19 pandemic and most importantly the need to customize
luxury products at scale, have brought the importance of digitalization in the
manufacturing process to the fore.
Luxury brands have historically been technology laggards, often being associated
with expert craftsmanship requiring much human involvement. However, brands
are now integrating advanced digital technologies such as additive manufacturing,
analytics, material science, augmented reality, and AI into their manufacturing
processes. This has enabled the digitalization and integration of vertical and
horizontal value chains, thereby enabling brands to not only respond quickly to
changes in demand patterns but also to reduce costs, customize goods, create new
business models and products, and manufacture at scale. Over the past few years,
Gucci, Ralph Lauren, Coach, Helmut Lang, and Burberry have set up digital
production facilities to improve their manufacturing speeds.
75
Sources: McKinsey; Ruggtek

Resale of luxury products, NFTs and social gaming present growth opportunities
New Revenue Streams
Resale
Historically, luxury brands have been averse to reselling their products in order to
protect their brand identities and margins. However, the last few years have seen a
surge in the sales of pre-owned luxury products, mainly because of specialized
digital trading platforms and fast-changing consumer behavior. According to
McKinsey, the value of the luxury resale market was between US$25-US$30 billion
in 2020, with other industry experts predicting an annual growth rate of 10-15%
over the next decade. Moreover, the market is still in the early stages of maturity,
thereby presenting an opportunity for brands and retailers to not only capture
market share but to also proactively devise strategies to shape demand.
Metaverse
According to a study by Morgan Stanley, the market for digital fashion and luxury
brands is expected to reach US$50 billion by 2030, with most of the growth coming
from NFTs and social gaming. In fact, these two areas are expected to expand the
industry’s total addressable market and EBIT by more than 10% and 25%,
respectively, over the next eight years. Soft luxury products, such as ready-to-wear,
leather goods, and shoes, are expected to be the major growth segments.
76
Sources: McKinsey; BCG

Licensing enables luxury brands to expand product and geographical reach
Licensing
Luxury licensing got a bad reputation in the 20th century because of overuse and
being linked to sub-standard products. This also led to ubiquity, as a result of which
brands often ended up in incompatible retail spaces, thereby threatening their
exclusivity. However, as the market matured and became global, licensing started
to present growth opportunities for brands in terms of increased product and
geographical reach, while maintaining distribution leverage, product quality control,
and brand exclusivity.
Today, many luxury brands around the world use licensing as their primary growth
strategy and to reach aspirational consumers, once the market for their primary
products saturates. One of the best examples is Burberry, Gucci, and Hugo Boss
licensing their fragrance and/or cosmetics business to Coty, one of the largest
beauty companies globally. Similarly, Bulgari, Ferragamo, Prada, and Versace
license their eyewear business to Luxottica, the largest eyewear company in the
world. Other brands use this strategy to enter niche and unexplored markets and
to reach the influential Millennials and Generation Z consumers who prefer
experiences to possessions. In November 2021, Flora Growth Corp. licensed luxury
brand Tonino Lamborghini to sell cannabidiol-infused drinks in North America and
Colombia.
77
Sources: Harvard; Jing Daily

CHAPTER 6
Challenges
Even though Chinese spending on luxury products has been one of the key drivers of the industry’s post-
pandemic recovery, challenges including unfavorable demographics, nationalistic sentiments,
indigenous-owned brands, and geopolitical tensions threaten to slow down the global market.
In addition, the Russia-Ukraine war has prompted many luxury brands, including Hermès, LVMH, Chanel,
Kering, Prada, Richemont, Net-a-Porter, and MyTheresa to suspend their operations in Russia indefinitely,
which might eventually hurt the overall market.
China faces a slew of challenges that threaten to slow down the global market
China
Even though Chinese spending on luxury products has been one of the key drivers • Indigenous-owned brands: According to a 2022 survey by Daxue Consulting, over
of the industry’s post-pandemic recovery, the country faces a slew of challenges 64% of the respondents claimed to have purchased Chinese luxury products and
that threaten to slow down the global market. The key ones are listed below. 90% of those who hadn’t were willing to do so in the future. These findings
highlight a growing popularity of indigenous luxury brands such as Duanmu
• Unfavorable demographics: China is currently facing an unprecedented
Liangjin among Chinese consumers, which is expected to eat into the share of
demographic crisis in the form of an aging population, a declining birth rate, and
foreign legacy brands. Greater use of Guochao (national trend) elements and
as a result, a sharp decrease in the working-age population. These challenges are
increased consumer support for national businesses are the main drivers of this
the result of the country’s one-child policy that was abolished in 2016 but which
trend.
continues to affect the nation’s fertility rate. Global economists have likened this
to Japan’s demographic transition that not only had a detrimental impact on the • Geopolitical tensions: Over the last few years, China’s geopolitical relations with
country’s luxury market but also on its overall economic growth. the Western countries have taken a downturn due to events such as the trade
war with the U.S. and sanctions against Huawei, souring relations between the
• Nationalistic sentiments: According to a 2021 survey by the Global Times, 41.7%
two countries. In retaliation, China has upped the import duties on foreign
of the respondents “looked down on the West” as compared to 18.4% in 2016.
products, making it difficult for them to run a profitable enterprise in the country.
The sharp rise in Chinese nationalism over the last few years due to events such
The 218% tariffs on Australian wines, which forced the companies to look for
as the U.S.-China trade war and sanctions against Huawei threaten to impact the
buyers in other countries, provide a good example of this.
demand for foreign products. In fact, H&M already experienced a 23% fall in
exports to China during 2Q2021, and Burberry and Nike faced a widespread
boycott, owing to their concerns regarding cotton production in the Xinjiang
territory.
79
Sources: Harvard; Jing Daily

Many luxury brands have suspended their operations in Russia
Russia-Ukraine War
Many luxury brands have been prompt in their response to Russia’s invasion of
Ukraine, having suspended operations in the country indefinitely. These include
Hermès, LVMH, Chanel, Kering, Prada, Richemont, Net-a-Porter, and MyTheresa, in
addition to Western consumer brands such as Apple, Nike, and McDonalds.
Additionally, Uniqlo, which initially announced that it would stay in Russia,
eventually buckled in the face of mounting global criticism and changed its course.
Even though Russia accounts for only a small share of the global luxury market, the
country’s oligarchs have been a major customer segment over many years,
spending mainly on yachts, watches, and luxury food and drink. Economic
sanctions and asset forfeitures have diminished the buying power of rich Russians
all over the world, thereby impacting the luxury market.
Moreover, the current situation is likely to have a ripple effect not only in terms of
falling local spending, but also declining consumer confidence throughout Europe
and North America. This is mainly due to rising energy prices, stock market
volatility, lack of tourism, and other external variables. According to Luca Solca,
analyst at Bernstein Research, the Russia-Ukraine war could decrease luxury
spending by around €8 billion.
80
Sources: Barrons; Financial Review; Bernstein Research

Most of the luxury brands lack digital capabilities
Legacy Technological Infrastructure
The luxury industry is currently experiencing a big technological disruption, with the
Metaverse at the center of this change. Data generation, data analytics, and data-
driven actions, such as automated customer support, have emerged as key success
factors for luxury brands and are vital for a seamless and fluid Metaverse
experience.
However, most of these brands have legacy platforms that lack the digital
capabilities to support new technologies. In fact, when Daniel Langer, CEO of luxury
brand Équité, audited the experiences of a “leading global luxury” fashion brand at
various locations and touchpoints, he had a disjointed experience, with each
interaction feeling like a different brand.
Moreover, countries such as China are making it harder for brands to access
relevant data. In fact, the country has enforced tough regulations, including CSL
(critical information), DSL (regulating data as a national security issue), and PIPL
(privatizing personal data), that have made data breaches a national security
concern. With most luxury consumers living cosmopolitan lifestyles, this has made
it harder for brands to access and utilize consumer data globally and therefore
create consistent brand experiences.
81
Sources: Barrons; Financial Review; Bernstein Research

Global uncertainties could make the current luxury rebound short-lived
Global Uncertainties
The demand for luxury goods was expected to wane due to various global However, many industry experts view this surge with skepticism and warn that it
uncertainties, such as the COVID-19 pandemic, the Russia-Ukraine war, the could be short-lived due to the various economic and geopolitical pressures. This
aftermath of Brexit, the U.S.-China trade war, and the current inflationary presents a challenge for luxury brands in terms of forward planning and
environment. However, the reality has been starkly different from the luxury production targets. If they produce too little, they run the risk of not meeting the
market’s sharp rebound uptick in most of the major global markets after a dip in demand, and if they produce too much, the product surplus could damage brand
2020. equity. Therefore, meeting and balancing demand has emerged as one of the
biggest challenges luxury companies are facing today.
In fact, brands such as Hermès and Louis Vuitton have recently announced plans to
expand their production capabilities, just to keep up with this surge in demand.
Hermès is building two new workshops for leather goods in France, in addition to
three other sites already being built in the country. Similarly, Louis Vuitton has
announced the opening of two new workshops in 2022.
Moreover, according to a study by Luxury Society, global consumer interest in

expensive iconic products such as the Cartier Love Bracelet and the Louis Vuitton
Neverfull bag is at an all time high. Another study by the Digital Luxury Group (DLG)
found that interest in the Hermès Birkin and Kelly bags has jumped by over 37%
and 86%, respectively, in terms of Google searches between the periods of March
2019 to February 2020 and March 2021 to February 2022.
82
Sources: Luxury Society

CHAPTER 7
COVID-19 Impact
Even though eCommerce has permeated almost every industry over the last decade or so, luxury brands
have been wary of selling online, relying instead on their brick-and-mortar stores, with the aim of
maintaining their exclusivity, craftsmanship, and authenticity. However, COVID-19 has changed the
scenario drastically, driving luxury online sales past the tipping point. Pure-play multi-brand retailers,
such as Farfetch, Tmall Luxury, and JD.com Luxury, that offer both multi-brand marketplaces and mono-
brand eCommerce websites, have been the biggest winners in terms of revenues and number of users.
Chinese and Indian cities such as Guangzhou, Beijing, Shanghai, Hong Kong, Delhi, and Mumbai have
been the luxury hotspots of both countries for many years. However, their saturation along with the
COVID-19-induced migration of a large part of the working-age population to a work-from-home model
and the sharp increase in online shopping have put the spotlight on tier-2 and tier-3 cities.
Pure-play multi-brand retailers have broken away from the rest of the pack
Pure-play Multi-brand Retailers
Even though eCommerce has permeated almost every industry over the last
decade or so, luxury brands have been wary of selling online, relying instead on
their brick-and-mortar stores, with the aim of maintaining their exclusivity,
craftsmanship, and authenticity.
However, COVID-19 has changed this scenario drastically, driving luxury online
sales past the tipping point. Pure-play multi-brand retailers, such as Farfetch, Tmall
Luxury, and JD.com Luxury, that offer both multi-brand marketplaces and mono-
brand eCommerce websites, have been the biggest winners in terms of revenues
and number of users. One of the reasons for their success is that they not only
provide an online platform to purchase luxury goods but also other services, such
as fulfilment, technology, logistics, payment, and customer analytics. Some of them
even stock inventory.
While Farfetch announced a record GMV of US$4.2 billion in 2021, which was up
33% year-on-year and 98% as compared to 2019, Tmall Luxury experienced a 159%
increase in year-on-year sales during the period from January through March 2021.
Moreover, JD. com’s high-profile partnerships with leading luxury brands such as
LVMH, Bulgari, and Berluti helped the company gain over 32 million customers
during 2Q2021.
84
Sources: Deloitte
Growth in demand from second and third tier cities in India and China
Demand from Small Cities
Chinese and Indian cities such as Guangzhou, Beijing, Shanghai, Hong Kong, Delhi,
and Mumbai have been the luxury hotspots of both countries for many years.
However, their saturation along with the COVID-19-induced migration of a large
part of the working population to a work-from-home model and the sharp increase
in online shopping have put the spotlight well and truly on tier-2 and tier-3 cities.
Luxury brands are quickly turning to these cities for their next wave of growth. In
fact, according to a 2020 study by Luxse Digital, as many as 45% of Chinese middle-
class consumers were eager to purchase luxury products in tier-2 and tier-3 cities
as compared to 37% in tier-1 cities. Even though this difference may not seem like
much, it signals a gradual change of guard in the country’s demand centers. The
main categories were fashion, shoes, and beauty.
In India, which is often considered the ultimate eCommerce frontier, Italian luxury
car maker Maserati is now targeting tier-2 and tier-3 cities, such as Lucknow,
Kanpur, Indore, Bhopal, Mangalore, Chandigarh, and Goa, after a strong spike in
demand.
Additionally, a more recent study from 2021 by consulting firm Bain & Co. found
that 25% of global luxury purchases in 2020 were indeed made by new consumers,
further signaling a growing interest from smaller and emerging markets.
85
Sources: Deloitte
Luxury brands started offering discounts during the pandemic
Discounting Strategies
The COVID-19 pandemic has affected demand across sectors, with most brands Even though this strategy was endorsed by some experts who considered
lowering their prices to boost consumption. Interestingly, the luxury sector, which markdowns to be a better option than destroying excess inventory, especially
has historically avoided a discounting strategy to preserve its elite status, also during times of economic volatility, consulting firm McKinsey had a contrarian view.
buckled under the pressure of growing market uncertainties, especially in the early They gave the example of Burberry, which experienced a 45% drop in year-on-year
part of 2020. global sales during April and June 2020. Since then, most luxury brands have
reverted to their old policy of not allowing discounts.
In fact, retail giant Neiman Marcus began offering Tom Ford glasses at a discount of
as much as 50% during that time while Nordstrom lowered the price of Salvatore
Ferragamo sandals by 40%. Moreover, Burberry decided to get ahead of retailers by
directly selling its products at a discount of 50% in China and Australia.
Online sales were also not immune to these pressures, with Yoox Net-A-Porter
marking down prices on brands such as Alexander McQueen, Balmain, Dolce &
Gabbana, and Prada by as much as 70%.
Even Louis Vuitton, that never sells their products at a discount, could not avoid the
markdown pressure, with 33% of its bags being offered at discounts on the Farfetch
marketplace between July and December 2020.
86
Sources: Luxury Tribune; Forbes

COVID-19 has prompted brands to revisit their sustainability goals
Sustainability
Historically, sustainability has not been high on the priority list of many luxury of the COVID-19 pandemic include:
brands, simply because they involve additional costs that affect the bottom line. In
• Mark Cross: The company has been working with Positive Luxury, a consultancy
fact, even brands like Christy Dawn, that have been very vocal about their
that advises luxury brands on how to improve their sustainability to ensure that
sustainability initiatives in the past, were forced to scale back due to high costs.
its manufacturing processes and product choices conform to the highest
However, the COVID-19 pandemic has emerged as an opportunity and a driving environmental standards. Consequently, the brand’s collections have become
force for brands to rethink their sustainability strategies. A sharp reduction in the smaller and now only focus on its iconic shapes instead of having new designs
carbon footprint due to limited travel, the need for brands to use and re-use as every three months.
much raw material as possible due to supply chain issues, and an overall change in
• Prada has pledged to recycle all its plastic and to incorporate sustainability into
consumer mindset, brought about by the universal suffering caused by the
its very DNA. It has also appointed Pamela Culpepper and Anna Maria Rugarli as
pandemic, are all contributing factors.
non-executive directors, with both having rich experience in managing
In fact, according to Erwan Rambourg, global head of consumer and retail research sustainable businesses.
at HSBC, the pandemic has increased the awareness of consumers, especially in the
• Stella McCartney: Even though this brand has historically been one of the biggest
Western countries, and this is expected to make environmental, social, and
advocates for sustainable practices, its recent efforts include launching a 2021
governance (ESG) matters mainstream at a faster pace than before. Brands can
summer collection made of mushroom leather.
expect increased scrutiny from both investors and consumers, most of whom are
now Millennials and Gen Zers. • Dolce and Gabbana has discontinued the use of animal fur in all its collections
starting from 2022, opting for eco-fur garments and accessories instead.
Examples of brands that have adopted more sustainable practices after the onset
87
Sources: HSBC; Times of India; Luxe. Digital

CHAPTER 8
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.
Brands use AI for personalization
Use of AI (1/2)
The last few tears have witnessed increased online penetration in the global luxury produced. In 2015, Burberry announced that its investment in personalized
market primarily due to the growing dominance of millennials and Generation Z, customer management programs had resulted in a 50% increase in repeat
who are expected to constitute 45% of global luxury shoppers by 2025, according to customers. The company also experienced a 100% sales increase for a particular
a Bain & Co. study. Brands are therefore rushing to adopt digital technologies to bag, simply by changing its picture online, an insight derived from AI-powered
not only mimic the in-store shopping experience on their eCommerce platforms analytics
but to also enhance the physical store experience. Artificial intelligence (AI) is
Luisa Via Roma (LVR)
currently the most sought-after technology.
A luxury fashion retailer that sells famous brands such as Balmain, Gucci, and Dolce
One of the main reasons for this is that AI, especially deep learning, not only helps
& Gabbana, partnered with Dynamic Yield, an AI-powered eCommerce
in enhancing customer experience but also helps brands reach a wider audience
personalization platform, to improve its personalization capabilities. It’s customers
due to its unique ability to create new data and identify novel patterns throughout
were able to receive personalized search results that were automatically sorted by
the consumer purchase life cycle. AI can be used to track a consumer’s preferences
price depending on the customer's spending history. This resulted in a significant
and apply it to predictive algorithms to create highly personalized online shopping
increase in its conversion rates.
experiences.
Cosabella
Burberry
Another example is luxury lingerie retailer Cosabella, that used AI-powered
It has been one of the pioneers of AI in the luxury goods industry. Products in its
marketing campaigns to double its online subscription base and achieve a 60%
stores are now fitted with RFID tags which can communicate with the consumers’
increase in email marketing revenue
mobile devices giving information on how the product can be used or how it was
89
Sources: Appear Here; Business Insider; Forbes; WWD; Luxe Digital

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 is 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.
90
Sources: Appear Here; Business Insider; Forbes; WWD; Luxe Digital

“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

Emarsys America
91
Brands using AR for enhanced customer experience
Use of AR
Immersive technologies such as virtual reality (VR) and augmented reality (AR) are Estée Lauder
witnessing increasing use by luxury brands who combine them with their physical
In July 2017, Estée Lauder launched the conversational AY enhanced lipstick advisor
retail stores to enhance the overall shopping experience. Even though, the main
to help customers select the ideal shade. The chatbot that works on Facebook
objective of this is to enable customers to get a virtual feel of the product before
Messenger was created in partnership with AR company ModiFace and allows users
making a purchase, many brands are also using it for digital marketing purposes.
to get personal shade recommendations based on a quiz they take.
In fact, a study by data intelligence company L2 on the Chinese market, found that
L'Oréal
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, The company acquired Modiface in March 2018 and has partnered with Facebook
consumers were more likely to respond to a marketing message if the content was to create AR powered make up try-on experiences for brands such as Maybelline,
dynamic and interactive, as is the case with AR campaigns. Below are a few L’Oréal Paris, NYX Professional Make up, Lancôme, Giorgio Armani, Saint Laurent,
examples of the technology’s adoption by luxury brands. Urban Decay, and Shu Uemura.
Burberry Gucci
It is using Apple’s AR platform called ARKit to enable the users of its mobile app to Gucci partnered with Spanish surrealist artist, Ignasi Monreal to create an AR
edit their pictures with Burberry-inspired drawings made by artist Danny Sangra, experience -#GucciHallucination, on its app. This was part of a marketing campaign
before posting them on social media. to support its Spring 2018 collection. More recently, it partnered with Snapchat to
provide a virtual try-on experience for its customers.
92
Sources: 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 Luxury watches is another industry where 3D printing has made rapid
been frowned upon by purists, the technology is now making rapid progress. Over advancements with companies such as Parmigiani Fleurier using it to improve
the last few years, it has been used not only for production and prototyping of efficiency and ergonomics and create innovative designs that were earlier
various luxury products but also in the creative process. According to a 2018 impossible to make using milling machines.
McKinsey survey of 100 luxury managers, 30% of them believed that they would
Many parts of the super luxury US$400,000 Parmigiani Bugatti Type 370 watch are
start offering 3D printed products in their stores in the next three to five years
now 3D printed. There are yet other manufacturers that are using the technology
while another 30% believed it would happen within five to 10 years.
not only for product development but also for production. Panerai’s Pam 578 Lo
The fashion industry is where 3D printing is witnessing extensive use. This is mainly Scienziato Luminor 1950 Tourbillon GMT Titanio, which was launched in 2017 and
because it makes it possible to create shapes without molds, thus resulting in the retails for over US$120,000 is one such example. It has a titanium case which is
production of elements with extreme intricacy that could otherwise not be hollowed out using the direct metal laser sintering technology which builds the case
accomplished. It was in 2011 that 3D printing for fashion began to take off with an layer by layer with a fiber optic laser using powdered titanium.
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.
93

“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

Balenciaga
94
List of tech start-ups disrupting the luxury retail space (1/3)
Tech Start-ups (1/3)
Company Description Focus areas Funding in million US$

A platform on which users can rent luxury clothes and accessories such as handbags and jewels
Rent the Runway Apparel & accessories 526.1
on a monthly basis
Diamond Foundry A diamond start-up that provides an ethical and eco-friendly alternative to mined diamonds Jewelry 352.7
Modern Meadow Produces animal-free lab-grown leather Handbags 183.5
Red Points Uses artificial intelligence to recognize fake products and to refine searches on marketplaces All 86
Eleven James A luxury watches subscription platform Watches 40
Maiyet Provides artisanal luxury fashion consisting of apparel, accessories and jewelry Apparel & accessories, jewelry 39
Provides a smart cloud data warehouse that automates the collection, modelling, and scaling of
Panoply Apparel & accessories 24.3
any data
Bag Borrow or Steal Provides an online boutique where women & men borrow, collect, and share luxury accessories. Handbags 20
Unmade Develops solutions to offer personalized clothing. Apparel & accessories 13.2
95
Sources: CB Insights; Company information; Crunchbase

Armarium An online platform that rents luxury clothes and accessories Apparel & accessories 6
Offers tailored fragrances for men based on the customers’ diet, body temperature, and work
Hawthorne Labs Fragrance 5.2
environment, among other parameters
Flont Develops and operates a jewelry subscription platform Jewelry 5
Cappasity Provides an in-store browsing experience to online retailers through interactive 3D images. Jewelry 7.5
Entrupy A start-up that uses artificial intelligence to help brands identify fake goods All 8.7
1Atelier Allows customers to customize the color and hardware of their leather handbags Handbags 1.5
Cypheme Uses artificial intelligence to help brands identify fake goods All 1.4
Block Verify Uses blockchain technology to help brands identify fake goods All 0.053
MemoMi Labs Develops solutions to integrate new technologies such as AR/VR in luxury stores Apparel & accessories NA
96

Modiface Offers make up, skin, and hair product visualization services to shoppers All Acquired by L'Oréal
Tracks smartphone signals across the store to help its clients understand how customers move
Euclid Analytics NA Acquired by The We Company
inside the store
97

CHAPTER 9
Country Analysis
The U.S., Mainland China, and Japan are projected to be the three biggest markets for luxury goods in
2022 with a market size of US$74.7bn, US$53.3bn and US$29.9bn respectively. These markets are
projected to account for 47% of the global luxury market in 2022.
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.
The U.S. to lead the global luxury goods market
U.S. (1/4)
According to the Statista Consumer Market Outlook, the U.S. luxury goods market is Fashion is the largest luxury segment in the country, with revenues of US$23.2
expected to increase from US$74.7 billion in 2022 to US$81.7 billion by 2027, at a billion in 2021, followed by leather goods (US$16.1 billion), cosmetics and
CAGR(1) of 2%. Even though the U.S. is the number one market for luxury goods fragrances (US$10.3 billion), watches and jewelry (US$7.3 billion), and eyewear
globally, factors such as political uncertainty, cutbacks on discretionary spending, (US$7.2 billion). The U.S. luxury market is likely to witness considerable digital
especially in response to the COVID-19 pandemic, and low sales to international adoption, with online sales expected to increase from 17.9% in 2022 to 26.5% by
tourists due to the strong dollar are expected to affect market growth. 2025. In 2021, EssilorLuxottica, followed by LVMH, Estée Lauder, Kering, L'Oréal,
PVH, and Tapestry were the top-selling luxury brands in the country.
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, stringent economic
policies, such as high tariffs on luxury cars, perfume, handbags, wine, spirits, and
cheese are expected to impact the import of luxury products, which mainly come
from Europe.

The U.S. luxury goods market is about to witness sluggish growth
U.S. (2/4)
2%(1) 82
79 80
76 78
75
69
64 64
61 62 62 62
59
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Luxury fashion to account for the largest share in 2022
U.S. (3/4)
Luxury goods market segment shares in 2022 Market share by leading brands in 2021
11% 10%
10%
11%
36%
5%
55% 5%
17%
5%
5%
5%
25%
Fashion Cosmetics & Fragrances Watches & Jewelry EssilorLuxottica Estée Lauder L’Oréal Tapestry
Leather Goods Eyewear LVMH Kering PVH Other
101

Average revenue per capita to register moderate growth
U.S. (4/4)
Luxury goods market: average revenue per capita in US$ Luxury goods market sales channel shares
1%(1) 7% 9% 10% 13% 16% 18% 20%

235 237 23% 26%
226 229 232
223
210
192 193 193 192 197 193
179
93% 91% 90% 87% 84% 82% 80% 77% 74%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

Despite COVID-19, Mainland China to grow at a rapid pace
Mainland China (1/4)
The Chinese luxury goods market has suffered over the last few years owing women on products such as designer handbags, perfumes, and other cosmetics.
primarily to President Xi Jinping’s anti-corruption drive which started in 2012. According to the Federation of the Swiss Watch Industry, watch exports to Hong
However, the market rebounded in 2017 and registered the highest growth in 5 Kong SAR, a favorite destination for Mainland Chinese buyers, fell 44% in 2020, as
years at 5.5%. The reduction of import duties levied on foreign luxury brands, the compared to 2018. Even so, watches & jewelry are the largest category followed by
rapid rise of a more affluent and fashion-savvy middle class, and the government’s fashion, leather goods, cosmetics & fragrances, and eyewear. In terms of per capita
fight against the parallel market run by the daigu2, are the major factors that spending, Mainland China is one of the leading countries, thanks to the rising
stimulated industry growth. Although the COVID-19 pandemic led to a sharp dip in purchasing power of young millennials and Generation Z. Luxury online sales are
revenues, from US$44 billion in 2019 to US$40.2 billion in 2020, the medium term expected to increase from 34.8% in 2021 to 35.5% by 2025.
bodes well for the market, mainly supported by the 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 luxury consumers 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. However, the emphasis is slowly switching to spending by
103

Mainland China’s luxury goods market to reach US$66 bn in 2027
66
4%(1) 63
61
58
56
53
44 43
40 40
35 34 35
34
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Watches & Jewelry to account for a 46% market share in 2022
2%
10%
16%
10%
46% 5%
17%
5%
65% 5%
20%
Watches & Jewelry Leather Goods Eyewear China National Gold Group Gold Jewellery Kering Rolex
Fashion Cosmetics & Fragrances LVMH Richemont Other
105

Online share to reach 35% by 2025 in Mainland China
4%(1)
32% 35% 34% 34% 35% 35%
45 37% 38%
43 41%
42
40
38
37
31 29
28 28
25 24 24 25
68% 65% 66% 66% 65% 65%

63% 62%
59%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

Japan is the third-largest luxury goods market globally
Japan (1/4)
With Mainland China’s massive consumer appetite for luxury products and South department stores. However, according to the Statista Consumer Market Outlook,
Korea’s image as a trendsetting nation, Japan has often been overlooked as a major online sales are expected to grow from 22.8% in 2022 to 29.4% by 2027, which is
force in the Asian and global luxury goods market. Its falling economic condition pointing toward an increased role for digital touchpoints in the luxury consumer’s
probably had a lot to do with this in the past, but times are now different. Japan’s buying journey. Japan’s peculiarity lies in the fact that it discriminates against
economy has rebounded after almost two decades of recession mainly due to certain clientele, focusing more on domestic consumers. For example, Chanel
Prime Minister Shinzō Abe’s economic program and monetary policy, which were attempts to keep local customers physically separated from tourists and has gone
started in 2013. This growth is reflected in the resurgence of the country’s luxury so far as to make a separate cosmetics and perfume section reserved for top
market from both domestic and foreign consumers. According to the Statista Japanese customers to keep them away from the nouveau riche crowd.
Consumer Market Outlook, Japan is the third-largest luxury goods market globally,
with estimated revenues of US$25.9 billion in 2021, a 5% increase as compared to
2020. 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, and the changing consumption habits of the country’s female
population.
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 such as
107

Japan’s luxury goods market to grow at a CAGR of 6% during 2022-2027
Japan (2/4)
39
6%(1) 38
36
34
32
30
26 26
25
23
21 22
21
18
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Cosmetics & fragrances segment to lead the luxury market in Japan
Japan (3/4)
2%
14% 15%
34%
10%
22%
5%
60%
5%
5%
29%
Cosmetics & Fragrances Leather Goods Eyewear LVMH Chanel Kosé

Fashion Watches & Jewelry Shiseido Kering Other
109

The Japanese online share is expected to reach 29% by 2025
Japan (4/4)
10% 11% 13% 15%

6%(1) 21% 23% 25%
320 27% 29%
305
290
274
258
238
204 196 206
185
161 168 171 90% 89% 87% 85%
144 79% 77% 75% 73% 71%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

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 Luxury goods market in billion US$
that nine French companies,(1) including the world’s largest luxury group, LVMH,
have been featured in Deloitte’s 2020 annual list of Top 100 luxury goods 4%(2)
companies. What is more interesting though is that these companies represent 22 22
over 28% of the total sales in the sector. Another report by the real estate company 21
20
20
Savills found that Paris enjoyed the highest share of all luxury store openings
18
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 15 16 16
15
of quality and high status. 14
13 13 13
According to the Statista Consumer Market Outlook, the French luxury goods
market is expected to increase from US$18 billion in 2022 to US$22.3 billion by
2027, at a CAGR(2) of 4.4%. Luxury fashion is expected to constitute the largest
product category, with sales reaching US$6.4 billion in 2022, followed by leather
goods (US$4.6 billion), cosmetics and fragrances (US$3.7 billion), watches and
jewelry (US$2.5 billion), and eyewear (US$1.1 billion).
In 2021, LVMH was the largest player in the market with a share of 25%, followed by
Kering and Hermès, with 5% each. Online penetration is expected to increase from 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
19.6% in 2022 to 27.5% by 2025.
111 Notes: (1) Clarins, Hermès, Kering, L'Oréal, Longchamp, LVMH, Nuxe, SMCP, Zadig & Voltaire (2) CAGR: Compound Annual Growth Rate / average growth rate per year

Fashion dominates the luxury market with a 36% market share
France (2/3)
6%
14% 25%
36%
5%
19%
65% 5%
26%
Fashion Cosmetics & Fragrances Eyewear LVMH Kering

Leather Goods Watches & Jewelry Hermès Other
112

Average revenue per capita to reach US$336 by 2027
France (3/3)
9% 10% 12%
4%(1) 15% 17% 20% 22% 25%
336 27%
328
318
308
297
274
237 239 242

230
215
199 203 199
91% 90% 88% 85% 83% 80% 78% 75% 73%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

The UK is a natural hub for luxury products
UK (1/4)
The UK is a natural and structural hub for luxury products owing to its established Fashion is the largest category, with sales of US$5.9 billion in 2021, followed by
customer base, pool of creative talent, and the legacy and heritage of many British leather goods and cosmetics, and fragrances (US$2.6 billion each), watches and
brands, such as Burberry and Harrods. Other factors such as London’s status as a jewelry (US$2.2 billion), and eyewear (US$296 million). In 2021, LVMH and
global financial center, the importance of London Fashion Week, and a strong and Richemont were the two largest brands in terms of sales in the country, with shares
diversified university system across the arts, fashion and design all contribute to of 10% each.
making the UK one of the most important markets for luxury products in the world.
Additionally, new brands such as Victoria Beckham, Orlebar Brown, and Emilia
Wickstead have emerged over the past few years and are making impressive sales
in both domestic and international markets, in spite of slow GDP growth.
However, Brexit-induced political and economic uncertainty, the devaluation of the

pound, the resultant rise in import prices, and of course disruptions caused by the
COVID-19 pandemic are negatively impacting market growth. The upside, however,
is that many international tourists are likely to travel 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. According to the Statista Consumer Market Outlook, the UK luxury goods
market is expected to grow from US$16 billion in 2022 to US$20.5 billion by 2027, at
a CAGR(1) of 5%.

The UK luxury market is likely to reach US$21 billion by 2027
UK (2/4)
5%(1) 21
20
19
18
17
16
14
13 13
12 12
11 11 11
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Fashion leads the luxury goods market in the UK
UK (3/4)
2%
10%
16%
10%
43%
5%
19% 5%
60%
5%
5%
20%
Fashion Leather Goods Eyewear LVMH Estée Lauder L’Oréal Others

Cosmetics & Fragrances Watches & Jewelry Richemont Kering TFG London
116

The online share is expected to increase to 35% in 2025
UK (4/4)
5%(1) 15% 17% 19% 24% 26% 28%

286
295 30% 32%
275 35%
264
253
234
193 191 199

184 182
167 164 160
85% 83% 81% 76% 74% 72% 70% 68% 65%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

Hong Kong SAR’s luxury market is expected to increase
Hong Kong SAR (1/4)
Historically, Hong Kong SAR has been a hub for luxury products, with the market International brands have responded accordingly and are decreasing their
increasing at a double digit growth rate every year from 2010 till 2014, according to presence in Hong Kong SAR. For example, in the famous Pacific Place mall,
Statista’s Consumer Market Outlook. This growth was mainly driven by Chinese Burberry and Louis Vuitton have reduced the size of their stores, while Coach has
tourists who visited Hong Kong SAR in large numbers from 2003 after the closed down completely. Landlords are thus looking to refresh their tenant mix to
government launched the Individual Visit Scheme(1). In fact, a study by asset cater to new spending habits and have therefore begun to target lifestyle
management company Schroder found that Hong Kong SAR mall sales to tourists companies and food outlets.
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.
118 Notes: (1) After the scheme, the number of tourists increased from 7 million in 2003 to 44 million in 2013
Sources: South China Morning Post; Schroders; Statista Consumer Market Outlook 2022
Hong Kong SAR’s luxury market to reach US$16 billion by 2027
Hong Kong SAR (2/4)
2%(1) 16
15 15
14 15
14
13 13
12 12
11 11 11
11
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Watches & Jewelry segment leads the luxury market
Hong Kong SAR (3/4)
3%
0% 15%
14%
15%
16% 50%
66%
10%
5%
5%
Watches & Jewelry Leather Goods Eyewear Rolex Richemont LVMH

Fashion Cosmetics & Fragrances Swatch Group China National Gold Group Gold Jewellery Other
120

Hong Kong SAR has one of the lowest rates of digital penetration
Hong Kong SAR (4/4)
1%(1) 11% 13% 14%

19% 19% 20% 22%
1,961 1,988 25% 28%
1,859 1,888 1,915 1,939
1,737 1,695
1,638 1,591
1,528 1,493 1,502 1,502
89% 87% 86%

81% 81% 80% 78% 75% 72%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

High concentration of HNIs makes Singapore an attractive market
Singapore (1/5)
The luxury goods market in Singapore is expected to increase from US$3.9 billion in In 2021, Swatch Group had the highest market share with 20%, followed by Rolex
2022 to US$4.7 billion by 2027, at a CAGR(1) of 3.8%. One of the main factors driving (15%), LVMH (10%), Richemont, and Kering (5% each). Online sales are expected to
the market is that it has one of the highest GDPs in the world resulting in a strong grow from 21.2% in 2022 to 28.5% by 2025.
concentration of high net-worth individuals (HNIs) 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, were 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 watches and jewelry constitutes the largest category, followed by luxury
fashion, leather goods, cosmetics and fragrances, and eyewear.

Singapore’s luxury market to reach US$4.7 billion by 2027
Singapore (2/5)
4%(1) 4.7
4.5
4.4
4.2
4.1
3.9
3.6
3.4
3.0 3.1
2.7 2.7 2.7
2.5
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
123 Notes: (1) High net-worth individuals (2) CAGR: Compound Annual Growth Rate / average growth rate per year

Luxury watches are very popular in Singapore
Singapore (3/5)
Luxury watches and jewelry constituted the single largest category in the market in Strong cultural heritage is another reason. Singapore was home to Timezone.com,
2021, with a total spend of US$2.1 billion, followed by luxury fashion. 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,
According to a study of 1,000 Singaporean consumers conducted by research
one of the leading print publications on watches globally, have their roots in
company Kadence Singapore, watch companies Patek Philippe and Rolex figured
Singapore.
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-
Royce(1). 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
cars(2), has created an economic environment conducive to spending on luxury
watches.
124 Notes: (1) Cars are not included in Statista’s luxury market study (2) Import and special duties have made Singapore one of the most expensive places to own a car in the world
Sources: Statista Consumer Market Outlook 2022; deployant.com; Forbes; Singapore Business Review
Swatch Group dominates the luxury goods market in Singapore
Singapore (4/5)
3%
1%
20%
18%
45%
15%
58%
20%
10%
5% 5%
Watches & Jewelry Leather Goods Eyewear Swatch Group LVMH Richemont
Fashion Cosmetics & Fragrances Rolex Kering Other
125

Singapore’s online share to reach 28% by 2025
Singapore (5/5)
3%(1) 9% 11% 13%

17% 19% 21%
764 23% 26%
742 28%
722
701
680
657
606
586
548 536
487 470 479
419
91% 89% 87%
83% 81% 79% 77% 74% 72%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017 2018 2019 2020 2021 2022 2023 2024 2025
Online Offline

CHAPTER 10
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.
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 72.7(1)
L’Oréal Paris, France 36.6(1)
Kering Paris, France 20(1)
Estée Lauder New York, U.S. 16.2(2)
Coty New York, U.S. 4.6(2)
Swatch Group Biel, Switzerland 8(1)
Hermès Paris, France 10.2(1)
Burberry London, UK 3.2(3)
128 Notes: (1) As of Dec 31, 2021 (2) As of Jun 30, 2021 (3) As of Mar 31, 2021
Sources: Company information

LVMH forayed into eCommerce in 2017
LVMH: Overview
The LVMH (Louis Vuitton Moët-Hennessy) group operates as a luxury products Business segments and selected brands
company. The company operates through six major segments including wines and
Business
spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, Key brands
segments
selective retailing, and other activities. It has over 70 brands including Marc Jacobs,
Sephora, Fendi, DKNY, Hermès, and the most recently acquired Tiffany and Co., in
Wines and Spirits
early 2021.
LVMH forayed into eCommerce in May 2017 with the launch of its website 24 Fashion & Leather
Sèvres. Since then, it has invested over US$60 million in an online fashion search Goods
business Lyst to expand its online presence and capture younger shoppers. The
Perfumes &
company was formed in 1987 through the merger of Louis Vuitton and Moët- Cosmetics
Hennessy and is headquartered in Paris, France.
Watches & Jewelry

Year founded: 1987
Number of Employees: 175,647 (31 Dec 2021) Selective retailing
Number of Stores: 5,556 (31 Dec 2021)
Revenue: US$72.7 billion (31 Dec 2021)(1) Other activities
129 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1.1324 as of 31st Dec 2021 (Oanda)

Celebrity endorsement and no-discount strategy catalyzed growth
LVMH: Strategies
LVMH has the most aggressive celebrity endorsement strategy 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
Luxury brands have for long used celebrity endorsements as the primary marketing
address the non-Caucasian segment, otherwise they run the risk of losing out
tool. In fact, Charles Worth, the man who invented haute couture, used the services
market share to brands such as Dolce & Gabbana and MCM.
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. A no-discount strategy helps to maintain exclusivity and enjoy higher
margins
Louis Vuitton is probably the most persistent among all luxury brands when it
comes to celebrity endorsements – having worked with Diane Kruger (2004), Uma When steel baron Henri Recamier married into the Vuitton family in the 1970s, he
Thurman (2005), Gisele Bündchen (2006), Pharrell Williams (2006), Scarlett noticed that retailers were adding a mark up of as much as 100% to the company’s
Johanssen (2007), Kate Moss (2008), Kanye West (2008), Madonna (2009), Angelina products and keeping the money for themselves. This resulted in him
Jolie (2011), Muhammad Ali (2012), Michelle Williams (2013), Gisele Bündchen implementing a policy of vertical integration which laid down the rule that the
(2014), Michelle Williams (2016), Emma Stone (2017), and most recently the K-POP brand would henceforth not only own its factories but also all its stores and any
group BTS, in 2021 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
In fact, according to an August 2018 Forbes article, LVMH spent 38.4% of its overall
sell the products at a discounted rate. In fact, according to reports in several trade
revenue on marketing and selling activities, with this number increasing to 42.9%
magazines, the company allegedly destroys products at the end of each season
for Louis Vuitton alone. By contrast Hermès spent only 5% of its overall revenues
rather than discount its unsold stock(1). This strategy has not only resulted in higher
on marketing. However, one area where the brand lacks is multicultural marketing
margins but has also reinforced the brands exclusivity which in turn allows it to
as a very small percentage of celebrities and models who endorse LVMH products
command a higher price than most other luxury brands.
130 Notes: (1) LVMH has never commented on this practice and hence these reports remain unconfirmed till now
Sources: Forbes; Zapyle

LVMH relied on acquisitions to fuel growth
LVMH: Timeline (1/4)
1854 l Louis Vuitton founded in Paris. 1992 l Louis Vuitton opens its first store in Beijing, Mainland China
1885 l Louis Vuitton expands internationally by opening a store in London 1993 l Acquired the Kenzo company from SEBP and Financiere Truffaut for
about US$80 million in August
1947 l Christian Dior launches Miss Dior perfumes
1996 l Acquired Fred Joaillier, a French jewelry brand in January
1969 l Louis Vuitton enters the Asian market with a store in Tokyo
1997 l Invested US$2.6 billion for 61% share in DFS Group Ltd., a specialty
retailer that catered to international travelers
1971 l Moët et Chandon merges with Jas. Hennessy & Company, the Acquired Sephora, the French retailer of perfumes and beauty
largest cognac producer in France, and is renamed Moët-Hennessy products, for US$267 million
1984 l Louis Vuitton goes public 1998 l Purchased Le Bon Marché, an exclusive specialty retailer in Paris
Acquired Krug, the premium champagne brand from Rémy
1987 l Louis Vuitton and Moët-Hennessy merged to create LVMH in a US$4 Cointreau
billion deal
1999 l Invested in four American beauty products companies: Hard Candy,
Bliss Spa, BeneFit Cosmetics, and Make Up For Ever
131

LVMH established its watch and jewelry division in 1999
1999 l Acquired luxury watch makers Tag Heuer for US$740 million in 2001 l Acquired Fendi, the Italian fashion house in November
September.
Purchased a majority interest in Thomas Pink, a British shirt maker, 2005 l The Watches & Jewelry division becomes a member of the
in September Responsible jewelry Council (RJC)
Sephora launches sephora.com, one of the very first online
shopping sites in October 2008 l Acquired luxury watch maker Hubolt in April
Partnered with Italian fashion company Prada, to acquire a majority
stake in Italian fashion design house Fendi in October 2011 l Acquired ArteCad, one of its main suppliers of Swiss watch dials in
Established new watch and jewelry division in November November
Increased its stake in Inter Parfums Inc., a perfume manufacturer,
from 6.3 percent to 20 percent. 2013 l Opened Hélios, its new Perfumes and Cosmetics research center in
Acquired Swiss watch manufacturer Zenith International S.A. in France
November Acquired 80 percent of Italian luxury cashmere clothing brand Loro
Piana for US$2.57 billion in July
2000 l Acquired Urban Decay, an American cosmetics company in February
Acquired 67% interest in Italian fashion house Emilio Pucci in
February
132

LVMH launched its multi-brand eCommerce website in 2017
2014 l Launched the Institut des Métiers d'Excellence, a vocational training 2017 l Launched a multi-brand eCommerce website in May
program to pass on unique skills and savoir-faire to new Launched Clos19, an experimental online drinks shopping platform
generations in May
Louis Vuitton introduced upscale smartwatch to compete with Apple
2015 l Inaugurated a new shoes and leather goods manufacturing facility in July
in Ferrare, in northern Italy in August Louis Vuitton launched its eCommerce site In Mainland China in July
TAG Heuer launched its first luxury smart watch in November LVMH's Celine launched its eCommerce venture in December
2016 l Sold out the loss-making fashion company Donna Karan 2018 l Invested over US$60 million in an online fashion search business
International to US design and licensing specialist G-III Apparel in Lyst in May to expand online presence and capture younger
July shoppers
Acquired suitcase maker Rimowa for US$716 million in October
2019 l Introduced Tambour Horizon connected watch and Horizon wireless
2017 l Created a venture fund, LVMH Luxury Ventures, to invest in small, earphones in February
promising fashion, cosmetics or accessories companies in February LVMH and Stella McCartney have reached an agreement in July to
Acquired majority stake in perfume maker Maison Francis Kurkdjian further develop the Stella McCartney House
in March Announced to acquire the luxury jewelry maker, Tiffany & Co for
Gained full control over Christian Dior for US$13.1 billion in April US$16.2 billion in November
133

LVMH to manufacture hydroalcoholic gel in France
2020 l Stockholders of Tiffany & Co. approved the acquisition by LVMH in 2021 l Moët-Hennessy launched the Robert-Jean de Vogüé Research
February Center to conduct scientific research around sustainability in
Secured an order with a Chinese industrial supplier to deliver October
around 40 million masks in France in March
Announced that its Perfumes & Cosmetics business would begin 2022 l LVMH Japan partnered with Softbank to enhance online and offline
manufacturing hydroalcoholic gel to address its shortage in France customer experience through the use of cutting edge technologies
LVMH plans to walk away from its planned US$16.2 billion deal, in February
citing the threat of U.S. tariffs on French goods in September LVMH partnered with Imperial College London to develop a fibre
Agrees on the deal in October, after Tiffany & Co. decides to lower capable of mimicking a range of luxury materials including fur in
the price of its acquisition, from US$135 per share to US$131.5 April
2021 l Acquires Tiffany & Co. for US$15.8 billion in January

Partnered with Prada and Cartier to develop the world’s first global
luxury blockchain called Aura Blockchain Consortium in April
After 16 years in development, LVMH officially opens its US$890
million flagship shop in Paris in June
Signed an agreement with Virgil Abloh to acquire a majority stake in
Off-White in July
134

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, Business divisions and selected brands
skin care, sun protection, make up, perfume, and haircare.
Business
L'Oréal is present across all distribution networks including mass-market, Key brands
divisions
department stores, pharmacies and drugstores, hair salons, travel retail, branded
retail and eCommerce. The company has a dedicated team of nearly 4000 people
Luxe(2)
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. Consumer products
Professional products
Year founded: 1909
Number of Employees: 85,400 (31st Dec 2021) Active cosmetics
Revenue: US$36.6 billion (31st Dec 2021)(1)
Revenue (eCommerce): US$10.5 billion (31st Dec 2021)(1)
Market Capitalization: US$263.3 billion (31st Dec 2021)
135 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1.1324 as of 31st Dec 2021 (Oanda) (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 in the cosmeceuticals market. In Latin America, the division achieved double digital
mainly because it is aligned with existing trends such as the desire for health, growth in 2017, mainly because of the strength of the Lancôme and La Roche-
safety, well-being, authenticity and naturalness. L'Oréal is one of the leading Posay brands. In 2Q2018 the company’s 6.3% increase in sales was also mainly
companies in this product segment globally. 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
2017 was a landmark year for the company’s business as it crossed €2 billion in
brands and the impetus provided by Vichy and CeraVe. In 2021, the company’s
revenues for the first time ever, with a 5.8% increase as compared to 2016. In 2021,
overall business in Latin America grew 20.6% year-on-year, driven mainly by
the active cosmetics segment saw the biggest growth among all segments, up
Revitalift, La Roche-Posay, and most of all CeraVe, which more than doubled its
28.4% year-on-year. It was also the year when L’Oréal Luxe became the company’s
sales in the region.
largest division, with active cosmetics doubling in size over the last four years.
One of L'Oréal’s 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 has 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
136
Sources: Trefis
L'Oréal was publicly listed in 1963
L'Oréal: Timeline (1/5)
1909 l The company was founded 1970 l Acquired Biotherm, a skincare specialist company to complement its
existing Lancôme and Vichy brand
1928 l Acquired the company Savons Français
1973 l Acquired the French pharmaceutical company, Synthelabo to
1959 l Expanded business operations to Brazil by forming FAPROCO research on remedial dermatology
(Fábrica Produtos Cosméticos S.A.)
1974 l Made an agreement with Nestle to enter certain international
1963 l The company got listed in Paris Stock Exchange markets, particularly Japan
1964 l Entered the luxury goods market by acquiring Lancôme, a perfume, 1976 l Acquired the mascara brand Ricils and merged it with Gemey to
skincare and make up brand expand its offer in all make up segments.
1965 l Acquired the then leading haircare products manufacturer, Garnier 1984 l Acquired Paloma Picasso’s beauty license to market its products
1985 l Acquired Ralph Lauren beauty license to market its products

1966 l Partnered with Guy Laroche, a major French couturier to create a
number of fragrances for luxury segment
1988 l L’Oréal acquired Helena Rubinstein, the American brand of skincare
products in October
137

L'Oréal adopted an inorganic growth strategy
1988 l Acruired La Roche-Posay 2002 l In association with Nestle, L'Oréal entered the market for nutritional
supplements for cosmetic purposes with the creation of Innéov in
1993 l L’Oréal acquires Redken for an undisclosed amount in June Oct
2003 l Acquired Mininurse, the mass-market skincare product company in

1994 l Acquired a controlling stake in Cosmair in June
Mainland China to help gain market share for Garnier
Formed alliance with Mr. Shu Uemura, the renowned make up artist
1996 l Acquired a controlling stake in Maybelline for US$508 million to gain
to enter the strategic Japanese market
a greater presence in the American mass-market in December
2004 l Acquires Yue Sai, an affordable luxury skincare and make up brand
1998 l L’Oréal acquires SoftSheen in July from Mainland China to improve its brand presence in the country
2000 l Acquired Matrix, Carson, Kiehl’s, Respons and a stake in Shu 2005 l Acquires Skinceuticals, a premium American beauty care brand for
Uemura professionals
2001 l Acquired Biomedical, an American brand of professional corrective 2006 l Acquired the French pharmaceutical company Sanoflore, a
cosmetic products, used and sold by dermatologists company that produce natural cosmetics by organic farming in
October
138

L'Oréal continued to fuel its growth through acquisitions
2006 l Opened L'Oréal Hairdressing Academy, largest hairdresser training 2011 l Acquired Pacific Bioscience to position itself in the market for sonic
center in the world devices and technologies in the field of skin care in December
Entered a licensing agreement with Diesel to launch a line of Opened a new subsidiary in Nairobi, Kenya in December to serve as
fragrances for the 18-35 age group worldwide the development center for the Group's activities in East Africa
Acquired SkinEthic, one of the major international specialists in
tissue engineering to develop alternative methods to animal testing 2012 l 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
2007 l Acquired PureOlogy, a high-end American professional haircare
market in April
brand that targets hair colorists and sales through hair salons in
Acquired Colombian Vogue group, the market leader in mass-
May
market make up products to strengthen its position in the region in
October
2008 l Acquired French luxury brand YSL Beauté for US$1.7 billion in
Acquired Urban Decay, an American specialty make up brand, to
January
increase its market presence in November
2010 l Acquired Essie Cosmetics, an American brand known for its ultra-
2013 l Acquired Cheryl's Cosmeceuticals, that specializes in skin care
trendy nail varnishes in April
products and treatments in beauty salons across the country
139

Further growth was achieved through partnerships
2013 l Acquired Decléor and Carita, two emblematic and complementary 2016 l Announced to acquire Atelier Cologne, a company that specialized
skincare brands in the U.S. in October in niche perfumery in June
2014 l Acquired NYX, a leader in the massive color cosmetics industry to 2018 l Acquired Modiface, a company that expertise in the creation of
provide high-quality, professional make up at accessible prices custom augmented reality beauty apps in March
Launched digital innovation application called “Make up Genius” to Acquired Pulp Riot, a professional hair color brand in May
enable consumers to test make up products using their mobile Signed a worldwide license agreement with Valentino in May to
phone develop and distribute fine fragrances and luxury beauty
Acquired Korean lifestyle company Nanda Co. Ltd in June
2015 l Acquired Niely Cosmeticos, the largest independent hair coloration Collaborated with Facebook in August to provide new AR powered
and haircare company in Brazil in March make up try-on experience through Facebook camera products
Signed a licensing agreement with Proenza Schouler in June for the Acquired German natural beauty company Logocos Naturkosmetik
creation and development of fine fragrances AG in August
Launched “My Skin Track UV”, a wearable sensor to help users track
2016 l Launched My UV Patch, the first ever stretchable skin sensor their personalized exposure to UV, pollution, pollen and humidity
designed to monitor UV exposure in January
Partnered with Poietis to conduct an exclusive research on 2019 l Acquired Mugler brands and Azzaro fragrances brands from Clarins
bioprinting hair follicles Group in October
140

Acquired Japanese company Takami Co. in early 2021
2019 l Signed a long-term license agreement with Prada to develop and

distribute luxury beauty products
2020 l Finalized the acquisition of the Mugler brands and Azzaro

fragrances 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
Announced the signing of an agreement to acquire the Japanese
company Takami Co. in December
2021 l Finalized the acquisition of Takami Co. in February

Acquired a minority stake in Swiss start-up Gjosa in March
Acquired Youth to the People, an American skincare company based
in California in December
141

Kering entered the luxury market in 1999
Kering: Overview
Kering SA is an international luxury products company that owns brands including Business divisions and selected brands
Alexander McQueen, Balenciaga, Bottega Veneta, Boucheron, Brioni, Gucci, and
Yves Saint Laurent. The company was established in 1963 as Pinault S.A. which was Business
initially into timber trading and entered the luxury market in 1999 with the Key brands
divisions
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, Luxury
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.

Sports & lifestyle(2)
Year founded: 1963
Number of Employees: 42.811 (31st Dec 2021) Eyewear
Number of Stores: 1.565 (31st Dec 2021)
Revenue: US$20 billion (31st Dec 2021)(1)
142 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1.1324 as of 31st Dec 2021 (Oanda) (2) Puma was a part of the division till May 2018

Michele-Bizzarri’s leadership and social media focus drive growth
Kering: Strategies(1/2)
A millennial-focused social media strategy pivotal to Gucci’s recent success partnering with people like photographer, model, artist and filmmaker Petra
Collins, who has designed many of Gucci’s successful campaigns and enjoys a large
Gucci makes up over 50% of Kering’s total corporate revenues. What is even more
following on social media.
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, Gucci was also one of the first brands to engage on Flipboard, a social network and
according to research firm L2 Intelligence, Gucci was been the best performing social news aggregator. One of Gucci’s meme-inspired campaigns to launch its new
digital fashion brand for two years running in 2016 and 2017, outranking other collection of luxury watches in collaboration with famous meme artists such as
digital-savvy brands such as Michael Kors, Fendi, Burberry, and Louis Vuitton. @youvegotmale, and @textsfromyourexistentialist, sparked controversy over
However, the brand has fallen to seventh place, according to Gartner’s 2020 Digital whether the brand was trying too hard. However, the campaigns resonated with
IQ Index: Luxury. Nevertheless, it has kept its pole position in Luxe Digital’s list of the brand’s younger and aspirational fan base, making two of the posts the top
top luxury brands online for four years consecutively – from 2018 through 2021. performing posts of all time.
As of May 2022, at 48.2 million, Gucci had more Instagram followers than Louis
Vuitton, Dior, and Hermès, with only Chanel (50.2 million) ahead of it. It’s Facebook
likes (20 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
143
Sources: Forbes; Medium; Raidió Teilifís Éireann

Revamped celebrity endorsement and digitalization driving recent success
Kering: Strategies(2/2)
Changes made by the Michele-Bizzarri team resulted in immediate success storytelling, elevated eCommerce, digital gifting with split payments, and AR-
powered try-on features on Snapchat and the Gucci App, to boost its online
Marco Bizzarri took over as Gucci’s CEO in 2014 when the brand was on the verge
business.
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 Moreover, in order to increase its influence in the massive Chinese eCommerce
adoption. market, Gucci opened two flagship stores on Tmall, Alibaba’s online luxury
shopping platform, in December 2020, selling fashion and leather goods and
Firstly, they stopped Gucci’s association with past celebrities such as Grace Kelly
following it up with the Gucci Beauty flagship store in February 2021.
and Jacqueline Kennedy Onassis and instead focused on contemporary celebrities
and style icons such as Rhianna, Blake Lively, Brad Pitt, and Rachel McAdams. They As a result of these efforts, the brand’s eCommerce sales have increased from just
also resurrected the iconic GG logo which had been deemphasized by the previous US$130 million in 2014 to over US$1.2 billion in 2021 and are poised for a robust
team of Patrizio di Marco (CEO) and Frida Giannini (Creative Director). These increase over the short to medium term as well.
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 company also uses innovative tools such as digital
144
Sources: Forbes; Medium; Raidió Teilifís Éireann

Kering entered the luxury market with the acquisition of Gucci
Kering: Timeline (1/3)
1963 l The company was established as Pinault S.A. 1999 l Gucci acquired luxury brands Yves Saint Laurent and YSL Beauté in
November
1988 l Company got listed in Paris Stock Exchange
2000 l Gucci acquired Paris-based luxury watch and jewelry firm
1990 l Acquired CFAO, a company that specialized in trading with Africa Boucheron from Schweizerhall Holding AG for US$145 million in
and in electrical equipment distribution May
1991 l The company entered into retail business 2001 l Gucci acquired 66.67 percent interest in Italian leather goods House,
Bottega Veneta for US$60.6 million in February
1992 l Acquired the department store group Au Printemps, and owned Gucci acquired 91 percent stake in the luxury fashion House,
majority share of the mail order clothing retail chain, La Redoute Balenciaga in July
Gucci signed partnership agreements with Stella McCartney and
Alexander McQueen
1994 l Group renamed as Pinault-Printemps-Redoute
Acquired Fnac company in June
2003 l Sold out Pinault Bois & Matériaux to the British group, Wolseley in
May
1999 l Entered the Luxury Goods sector with the acquisition of 42% of
Gucci Group in April
2004 l Raised its stake Gucci Group to 99.4% in April
145

It’s name was changed from PPR to Kering in 2013
2005 l The group name changed from Pinault-Printemps-Redoute to PPR 2012 l Formed a joint venture with Yoox dedicated to eCommerce for
several Luxury brands of the Group in August
2006 l Sold out majority of France Printemps to RREEF and the Borletti Acquired of a majority stake in Chinese fine jewelry brand, Qeelin in
group in June December
2013 l Acquired a majority stake in the luxury designer brand, Christopher

2007 l Acquired 62.1 percent stake in Puma in July (27.1 percent stake in
Kane in January
April)
Acquired Tannerie de Périers in Normandy, a tannery specialized in
precious skins in March
2008 l Sold out YSL Beauté to L’Oréal in June
The group name changed from PPR to Kering in March
Acquired minority stake in luxury watch Manufacture, Girard-
Acquired a majority stake in Italian jewelry brands Pomellato and
Perregaux
Dodo in April
2011 l Sold out the multichannel retailer of discount home furnishings to 2014 l Sold out its multichannel retailer brand La Redoute in June
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
146

Kering created a new division for luxury and lifestyle
2014 l Acquired the watch Manufacture Ulysse Nardin in July 2020 l Kering Eyewear announced partnership with French fashion brand
Created two new divisions, luxury and sports & Lifestyle in May Chloé in June
2015 l Launched Kering Eyewear, specialized in the high-end eyewear 2021 l Successfully completed the sale of 5.9% of Puma's share capital in
sector in June May
Invested in Cocoon, a handbag rental service, in June
2017 l Kering Eyewear and Cartier signed a strategic agreement to develop, Announced that the company had gone completely fur free in
make and market Cartier eyewear in March September
Kering Eyewear acquired Danish Luxury Eyewear brand LINDBERG
2018 l Partnered with London College of Fashion, Kering launched world’s in September
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 2022 l Divested its 100% stake in Sowind Group SA, manufacturers of
on luxury brands Girard-Perregaux and Ulysse Nardin, to its current management in
January
2019 l Completed the sale of its US sports and lifestyle brand Volcom to
Authentic Brands Group (ABG).
147

Estée Lauder has a presence in more than 150 countries
Estée Lauder: Overview
The Estée Lauder Companies Inc., established in 1946, manufacturers and markets Business divisions and selected brands
skin care, make up, fragrance, and haircare products in more than 150 countries.
The company markets its products under various brand names including Estée Business
Key brands
divisions
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. Skincare
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 Make up
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). Fragrance
Year founded: 1946 Haircare
Number of Employees: >62,000 (30th June 2021)
Revenue: US$16.2 billion (30th June 2021)
Market Capitalization: US$115.1 billion (30th June 2021)
148

Acquisitions form the cornerstone of the company’s success
Estée Lauder: Strategies (1/2)
Inorganic growth, one of the keys pillars of Estée Lauder’s growth strategy By Kilian helped the company establish itself in the niche fragrances market, which
has been growing rapidly due to customers moving towards unique and
One of the pillars of Estée Lauder’s success has been its inorganic growth strategy.
customized products.
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 BECCA Cosmetics helped Estée Lauder break into the Generation Z and non-
extensions or making new products. Caucasian markets.
The company made its first acquisition in 1995, the same year it went public, when Deciem helped the company to add high-quality beauty products to its portfolio
it bought Bobbi Brown, a brand that is now sold in over 60 countries around the available at low prices.
world. Since then, the company’s acquisitions have witnessed a significant uptick
Dr.Jart helped Estée Lauder to further strengthen its position in the skincare
with multiple purchases in the same year. A few of them include skincare brands
segment.
RODIN olio lusso and GLAMGLOW (2014), fragrance brand Le Labo (2014),
fragrance house By Killian (2016) and make up 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 make up dupe market, along with delivering market share in
prestige make up, multichannel distribution and millennial consumers.
149
Sources: Global Cosmetic Industry magazine; The Motley Fool; Travel Markets Insider
Restructuring programs to optimize various business areas
Estée Lauder: Strategies (2/2)
Reallocating resources as part of the Leading Beauty Forward program Post-COVID Business Acceleration Program
In May 2016, Estée Lauder launched a multi-year initiative called Leading Beauty In August 2020, the company initiated the two-year Post-COVID Business
Forward in order to better leverage its cost structure and free resources to fuel Acceleration (PCBA) Program to realign its business with the changes brought
growth in the future. The initiatives which began in the fourth quarter of 2016, went about by the pandemic. It is expected to run through 2022 and 2023. The program’s
on till year-end 2021 and include restructuring of certain business functions and main areas of focus include:
investments in new products, social media, communications, in-store
• accelerating the development of the brand’s online offerings by realigning the
merchandising, point-of-sale activities, and advertising. The company expects to
distribution network in the form of closing 10-15% of department stores and
spend up to US$700 million on this program in order to realize annual net benefits
freestanding stores in North America, Europe, the Middle East, and Africa,
of between US$200 million and US$300 million before tax. The key initiatives of
Leading Beauty Forward include: • reducing brick-and-mortar point-of-sale employees and related support staff,
• A net reduction of about 2.5% of its workforce, amounting to around 1,200 • redesigning Estee Lauder’s regional branded marketing organizations, and.
positions globally • exiting the global distribution of BECCA products.

• Optimizing its supply chain and product development process in order to lower According to initial estimates, the PCBA Program would result in a net reduction of
inventory levels and bring down the time taken for an idea to go to market from around 1,500-2,000 jobs around the world, including part- and full-time employees.
18 months to 12 months, with small changes taking only five or six months However, these estimates have since been adjusted to around 2,500 jobs. It is
• Shifting focus from traditional to social and digital marketing strategies and expected to result in related restructuring and other charges of around US$500
develop a more robust omnichannel offering million.
150
Sources: Global Cosmetic Industry magazine, The Motley Fool, Travel Markets Insider, Annual Reports
Estée Lauder entered the eCommerce business in 1996
Estée Lauder: Timeline (1/3)
1946 l The company Estée Lauder Co. was founded 1990 l Launched 'Origins', the first wellness brand in U.S. department
stores
1956 l Introduced Re-Nutriv, the first ever luxury skincare collection for
women 1993 l Entered the Chinese market with Estée Lauder and Clinique brands
launch in the Isetan department stores in Shangha
1960 l Opened its first counter outside of the U.S. in Harrods, London Signed agreement with fashion designer Tommy Hilfiger for global
distribution
1962 l Introduced the first make up color collection in the industry
1994 l Acquired a majority stake in Toronto-based M·A·C Cosmetics

1963 l Launched Aramis, the first prestige men's fragrance and treatment
brand of grooming products
1995 l Acquired Bobbi Brown Cosmetics in October
Acquired La Mer, skincare and cosmetics company
1968 l Launched Clinique, a dermatologist-guided, allergy-tested,
fragrance-free cosmetic brand
1996 l Launched its first eCommerce sites for Clinique and Bobbi Brown.
1976 l Launched a separate line called 'Skin Supplies for Men'
1997 l Acquired Sassaby Inc (of Jane brand) in September to enter mass
1981 l Started selling products in Russia market for cosmetics
151

Acquisition and licensing agreements fostered growth
1997 l Signed a licensing agreement with Donna Karan Intl. in September 2004 l Sold out Jane cosmetics line, responsible for mass-market cosmetics
to manufacture and market beauty-related products products of the company in February
Acquired Aveda, an ayurveda based cosmetics company for US$300
million in November 2005 l Signed an alliance with fashion designer Tom Ford in April, to create
both an exclusive line of fragrances and related products
1998 l Acquired the complete stake in M.A.C. cosmetics in February
2006 l Acquired luxury watch maker Hubolt in April

1999 l Launched ELC Online division for all brands under Estée Lauder
Group 2010 l Acquired the privately held make up brand Smashbox Beauty
Acquired Jo Malone Ltd, a beauty products manufacturer in October Cosmetics in May
2000 l Acquired majority stake in Bumble & Bumble L.L.C. hair salon and
2011 l Signed global licensing agreement with Ermenegildo Zenga to
products company to expand its beauty-shop network in June
market fragrances under the Ermenegildo Zegna Group’s brands in
March
2003 l Acquired Laboratoires Darphin, a company which was into
Signed a multi-year agreement for the exclusive worldwide license
manufacturing and marketing of prestige skin care products in April
of the Tory Burch fragrance business in October
Acquired Michael Kors L.L.C., a high-end fragrance company in May
152

Estée Lauder continues its acquisition spree
2012 l Introduced AERIN Beauty, a luxury lifestyle beauty and fragrance 2017 l Announced to invest in DECIEM, a vertically integrated multi-brand
brand that develops luxurious make up, fragrance and body skin care cosmetics company to expand its skincare segment in June
products
2018 l Started using advanced 3D printing technology to modernize
manufacturing processes and prototyping in November
2014 l Acquired RODIN olio lusso, a selective line of premium, sensorial
products company in October
2019 l Signed an agreement to acquire global skin care company Dr Jart+
Acquired Le Labo, the high-end fragrance and sensory lifestyle
in November
brand in October
2020 l Debuted its products on the omnichannel retailer QVC

2015 l Acquired Glamglow, the skin care brand focused on fast-acting
treatment masks in January 2021 l Acquired majority ownership in DECIEM for US$1 billion in February
Expanded its partnership with QVC, featuring across all of the
2016 l Acquired By Kilian, the Paris-based prestige fragrance brand in shopping channel's platforms, including a livestream video launch
February Clinique became the first Estee Lauder owned brand to offer an NFT
Acquired Becca Cosmetics for about US$200 million in October in October
Acquired make up brand Too Faced for US$1.45 billion in December
153

Coty is present in both consumer and professional beauty segments
Coty: Overview
Coty Inc is an international beauty products company that operates in three Business divisions and selected brands
segments: Luxury, Consumer Beauty, and Professional Beauty. The Luxury segment
offers prestige fragrances, and skincare and cosmetics products, whereas the Business
Key brands
Professional Beauty segment offers hair and nail care products to nail and hair divisions
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 Luxury
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. Professional beauty
Coty Inc was founded in 1904 and is headquartered in New York city, U.S.
Year founded: 1904 Consumer beauty
Number of Employees: 11,430 (30th Jun 2021)
Revenue: US$4.6 billion (30th Jun 2021)
Market Cap: US$7.1 billion (30th June 2021)
154

Inorganic growth and eCommerce expansion help the business grow
Coty: Strategies
Inorganic growth key to Coty’s push into the beauty market eCommerce expansion, an integral part of Coty’s digital strategy
Coty has made its transition from a pure-play fragrance maker to the beauty eCommerce has been a major focus area for Coty, after the appointment of
industry on the back of several strategic acquisitions. The most important among industry veteran Sean Foster as Global Senior Vice Present of eCommerce, in April
them was that of nearly 40 brands including Clairol, Wella, Max Factor, and 2017. Building out better omnichannel capabilities and expanding to new markets
CoverGirl, from Procter & Gamble in 2017, which then resulted in boosting the with enhanced investments in digital were the two immediate areas of emphasis.
company’s top line by over 100% in the first quarter of 2018. It also expanded the Putting the plan to action, Coty acquired peer-to-peer social selling platform
company’s product suite to include the lucrative ‘salon professional’ and hair Younique in January 2017, and this has paid off with increased revenues and
coloring segments. sellers.
The company’s other acquisitions include a 60% stake in Younique, an online peer- In September 2021, the company signed a multichannel agreement with beauty
to-peer social selling platform in beauty and the takeover of international license technology provider Perfect Corp. to integrate advanced augmented reality and
rights for Burberry’s fragrances and cosmetics business. Younique has been an virtual reality (AR/VR) solutions to its digital marketing offerings.
important addition to Coty’s portfolio with CEO Camillo Pane crediting the
Coty also opted to enter the Chinese market through the BC platform Tmall,
acquisition to the company’s stellar 2Q2018 results. Younique’s sellers increased
instead of opening physical stores.
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 has helped the company to
leverage the brand’s favorable position in many markets across the world.
155

An inorganic growth strategy enhanced Coty’s market presence
Coty: Timeline (1/3)
1904 l The company was founded by François Coty 2006 l Coty Prestige is created to manage Coty’s premium brands
1925 l Coty Inc became a publicly traded company 2007 l Acquired Del Laboratories, which makes Sally Hansen nail care
products for US$800 million in December
1939 l The five foreign Coty companies are reorganized in Coty
International Corp 2008 l Sold out Orajel and other over-the-counter drug brands to Church &
Dwight Co for US$380 million
1963 l Chas. Pfizer & Co acquired Coty and Coty International for about
Signed a deal with Gemini Cosmetics to distribute Coty Beauty’s
US$26 million prestige brands to department and specialty stores in the U.S.
1992 l Joh. A. Benckiser GmbH, a German company acquired Coty

2009 l Entered a license agreement with GUESS Inc to develop and market
new GUESS fragrance lines
1999 l Introduced Adidas Moves, a men's fragrance, to the United States
2010 l Partnered with Calvin Klein, Inc, to develop and market a make up
2002 l Signed Jennifer Lopez and launched her first fragrance, Glow by JLO
line for launch in 2012
in April
Acquired the German cosmetics firm Dr. Scheller Cosmetics AG in
November
2003 l Acquired Kenneth Cole and Marc Jacobs
156

Continued acquisitions in the midst of a listing on the NYSE
2010 l Acquired Philosophy, inc., a premier skincare and cosmetics 2016 l Closed the deal to acquire 41 beauty brands from Procter & Gable
company in November for US$12.5 billion in July
Acquired OPI Products, a company dealing with skin care and nail Acquired GHD, manufactures of haircare styling products and
polish in November accessories from Britain in October
Acquired TJoy Holdings Ltd, a Chinese skin care company for about
US$400 million in December 2017 l Acquired Younique LLC, a Utah based cosmetic products company
for US$600 million in January
2013 l Acquired StarAsia, a distributor of beauty products in Southeast Acquired the exclusive long-term global license rights for Burberry
Asia in May Beauty luxury fragrances, cosmetics and skincare in October
The company got listed in New York Stock Exchange in June
2018 l Launched digital accelerator start-up program in February focused
2015 l Acquired Bourjois cosmetics brand from CHANEL for US$239 million on Artificial Intelligence companies to allow AI uses in its brands
in April Introduced virtual reality (VR) based fragrance discovery experience
Acquired Beamly, a digital marketing firm based in New York and for customers to find their perfect match of scent in December
London in October
Acquired the personal care and beauty business unit of Brazil’s 2019 l Unveiled augmented reality (AR) enabled Wella Professionals Smart
Hypermarcas SA for about US$1 billion in November Mirror to improve hair color selection experience in January
157

Entered into partnerships to enhance brand presence
2019 l Renewed partnership with Lacoste for fragrances in July 2022 l Announced that it had started production of the world’s first
Partnered with MARV Studios to launch a new line of Kingsman globally distributed fragrances made using carbon-captured ethanol
fragrances for men in October in February
Partnered with Kylie Jenner to jointly build and further develop
Kylie’s existing beauty business in November
2020 l Announced a strategic partnership with Kim Kardashian West to

develop more product lines
Announced the launch of Kylie Skin at Douglas, a brand by Kylie
Jenner, in Europe
2021 l Completed the purchase of a 20% stake in Kim Kardashian West's

company for US$200 million in January
Relaunched Kylie Cosmetics with a range of Vegan products in July
Signed a definitive agreement to sell 9% stake in beauty company
Wella to KKR in October
Signed a licensing agreement with Orveda, a French high-end
skincare brand in November
158

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 Business divisions and selected brands
watches and jewelry. The company was formed through the merger of Allgemeine
Gesellschaft der Schweizerischen Uhrenindustrie (ASUAG) and Société Suisse pour
Divisions Key brands
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.
Prestige and
The Swatch Group markets its products through eighteen watch brands that luxury range
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 High range
headquartered in Biel, Switzerland and listed on SIX Swiss Exchange, Zurich.
Year founded: 1983 Middle range
Number of Employees: 31,444 (31st Dec 2021)
Revenue: US$8 billion (31st Dec 2021)(1)

Basic range
Market Capitalization: US$15.8 billion (31st Dec 2021)
159 Notes: (1) Converted from CHF to US$, exchange rate: CHF-US$ 1.09252 as of 31st Dec 2021 (Oanda)

Swatch fueled growth through acquisitions
Swatch: Timeline (1/2)
1983 l The company formed as SSIH/ASUAG Holding Company with the 2002 l Acquired Rubattel et Weyermann, a company that manufactures
merger of ASUAG and SSIH and distributes watch dials in April
1986 l SSIH/ASUAG Holding Company changed its name to SMH 2006 l Acquired watch dial manufacturer MOM Le Prélet S.A. in October
2008 l Acquired the watch components division of Burri SA in July

1992 l Acquired Blancpain S. A. that manufactures, commercializes, and
Acquired the Dubai based lifestyle luxury goods retailer, Rivoli
repairs watches and timepieces for men and women
Group in July
1998 l The company changed its name from SMH to the Swatch Group 2010 l Acquired Novi SA, the manufactures of finished watches and
assembling watch movements in December
1999 l Acquired Groupe Horloger Breguet, one of the oldest luxury watch
manufacturer in the world in September 2012 l Acquired Simon & Membrez SA, the manufactures high-quality
watch cases for the top price segment in April
2000 l Acquired watch manufacturer Montres Jaquet Droz in April
2013 l Acquired HW Holding Inc., a jewelry and luxury watch company
Acquired Glashütter Uhrenbetrieb GmbH, a Germany based luxury
based in New York for US$1 billion in March
mechanical watch manufacturer in October
160

Swatch launched NFC-enabled analog watches in 2015
Swatch: Timeline (2/2)
2015 l Tissot became the first official timekeeper of the National Basketball 2021 l Swatch collaborated with The Museum of Modern Art (MoMA) to
Association (NBA) in October launch special edition designs starting March
Launched an NFC-enabled analog payments watch called the
Swatch Bellamy in Mainland China in October 2022 l Launched a line of 11 planetary-themed watches in collaboration
Partnered with Visa Inc to provide tap and pay feature with Swatch’s with Omega in March
new “pay-by-the-wrist" watch, Swatch Bellamy in November
2016 l Swatch and Safilo Group announced five-year collaboration

agreement in February to co-design eyewear collections in February
2017 l Swatch Group created the world’s smallest Bluetooth chip in March
OMEGA became the official timekeeper of the Volvo Ocean Race in
September
2020 l Omega announced the launch of its online shopping platform in

Europe
161

Hermès restructured its retail network in 2017
Hermès: Overview
Hermès International, founded in 1837, designs, produces, and distributes personal Business divisions and selected brands
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, Business divisions Product categories
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
Leather Bags, luggage, and accessories
boutiques in France in Avignon and Rouen, one 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 Lifestyle accessories Scarves, silk accessories, shoes, equestrian, ties
such as Istanbul, Sao Paulo, and Changsha (Mainland China). The company is
headquartered in Paris and listed on Euronext, Paris. Home furnishing Textiles, tableware, furniture, lighting, wallpaper, gifts
Year founded: 1837

Perfumery Fragrances, refills
Number of Employees: 17,595 (31st Dec 2021)
Number of stores: 303 (As of 31st Dec 2021) Jewelry Silver, gold, enamel, leather, lacquered metal, horn jewelry
Revenue: US$10.2 billion (31st Dec 2021)(1)
Market Capitalization: US$183.7 billion (31st Dec 2021) Watches Collection for men and women and Apple watches
162 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1.1324 as of 31st Dec 2021 (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 maintain exclusivity. In fact, with Hermès imposing a cap on the number of
for its traditional craftsmanship, brand exclusivity, and superior manufacturing. products manufactured, there wasn’t even enough stock to cover demand.
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.
However, this strategy has not augured well for Hermès after the onset of the
COVID-19 pandemic. In fact, sales of the leather goods and saddlery division, which
constitutes around half of the company’s total sales, decreased by 5.4% year-on-
year in 4Q2021. This decline was completely different from what other luxury
brands experienced during the same time period, and a major reason for that was
the brand’s desire to
163

Hermès became a public limited company in 1993
Hermès: Timeline (1/2)
1837 l The company was founded in Paris by Thierry Hermès 1972 l Introduced first Hermès shoes for women
1922 l Introduced first line of handbags with patented zipper in its design 1976 l Acquired the shoemaker company John Lobb
1924 l Started selling products in the U.S. market 1993 l The company got listed in Paris Stock Exchange
1929 l Introduced the first women’s couture apparel collection 1996 l The company entered the Chinese market with a new store in
Beijing
1937 l Introduced its line of silk scarf, the Carré
1997 l Introduced first Hermès shoes for men
1950 l The perfume division of Hermès was established
1999 l Acquired 30% of Jean Paul Gaultier
1951 l Launched the first perfume Eau d'Hermès
2001 l Introduced its eCommerce website to facilitate customers shop
1956 l Introduced the iconic Kelly bag online
1961 l Launched the new line of perfume for women, Calèche 2007 l Acquired 28 Rue Faubourg Saint-Honore to expand its flagship store
in Paris
164

LVMH acquired 20% stake in Hermès in 2010
Hermès: Timeline (2/2)
2010 l LVMH acquired 20% stake in the company in October 2020 l Announced the reopening of its store in Taikoo Hui Guangzhou,
Mainland China
2013 l Acquired d’Annonay tannery, one of its key providers of calf leather Announced the opening of its new store in Kuwait
to ensure uninterrupted supply in January Opened an exclusive store in Stockholm, Sweden in October
2015 l Partnered with Apple to create a collection of new Apple Watches in 2021 l Opened a new flagship store in Tokyo in February
September
2022 l Announced the construction of two new workshops in France, to
2016 l Acquired a stake in Maison Pierre Hardy, a French footwear and open in 2025 and 2026 in March
accessory design company in July
2017 l Announced in October to open two new leather goods production

facilities in France in the next two years
2018 l Launched its new European website with integrated online store in
April
Launched new fine jewelry collection in July
Launched its Chinese eCommerce website in October
165

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 Business segments and product categories
children under the Burberry brand name. The company operates in two segments:
Retail/Wholesale and Licensing. Business segments Product categories
It markets its products through Burberry mainline stores, concessions, outlets,
digital commerce, Burberry franchisees, department stores, and multi-brand
Women’s Clothing, bags, scarves, accessories, shoes, make up, fragrance, gifts
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. Men’s Clothing, scarves, accessories, shoes, fragrance, gifts
Burberry Group plc was founded in 1856 and is headquartered in London, the
United Kingdom. Children’s Clothing, shoes, accessories, gifts
Year founded: 1856
Number of Employees: 9,234 (31st Mar 2021)
Number of Stores: 415 (31st Mar 2021)
Revenue: US$3.2 billion (31st Mar 2021)(1)
166 Notes: (1) Converted from GBP to US$, exchange rate: GBP-US$ 1.37474 as of 31st Mar 2021 (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, needed to
be priced at least 50% higher.
167

“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

Burberry
168
Burberry partnered with Farfetch to improve its eCommerce presence
Burberry: Timeline (1/2)
1856 l Burberry was founded by Thomas Burberry 2001 l Burberry launched its first children’s wear collection
1888 l The weatherproof fabric, gabardine was patented by Burberry 2010 l Bought out its Chinese business partner for £70 million in July to
expand its luxury brand further in Mainland China
1891 l First Burberry store opened in the West End of London at 30
Haymarket 2016 l Completed acquisition of its Chinese retail business from Sparkle
Roll Holdings Limited in August
1912 l The iconic trench coat was introduced to the War Office to be worn
by military personnel during the First World War 2017 l Partnered with Coty in October to accelerate the growth and
development of the Burberry Beauty business
1924 l Burberry's iconic Haymarket Check is first introduced in the lining of
the trench coat 2018 l Partnered with Farfetch, a technology platform for the fashion
industry to further strengthen its eCommerce presence in February
1970 l Opened a New York flagship store at East 57th Street Entered into an agreement in May to acquire a luxury leather goods
business from CF&P to have greater control over quality and costs
2000 l Burberry-Touch, the new fragrance for men and women was Partnered with UN Climate Change to launch the Fashion Industry
launched Charter for Climate Action in December
169

Partnered with Tencent to develop social retail in Mainland China
Burberry: Timeline (2/2)
2019 l Partnered with online marketplace ‘The RealReal’ to increase its 2021 l Partnered with ELLE Digital Japan to launched an interactive virtual
presence online in October store, similar to its flagship Ginza store in March
Launched its first online game called B Bounce, bringing the gaming Partnered with Mythical Games to launch an NFT collection in its
experience to customers globally on Burberry.com in October flagship title, Blankos Block Party in August
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.
2020 l Announced the launch of a curated edit of 26 styles from the

Spring/Summer 2020 collection, all made from sustainable materials
Launched a new Augmented Reality (AR) shopping tool through
Google Search technology.
Announced a partnership with Mythical Games, aiming to launch a
limited-edition game known as Blankos Block Party
2021 l Announced its partnership with Team Qhubeka NextHash, a UCI

WorldTeam cycling team based in South Africa
170

The biggest eCommerce brands were already founded in the 2000‘s
Leading eCommerce Luxury Fashion Brands Profiles
Farfetch Ltd. The Net-A-Porter Group Limited mytheresa.com GmbH
• Administrative and support service, ISIC N • Administrative and support service, ISIC N • Clothing, footwear, and leather articles, ISIC 4771
• Headquarters: United Kingdom • Headquarters: United Kingdom • Headquarters: Germany
• Founding year: 2007 • Founding year: 2000 • Founding year: 2001
• Revenue in 2021 in million US$: 2,256.6 • Revenue in 2021(1) in million US$: 838.8 • Revenue in 2019(1) in million US$: 230
• Number of employees 2021: 6,464 • Number of employees 2021: 1,676 • Estimated number of employees 2016(1) : 324
Revenue in million US$ Revenue in million US$ Revenue in million US$

2,257
1,674
1,043 949 1,037 958

787 839
602
386 298 370
170 233 230
2017 2018 2019 2020 2021 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2015 2016 2017 2018 2019(1)
171 Notes: (1) Estimated value
Sources: Market data by Quandl and WBV 2022; Company DB 2022

CHAPTER 11
Appendix
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, but
Generation Z Gen Z
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 would benefit from professional management to
High Net-worth Individuals HNI
secure and grow future wealth.
Luxury leather - Includes handbags, suitcases and briefcases as well as small leather goods such as wallets.
Luxury watches & 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.
Includes only prestige skin care, fragrances and decorative cosmetics; haircare, oral care, personal hygiene, and professional products
Prestige cosmetics and fragrances -
produced for hair salons or cosmetic parlors are not included.
173
GLOBAL CONSUMER SURVEY 2022
Understand what drives

consumers
The Statista Global Consumer Survey offers a global perspective on
consumption and media usage, covering the offline and online
world of the consumer. Our survey is designed to help marketers,
planners, and product managers understand consumer behavior
and consumer interactions with brands.
• Cross-tabulation
• Customized target groups
+
• Trend and country comparisons
• Export in Excel (CSV) or PowerPoint format
1,700,000+ 56 3.4bn.+ 14,500+ 50+

Find out more on:
Go to Global Survey statista.com/global-consumer-survey
interviews countries & represented international topics &
territories consumers brands industries
174
CONSUMER MARKET OUTLOOK
Everything you need to know

about consumer goods
The Consumer Market Outlook presents the key
performance indicators – sales, revenues, and prices – of the most
important consumer markets worldwide. Our market calculations
made by our in-house analysts are based on data from validated
sources.
• Revenues, volumes , prices, COVID-19 impact, and

forecasts
• More than 250 product categories in 150+ countries and
territories as well as 37 regions
• Covering the period 2012 to 2026
Find out more on:

Go to Outlook statista.com/outlook/consumer-markets
175
CONTENT & INFORMATION DESIGN
Experts for your

project’s success
We at Statista Content & Information Design have been working
with data, facts, and analyses for years and for this reason
especially understand how these can be visually processed in the
best way possible. Our experienced team of consultants, editors,
designers, and digital marketing experts conduct research, analyze,
and filter data or process your content. From concept all the way to
dissemination – we are your partners for content & information
design.
We turn data into brand experiences – in an understandable and

detailed manner. With our individual graphics, animated videos,
presentations, as well as white papers and interactive microsites.
Find out more on:

Visit our website
statista.design/en/
176
STATISTA Q
Your Partner for

data related questions
Statista Q is a division of Statista and offers individual and data-based
research and analysis services for companies. This includes quantitative
and qualitative market research projects. Our Team now comprises over
100 analysts, market researchers, and industry experts, who try to
answer your questions from the following six topics:
Find out more on:

Visit Statista Q q.statista.com/
177
Authors
Leonie Senn-Kalb Dev Mehta Luana Stefan

Team Lead Reports Founder and Director, AgileIntel Analyst
Research
l.senn@statista.com l.stefan@statista.com
As Team Lead for the Industry, Country, Global Dev has over 10 years of experience working for Luana Stefan studied Economics at the Ruperto Carola
Business City, and In-Depth Reports since 2022, Leonie market research, legal, and consulting companies. He University of Heidelberg.
specializes in economic and societal topics as well as has worked in various sectors, which include but are
Before joining Statista, she gathered experience in
market and industry insights. Additionally, she not limited to defense, digital marketing, fintech,
distribution network strategy and business analysis.
continues to carry out the tasks of her previous role at insurance, and consumer goods. He completed his
Statista as Senior Project Manager, leading postgraduate degree from Massey University New
department-wide projects. Before that, she worked as Zealand and has a master’s degree in Marketing
a consultant at EY for Transaction Advisory Services Management from Middlesex University, London.
with a focus on large carve-out and integration
projects.
178
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INDUSTRIES & MARKETS

Luxury Goods – In-depth

Management Summary Luxury Online Shopping 36 Best Performing Influencers 2021 64

Legacy Technology Infrastructure 81 U.S. 99 Hermès 162

Global Luxury Goods Market

Sources: Statista Consumer Market Outlook 2022

Luxury goods market in billion US$

Sources: Statista Consumer Market Outlook 2022

According to the Outlook, luxury fashion continues to dominate the market in

Sources: Statista Consumer Market Outlook 2022

Luxury goods market segment shares in 2022

Fashion Leather Goods Eyewear

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Luxury fashion goods market in billion US$

Sources: Statista Consumer Market Outlook 2022

43% 45% 46%

29% 25% 22%

2015 2021 2027 2015 2021 2027

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Luxury leather goods market in billion US$

Sources: Statista Consumer Market Outlook 2022

42% 44% 44%

2015 2021 2027 2015 2021 2027

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Luxury watches & jewelry market in billion US$

Sources: Statista Consumer Market Outlook 2022

34% 34% 35%

14% 13% 11%

2015 2021 2027 2015 2021 2027

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Prestige cosmetics & fragrances market in billion US$

Sources: Statista Consumer Market Outlook 2022

11.4 47% 45%

2015 2021 2027 2015 2021 2027

Sources: Statista Consumer Market Outlook 2022

Sources: Statista Consumer Market Outlook 2022

Luxury eyewear market in billion US$

Sources: Statista Consumer Market Outlook 2022

39% 40% 42%

2015 2021 2027 2015 2021 2027

Sources: Statista Consumer Market Outlook 2022

Sources: Knight Frank; Classic Car; The Spirit Business

Change in value of selected luxury assets from 2011-2021

Sources: Knight Frank

Deep Dive: Luxury Retail & Online Shopping

According to a report by the investment research and management company Burberry

Sources: Burberry; Harvard Business Review; RWTH Aachen University

Overall, brands are increasingly reinventing the purposes of their brick-and-mortar

Sources: Burberry; Harvard Business Review; RWTH Aachen University

Burberry Lorem Ipsum Lorem Ipsum Estée Lauder

Sources: Company website

Sources: Forbes; Luxe Digital; Pew Research Center

Doug Stephens, Founder & President

Sources: Statista Consumer Market Outlook 2022; CNBC; McKinsey

Sources: Cartonomy; McKinsey

38 Notes: (1) Estimates as of 2016

Sources: Cartonomy; McKinsey

Sources: BusinessofFashion; CNBC; Digital Commerce 360; Wharton; FashionUnited UK