Global Powers of Luxury Goods 2018

Perspectives

Global Powers of Luxury Goods 2018

Shaping the future of the luxury industry

Luxury goods sales growth bottoms out, profit margins resilient under pressure, and M&A activity heats up.

The luxury goods industry has undergone major changes over the past two decades. Varying economic trends, rapid digital transformation and evolving consumer preferences are creating a new competitive landscape which is challenging the traditional corporate strategies.

Australia has long been a destination for global international brands. However, we have experienced an acceleration of new brands either entering Australia or expanding their existing operations in recent years. Australia remains a highly prosperous nation, with a consumer population that has always had a strong desire for international branded products, particularly those from Europe. Coupled with this, Australia’s proximity to Asia provides access to significant inbound tourism as well as affluent international students studying across the country.

Global Powers of Luxury Goods 2018

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The Australian luxury retail market: key trends
  • Increasing competition as local consumers continue to respond strongly to direct access to the best global brands and services
  • Rise of the flagship store which offers the ability to create an environment and platform to build and enhance a brand that resonates with the customer
  • Growth in online, and the next generation consumer have prompted luxury brands to invest significant capital into their online and digital strategies.

The world’s 100 largest luxury goods companies generated sales of US$217 billion in FY2016 and the average luxury goods annual sales for Top 100 companies is now US$2.2 billion. The report discusses the trends and issues that are driving the luxury industry. It also identifies the 100 largest luxury goods companies based on publicly available data for FY2016 (which we define as financial years ending within the 12 months to June 2017), and evaluates their performance across geographies and product sectors.

Global luxury retail market: key findings
  • Italy is once again the leading luxury goods country in terms of the number of companies, while France has the highest share of sales
  • China, France, Germany, Italy, Spain, Switzerland, the UK and the US together made up 83 percent of the Top 100 luxury goods companies and 90 percent of Top 100 luxury goods sales
  • Sales by companies in the clothing and footwear sector was 0.2 percent lower in FY2016 than in the previous year, although currency-adjusted sales grew by 0.2 percent. Both sales growth rates and net profit margin fell for the second year in succession. With 38 companies, this product sector has by far the largest number of companies in the top 100
  • Cosmetics and fragrances was the top-performing sector in FY2016, and the only sector with improving composite luxury goods sales growth, at 7.6 percent
  • The average luxury goods sales for the eleven companies in the multiple luxury goods sector was US$6.3 billion and together they accounted for 32.2 percent of the Top 100 luxury goods sales.
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