Emerging markets consumers drive luxury market growth has been saved
Emerging markets consumers drive luxury market growth
The 2017 edition of the Deloitte Global Powers of Luxury Goods report examines and lists the 100 largest luxury goods companies globally and discusses the key trends shaping the luxury market and provides a global economic outlook.
1 June 2017: Seventy percent of consumers in the emerging luxury markets of China, Russia and the United Arab Emirates have increased their spending in the last five years compared to 53% in the more mature markets of the EU, US and Japan, according to the results of a survey published in the fourth annual Global Powers of Luxury Goods report issued by Deloitte Global.
The report examines and lists the 100 largest luxury goods companies globally, based on publicly available data for consolidated sales of luxury goods in financial year 2015 (which we define as financial years ending within the 12 months to 30 June 2016). It also discusses the key trends shaping the luxury market and provides a global economic outlook.
“Travel and tourism is still a great growth opportunity for the luxury sector,” says David White, leader of Deloitte Australia’s retail, wholesale and distribution group.
Almost half of luxury purchases are made by consumers who are travelling, either in a foreign market (31%) or while at the airport (16%). This rises to 60% among consumers from emerging markets, who typically do not have access to the same range of products and brands found in more mature markets.
White adds: “The latest Deloitte Access Economics Retail Forecasts identified the explosion of international tourism into Australia, led by China, as providing our retail sector in Australia a big boost. The Forecasts showed how tourist shopping expenditure from China alone is already around AU$1.4 billion per year, and is set to almost quadruple over the next decade. Greater affordability and product availability are the two main drivers of luxury purchases abroad. Consequently the exchange rate of the Australian dollar remains a key influence over luxury sales in Australia.”
Based on publicly available data, the world’s 100 largest luxury goods companies generated sales of US$212 billion in financial year 2015. The average luxury goods annual sales for a Top 100 company is now US$2.1 billion.
“The essence of luxury is changing from an emphasis on the physical to a focus on the experiential and how luxury makes you feel,” says White. “However premium quality remains a ‘must have’ and consumers retain a keen eye for craftsmanship and hand-made products. We are also seeing digital become increasingly relevant to luxury retail with a third of transactions taking place in the digital - online and mobile - channel.”
Key findings from the report include:
- Luxury goods sales growth up – sales for the world's 100 largest luxury goods companies grew by more than three percentage points in financial year 2015. Most currencies weakened significantly against the US dollar, which benefited many multinational companies based in other regions who experienced favourable currency effects, driving up reported sales. In the Top 100, only six companies reported double-digit sales decline in financial year 2015; half of these were jewellers, the product sector which continued to experience volatile demand.
- Italy is once again the leading luxury goods country in terms of number of companies, while France has the highest share of sales – with 26 companies in the Top 100, Italy has more than double the number based in France. However, the predominantly family-owned Italian companies are much smaller, with average luxury goods size of US$1.3 billion, which is around a quarter of the average US$5.1 billion luxury goods sales for the French companies.
- Companies in the multiple luxury goods sector nearly double sales growth – compared to the previous year and lead profitability, while bags and accessories continue to be the fastest growth sector.
About the Global Powers of Luxury Goods report
The Global Powers of Luxury Goods report identifies the world’s top 100 largest luxury goods companies based on publicly available data and analyses them from multiple perspectives. It also examines industry trends and global economic conditions. For the “New luxury consumer” section of the report, Deloitte Global surveyed over 1,300 consumers in 11 countries (China, France, Germany, Italy, Japan, Russia, Spain, Switzerland, UAE, UK and US) to explore their attitudes to luxury goods and their purchase behaviour.