Global Powers of Luxury Goods 2018
Luxury goods sales growth bottoms out, profit margins resilient under pressure and M&A activity heats up
To succeed in a quickly changing context and in new markets, luxury players are increasingly shifting their focus on digital connectivity, upwardly mobile consumers and bold business models.
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. The ten largest companies account for 47% of the total turnover of all 100 companies while the top five largest fashion & Luxury players – LVMH, Estée Lauder, Richemont, Luxottica and Kering – maintained their positions on the leader board.
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.
Swiss market dominated by Richemont, Swatch, and Rolex
There were nine Swiss companies in the Top 100 this year. Switzerland's luxury good sales are still dominated by Richemont, Swatch, and Rolex, which together account for 87% of FY2016 luxury goods sales for the nine Swiss companies in the Top 100. All three Swiss luxury goods giants, each with sales in excess of US$5 billion, dropped one place in the ranking on the back of falling sales. Richemont is in 3rd position, Swatch Group was overtaken by L’Oréal and now ranks 7th, while Rolex dropped to 12th.
The leading luxury good companies in the world
Key findings from the report:
- 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.
Top 100 - Quick statistics
Rapidly changing markets and customer needs
The luxury goods industry has faced deep changes over the past two decades. Varying economic trends, rapid digital transformation and evolving consumer preferences and tastes are creating a new competitive landscape where traditional strategies are under threat. The growing importance of non-western markets for the luxury goods industry has been supported by supply chain leadership, technological innovation, international investment and adjustments to demographic changes. These factors will help maintain further strong growth in these geographical markets.
Given ever-evolving customer preferences, the growing importance of the younger generations and the increasing use of mobile platforms, the ability to switch seamlessly among different channels has become essential for personal luxury brands. If they are too slow to implement digital supply networks, they risk to be left behind.