Global Powers of Luxury Goods 2019
Bridging the gap between the old and the new
Luxury goods market displays growth despite slowing economy. Digitisation and growing millennials and Gen Z define the future.
Despite the recent slowdown of economic growth in major markets including China, the Eurozone and the US, the luxury goods market looks positive.
In an age of fast changing trends, luxury companies have started to keep an eye on the new consumer classes of the future, are committing to make significant investments in digital marketing and increasingly using social media to engage their customers.
Companies are re-examining the value of brand heritage and brand history for their new customers and are adopting an omni-personal approach, focusing solely on the consumer, even prior to channel identification. To do that, they rely on the support of digital technologies.
In this path between the old and the new, companies are faced with consumers’ increasing sensitivity towards privacy, but are trying to convert it into an opportunity to offer more personalised products and services to their customer base.
The world’s Top 100 luxury goods companies generated revenues of USD247 billion in FY2017, up from USD 217 billion in the previous year (an increase of USD 30 billion). Annual growth jumped to 10.8%, on a currency-adjusted composite basis, much higher than the previous year’s 1.0% growth. Seventy-six percent of the companies reported growth in their luxury sales, with nearly half of these recording double-digit year-on-year growth.
The Swiss luxury industry remains strong, but…
Richemont maintained last year’s third position on the overall ranking. They turned round declining FY2016 sales to achieve 3.1% sales growth in FY2017, with strong sales performance in the Asia Pacific region. The Swatch Group, placed 8th, rebounded even more strongly, with year-on-year growth up 16.4% in FY2017, at 5.4%. The result was driven by strong growth in Asia Pacific and Europe. They also improved profitability, with a FY2017 net profit margin of 9.5%, up 1.6%.
Rolex remains in the Top 15, and along with Richemont and the Swatch Group accounts for over 86% of the total share of Swiss company luxury goods sales in the ranking presented. Overall, there have been no changes in in the Swiss participation in the world’s Top 100. The nine Swiss-based companies operate in the luxury jewellery and watches product sector. They all returned to growth in FY2017, with a 7.7% increase in annual luxury goods sales.
However, for the third consecutive financial year, the growth in Swiss luxury goods sales is lower than global growth. This reflects the evolution of the watch industry. All the Swiss companies in the ranking operate in the jewellery and watch sector and, while the jewellery market has shown strong results, the global watch market has experienced some turbulent times in the last two financial years.
The leading luxury good companies in the world
Key findings from the report:
- In FY2017, the minimum revenue threshold required to enter the world’s Top 100 list of luxury goods companies was USD 218 million, up USD 7 million from FY2016, with an average company size of USD 2.47 billion.
- The Top 10 companies accounted for nearly half (48.2%) of the total luxury goods sales of Top 100 companies, an increase of one percentage points over the previous year.
- France has the largest companies and is the best-performing country, achieving 18.7% composite sales growth, and also contributed the largest share to the total sales of Top 100 luxury good companies.
- Cosmetics and fragrances was the top-performing sector in FY2017 with 16.1% sales growth, which was majorly due to the double-digit year-on-year growth of seven companies out of the total 11 in the sector.
- The nine Swiss companies in the Top 100 returned to growth in FY2017, but lagged behind the whole market with increased annual luxury goods sales of only 7.7%.