Global Powers of Luxury Goods 2020

The pandemic is proving to be an accelerator for brands to adopt new paradigms of value creation. Now more than ever, luxury goods companies are seeking new ways to connect with their customers. They are reinventing and re-imagining themselves in ways that were previously unimaginable.

Sustainability will play a key role as fashion and luxury goods companies look for recovery after the pandemic crisis. Global luxury brands have been investing significantly in “green” technologies and other measures such as carbon offsetting to fight against climate change. While this is not limited to innovations in the supply chain, embracing new values and perspectives in response to the evolving needs of consumers and the environment can act as a game changer.

Although luxury goods companies were initially slow to adopt digital technologies, the pandemic has accelerated the shift to analyzing consumer data through artificial intelligence (AI) and augmented reality (AR) applications. However, physical stores which offer a unique customer experience will not be completely replaced by digital-only, and an agile omnichannel sales approach is needed. This will make it possible for brands to overcome the barriers imposed by social distancing rules—whereby they can ensure that safety and hygiene rules are followed, and customers can continue to enjoy the personalized in-store experience.

The world’s Top 100 luxury goods companies generated revenues of US$281 billion in FY2019, up from US$266 billion in the previous year (an increase of US$15 billion). Annual growth jumped to 8.5% on a currency-adjusted composite basis, lower than previous year’s 9.6%. There were 12 “high performer” companies in the Top 100 that reported both double-digit year-on-year sales growth and a double-digit net profit margin.

The report discusses the trends and issues that are driving the luxury goods industry. It looks into how digitization is opening up new growth avenues, and how building sustainability and maintaining a circular economy will be key for these luxury companies to thrive in these unprecedented times. It also identifies the 100 largest luxury goods companies based on publicly available data for FY2019 (which we define as financial years ending within the 12 months to December 2019)*, and evaluates their performance across geographies and product sectors.

Key findings from the report:

• In FY2019, the minimum revenue threshold to enter the Top 100 list of luxury goods companies was US$238 million, up US$20 million from FY2018.
• Top 100 luxury goods companies based in China, Japan, and the US saw their composite year-on-year rate of sales growth drop sharply in FY2019 while companies based in Europe saw an increase in their growth rate, with the exception of the UK, which saw a subtle fall.
• For the first time, in FY2019 the Top 10 luxury companies contributed more than half of the total luxury goods sales of the Top 100 companies.
• While Italy has the greatest number of luxury goods companies, France is the highest performing country with 15.7% composite sales growth, contributing 28.3% the largest share to the total sales of Top 100 luxury good companies.
• The multiple luxury goods was the top-performing sector in FY2019 with 12.8% sales growth and contributed more than one-third of the total Top 100 luxury goods sales.
• The clothing and footwear sector continues to account for the highest number of companies in the Top 100, but they have the smallest average company size of just US$1.2 billion.

* Since the first Global Powers of Luxury Goods report was produced in 2014, a mid-year fiscal year has been used, i.e. for the Global Powers of Luxury Goods 2019 report, FY2017 meant fiscal year end dates from 1 July 2017 to 30 June 2018. For the Global Powers of Luxury Goods 2020 report, we have changed to a calendar year fiscal year definition, i.e. FY2019 means fiscal year end dates from 1 January to 31 December 2019. Growth calculations (CAGR and year-on-year) are also based on calendar year data for financial years FY2016 to FY2019.