Global Luxury Retailing | Verdict Sector Report

Summary
The era of double digit global luxury expenditure growth continues to slip away, with a second year of much softer rises in 2014 up 3.8%. As a result of a slowdown in China - caused by a shift in purchasing behaviour and crackdown on luxury gifting - political problems in Russia and recovering economies in much of Europe, the global luxury market has entered a more modest growth period.

Key Findings
- Make informed regional investment decisions with luxury expenditure forecasts to 2020 based on inputs including the number of wealthy individuals.

- Choose which product sectors to prioritise and grow based on 2015 and 2020 sales forecasts across five sectors and their sub categories.

- Discover the size of the online luxury market and pureplay market in 2015 and forecasts for 2020 to aid investment decisions in digital operations.

- Understand the variety of luxury shopper personas as well as shopping habit differences by region and learn how best to target these consumer groups.

- Use our market share data to analyse which rivals are struggling, allowing you to gain a competitive advantage and build a strategy to steal share.

Synopsis
Asia Pacific will continue to be the driving force of the market, aiding luxury expenditure to grow by 40.5% in the five years to 2020. While geographically smaller, we expect to see a higher level of interest in countries such as Indonesia, Malaysia, Vietnam and Thailand which will drive spend in South East Asia by 76.3% in the next five years.

The importance of personal appearance and looks in China has fallen in 2014, partly due to a gradual shift in consumer sentiment toward wanting more subtle luxury and being less driven to display wealth or enhance appearance through the products they buy. Smaller discreet luxury players like Elie Saab and Paul and Joe should capitalise on this trend.

As new luxury players launch online and introduce country dedicated websites, online luxury spend will grow by 25.3% in 2015 to a 7.1% share of total spend. The online pureplays market will outperform at 35.4% as My Theresa, Yoox, and Far Fetch continue to grow their branded offers allowing them to reach a larger customer base.

Reasons?To?Buy
- Which regions/markets hold the most potential for the luxury sector and should I invest in them?

- How have consumer spending habits changed in regions such as Western Europe, China and Russia, and how should I adapt my proposition to target them?

- What is the size of the online luxury sector and how can I learn from existing luxury online pureplays and the online discounters?

- Which retailers are gaining market share, and which are struggling to protect their share and why? How will market leader LVMH fare in 2015?

- Which product categories are forecast to deliver the most robust growth? In what regions should luxury houses push diffusion lines?

1 Overview
2 Executive Summary
2.1 China causes luxury growth slowdown
2.2 Smaller brands support growth in 2014
2.3 Russia becomes a high risk market
2.4 Asia Pacific will continue to boost luxury spend over next five years
2.5 Southeast Asia will be fastest growing region
2.6 South Korea growth to outperform China in the next five years
2.7 Consumers in India and the US are becoming wealthier
2.8 Less branding and more exclusivity become essential for success in China
2.9 Mature luxury markets demand brand heritage and better value for money
2.1 Accessories will be the fastest performing category
2.11 Online's share of luxury goods market forecast to reach over €23bn in 2015
2.12 Luxury online pureplays will continue to gain traction
2.13 Luxury brands must seize opportunities in airports to drive future spend
3 Recommendations
3.1 Regional opportunities
3.2 Sector opportunities
3.3 Airport formats must be invested in
3.4 A multichannel proposition is essential to improve accessibility
3.5 Recognise different consumers' motivations for purchasing by region
3.6 Tailor proposition to better cater to different consumer personas
4 Market Size
4.1 Market definition
4.1.1 Categories covered
4.1.2 Regions covered
4.1.3 Players covered
4.2 Expenditure Trends
4.2.1 Slowdown in China contributes to softening in growth in 2014
4.3 Regional breakdown
4.3.1 Following year-on-year share declines, Americas picks back up
4.4 Europe
4.4.1 Domestic consumers keep market growth low
4.4.2 European country breakdown
4.5 Americas
4.5.1 Growth in Latin America slows, while retailers in the US see a pick-up
4.5.2 Americas regional breakdown
4.5.3 Latin America suffers slowdown
4.6 Asia Pacific
4.6.1 Asia Pacific continues new era of single digit growth
4.6.2 Asia Pacific regional breakdown
4.6.3 China
4.6.4 Japan
4.6.5 Asia Pacific excluding Japan and China
4.7 The Middle East and Others
4.7.1 Growth exceeds total market in 2015, rising 5.6%
4.8 Luxury goods market segmentation
4.8.1 Accessories continues to drive luxury expenditure
4.8.2 Watches limit growth in watches and jewellery division
4.8.3 Accessories
4.8.4 Perfumes and cosmetics
4.8.5 Watches and jewellery
5 Market Forecast
5.1 Expenditure Trends
5.1.1 Asia Pacific excluding Japan to drive growth in the next five years
5.1.2 Luxury market drivers and inhibitors
5.2 Regional breakdown
5.2.1 Europe is forecast to lose the most share by 2020
5.3 Europe
5.3.1 Europe to gain over €30bn in luxury spend in five years to 2020
5.3.2 European country breakdown
5.4 Americas
5.4.1 Rising wealth in Latin and North America will drive market growth
5.5 Asia Pacific
5.5.1 Asia Pacific to achieve the highest growth in five years
5.5.2 sia Pacific regional breakdown
5.5.3 China
5.5.4 Japan
5.5.5 Asia Pacific excluding Japan and China
5.6 The Middle East and Others
5.6.1 Region to outperform total global luxury growth by 3.7 percentage points in the next five years
5.7 Luxury goods market segmentation
5.7.1 Accessories
5.7.2 Perfumes and cosmetics
5.7.3 Watches and jewellery
6 Trends
6.1 Online luxury market set to reach almost €50bn by 2020
6.1.1 Online's share of luxury sales forecast to more than triple in 10 years
6.1.2 Expanding online pureplays drive the market
6.1.3 Online discounters will grow in popularity in weaker economic climates
6.2 Luxury travel retail
6.2.1 Rising passenger numbers and consumer wealth lure luxury brands to airports
6.2.2 Asia Pacific drives luxury airport spend, both now and in the future
6.2.3 Luxury retail success is driven by the consumer, not the market
6.2.4 Beauty will remain the most desirable sector
6.2.5 Spend on clothing remains small, but its share of spend will grow
6.2.6 Diffusion brands should be made more accessible as low cost carriers broaden traveller base
6.3 Consumer sentiment and spending habits
6.3.1 Europe
6.3.2 Asia
6.3.3 The US, Latin America and the UAE
6.4 Luxury shopper personas
6.4.1 The ostentatious consumer and the gift giver
6.4.2 The trend setter and the loyal follower
6.5 Brands must strike the right balance between accessibility and exclusivity
6.5.1 Young luxury brands should seek a balance between the two
6.5.2 Limited ranges boost exclusivity…
6.5.3 Burberry succeeds in maintaining a good balance between accessibility and exclusivity
7 Market Shares
7.1 Leading luxury players
7.1.1 Richemont makes the greatest share gains in five years to 2015
7.2 Winners and losers
7.2.1 Smaller players
7.3 Operating statistics
7.3.1 Revenue
7.4 Operating margin
7.5 Store presence
8 Methodology
8.1 Building up the market size
8.2 Forecasts
8.3 Exchange rates
8.4 Datamonitor's wealth data
8.4.1 Definitions
8.4.2 Global Wealth Model methodology
9 Appendix
9.1 Categories covered
9.2 Regions covered
9.3 Players covered
9.4 About Verdict Retail
9.5 Disclaimer