LuxuryGoodsWorldwideMarketStudy_Spring 2011 Update

8/6/2019 LuxuryGoodsWorldwideMarketStudy_Spring 2011 Update

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This information is confidential and was prepared by Bain & Company solely for the use o

Luxury Goods WorlSpring 20

Milan, 3 rd

f our client; it is not to be relied on by any 3rd party without Bain's prior written consent

wide Market Study1 Update

May 2011


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2010: A new peak for lu

CAGR 95-0011%

CAG1

11% 10% 4% 12% 18% 0%

BOOM(DEMOCRATIZATION) CON

4%

Note: 2010 data continues be estimated (E) in tfinalize and report 2010 data until June or July 2

2

ury goods consumption

00-04,4%

-3%

CAGR:5,5%

5% 8% -2%8%

OLIDATION EXPANSION CRISIS

6%-8%

CAGR 04-078%

CAGR 07-09-5%

REBOUND

+12%

his report as some privately-held companies do not011.


3/18


4/18

Strong growth across twith Mainland China th

Worldwide Luxury Goods Market by Are

Americas

Europe

Japan

Asia-Pacific

Rest of World

4

e board except Japan,rising star

+16%

+9%

0%

+23%

+12%

YoY 10E vs 09

+12%

of which Mainland China+30%

+10%

+7%

-10%

+19%

+8%

+8%

YoY 10E vs 09

@ K exch. rates


5/18


6/18


7/18

Key drivers of luxury go

Europe, USA

Japan

China

Other fastgrowingmarkets

Retail : Strong results i Wholesale : Boost in Fa

stock-out holiday seaso

1

2

3

4

Still stagnating and d

11 th March earthquakluxury market dynamics

Recovery expected by yreconstruction

Growth expected bothare increasingly taking

Used as a test mark

Lifestyle changes drive l

Perimeter growth expe

Brazil continues its groinvest heavily in retail

7

ods market for 2011

first months of 2011 for all playersll/Winter 11 orders; restocking after the

eflating market

e is impacting macroeconomic conditions and

ar-end, also fueled by GDP growth due to

in like-for-like and in terms of perimeter. Playersirect control over distribution

t for innovative retail experiments

uxury goods sales increase in Russia

cted for the Middle Eastern region

th pace, with international brands starting to


8/18

Excellent results in Eu

Sell-out Retail Spring/Summer 10

1

Strong results for Q1 2011

- Booming performance of flagship stores

- Russia recovering from consumptiondecrease

Double digit like-for-like growth

- Increase of in-store traffic

- Higher average ticket

Strong impact of Asian tourist flows toEurope, especially Chinese

US department stores see positive sell-out trends: +6% Jan, +12% Feb 11,+13% Mar 11

Re-stocking effect after a strongholiday season

8

rope and US to date

Sell-in Wholesale Fall/Winter 12

Our wholesalers are continuing toincrease their budget, but we are

rationalizing our network .

We are receiving orders from partnersthat have not shown up last years : they

are starting to buy and stock again.

All categories are growing incredibly,especially leather goods and womens

shoes .

After two very low sales campaignmenswear has come back to pre-crisislevel, even better.


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2006

21

2007

21

2008

20

2009

18

2010E

18

Jap

Japan: slack consumby the earthquake

2

0%

-12%-3%

0%-18% -10%

Japan Luxury Goods Market Trend (B)

K @ Constant exchange rate

9

n

Japanese market has been losing sharesince 2007, driven by macro-economic anddemographic drivers

-Mature consumers reducing their spending inluxury goods (baby boomers retiring)

-Young generations rejecting global brandso Lower purchasing power than previous

generationso Less dependence on Western trendso Digitalization of experience (less is more)

Despite positive effect of JPYappreciation in 2010 (+12% vs ), the

market stagnated in 2010

In 2011 the market will also be affectedby the March 11 earthquake

tion further weakened


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Japan: Earth

... leading to a strongpartial recovery expec

2

-5%

Japan Luxury by Quarter(2010E -2011F)

Mno

NT

Sim

FiinG

Im~

Lsi

Positive performance of department stores prior to

earthquake

10

uake Effect

drop in first quarter;ed by year-end

arch 11 th earthquake devastated Japansrthern regions

clear risks forced luxury brands to closekyo stores for over 10 days

- Stores in the Osaka area not really impacted andmaintaining previous year performances

rong performance of luxury brandsmediately after store re-openings

rst signs of recovery are expected startingthe 3 rd quarter, also fueled by growingP due to the reconstruction

pact of earthquake also felt in maturearkets: Japanese consumers account for% of EU sales through tourism

ng-term impact not expected to benificantly negative

- Previous natural disasters (e.g. Kobe earthquake of 1995)had low impact on luxury


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Mainland China contingrowing market for lu

Mainlan

2007

4.5B

2008

5.9B

2009

7.1B

2010E

9.2B

2011F@k exch.

11.5B

29% 31% 20% 30% 25%YoYgrowth

Chinese (Mainland) Luxury GoodsMarket Trend (2007-2011F, B)

CAGR 07-11F:26%

3

11

ues to be the fastestury

d China

China will continue to be the fastestgrowing market for luxury

It will become the third luxury marketworldwide in 5 years

Tier 2/3 cities will be the newbattleground for luxury brands, but growthalso driven by strong organic growth

Overseas luxury market will still accountfor >50% of total Chinese luxury spending

Consumers becoming more and moresophisticated and selective : in-storeexperience and after-sales service willbecome a key success factor

- Players are testing new store innovative solutionsand digital initiatives in China


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Chinese luxury consusophisticated and de

3

Big Shoppin-land :new multi-formatretail spaces aremaking shopping areal entertainmentactivity

Retail-tainment

Fake? No, thanks!

No compromise onluxury : demand forcounterfeit products isdecreasing fast;consumer toosophisticated

12

ers are increasinglyanding

Digitalization

Brand loyalty

Strong investments indigital marketing:luxury consumeryounger than in othermarkets

Fast growth of the e-

commerce channel

Chinese are becomingmore attached toWestern brands .Brand loyalty is nolonger a Westernphenomenon


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Emerging markets incthe global chessboard

Brazil

Luxury goods market2010E: 1.8 B

Key luxury cities:Sao Paulo

M.East Luxury goods4.1

Key luxury cAbu Dhabi, Do

CAGR 10-13: +10-15%

CAGR 10-13

4

13

easingly important on

Russia Luxury goods market2010E: 4.8 BKey luxury cities:

Moscow, St. Petersburg

Luxury goods market2010E: 0.8 B

Key luxury cities:Mumbai, Delhi

India

arket 2010E:B

ities: Dubai,a, Kuwait City

CAGR 10-13 : +5-10%

CAGR 10-13 : +5-10%: +10-12%


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In 2011, luxury goodsenjoy strong momentu

Bain Forecast at 05/03/11

@ constant exchange rates

+8%

Worldwide Luxury Goods Market (B)

14

arket will continue toESTIMATES

Growth by Geographic Areas

@ constant exchange rates

Asia Pacificex-China

China

Japan

Americas

RoW

+7%

+8%

-5%

+15%

+25%

+7%

+8%Total

Europe


15/18

Good basics will fuel me

2010E

172B

2011F@ k exch.

185B

2014F@ k exc

214-221

Bain Forecast@ constant exc

+8%

CAGR 2011-2014

+5-6%

Worldwide Luxury Goods Market

15

dium term growth

B

ESTIMATES

t 05/03/11hange rates

Asia-Pacific, and especially Chinasbooming economy, will drive luxurygoods consumption

- Mainland and Greater China- Touristic destination in Asia andWorldwide

Consolidation of mature markets(US and Europe) which still hold themajority of personal wealth

New emerging markets becoming

material: Brazil and Middle East(Saudi Arabia)

Japanese market recovery andstabilization


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The overall global balansignificantly, but Asia wi

Americas

Europe

Japan

Asia-Pacific

Rest of World

Worldwide Luxury Goods Market by Ar

16

e will not changell keep gaining share

ESTIMATES

+4/5%

+1/2%

+10/11%

+6/7%

+5/6%

CAGR 11-14E

+4/5%

a


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Great job to date...How to succeed in the n

1995

100

2010

223

2025F

400?

Worldwide Luxury Goods Market trend(indexed 1995)

Ce

17

ext 15 years?What you have to get right

hina (as a symbol for allmerging markets)- Penetration- Route to market- Tailored value proposition

enerational shift- Baby-boomers retirement- Japanese teenagers- Generation Z (always

connected)

nhanced customerxperience- Low loyalty and

satisfaction- Integrated online and

offline experience- Service


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LuxuryGoodsWorldwideMarketStudy_Spring 2011 Update

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