The world’s 100 largest luxury goods companies generated sales of $222 billion in financial year 2014, 3.6 percent higher year-on-year. The average luxury goods annual sales for a top 100 company is now $2.2 billion.
Luxury goods are being reinvented – some have called it the “decade of change” – an industry which for a long survived on its European heritage, corporate mystique, and indulgent customers – is finally being disrupted – by digital, by Asians, and by a new sense of what luxury actually is.
Over recent years luxury has been characterised by the Chinese consumer and the explosion in the use of digital technology. This period has offered strong growth, new markets and exciting channels. It brought with it an avalanche of exciting new technologies and platforms for brands to play on, and experiment with.
There is a shift in the luxury path-to-purchase. Empowered by social networks and digital devices, luxury goods consumers are dictating increasingly when, where and how they engage with luxury brands. They have become both critics and creators, demanding a more personalised luxury experience, and expect to be given the opportunity to shape the products and services they consume.
The category is now consolidating its new ways of working. The external environment will change in a number of crucial areas: an evolution in consumer buying behaviours; the merging of channels and business model complexity; an acceptance of highest levels of sustainability; an increase in international travel; the growing importance of the millennial consumer; and the continued impact of the global economy. All of these factors create opportunities for the luxury goods sector.
There are four key elements of growth for luxury goods companies, and if brands bring disciplined, long-term investment to these areas and focus on them, they will be well-placed to succeed. In addition, brands will also emerge as ‘winners’, in the eyes of the consumers, investors and stakeholder communities, if they manage carefully four other factors in the market: reputational risk, regulation and stakeholders, inertia and external events.
See the new report by Deloitte: Global Powers of Luxury Goods 2016
Over the coming months I will be interviewing some of the world’s luxury brand leaders, to really understand how they are responding to the changing market, and how they see the next phase in its reinvention. I will be learning from:
Here are some more useful reports on the state of luxury brands, and how they are seeking to reinvent themselves – from purpose to business model, reputation and responsibility, product and service, channel and price: