NEWS
NEWS
Luxury goods sales growth bottoms out , profit margins resilient under pressure
THE world ’ s 100 largest luxury goods companies generated sales of US $ 217 billion in FY2016 and the average luxury goods annual sales for a Top 100 company is now US $ 2.2 billion , according to the fifth annual Global Powers of Luxury Goods report by Deloitte .
The report examines and lists the 100 largest luxury goods companies globally , based on the consolidated sales of luxury goods in FY2016 ( which is defined as financial year ending within the 12 months to 30 June 2017 ). It also discusses the key trends shaping the luxury market and provides a global economic outlook .
The top five largest fashion & luxury players — LVMH Moët Hennessy Louis Vuitton SE , The Estée Lauder Companies Inc , Compagnie Financière Richemont SA , Luxottica Group SpA and Kering SA — maintained their positions on the leader board .
“ The luxury market has bounced back from economic uncertainty and geopolitical crises in 2016 , edging closer to annual sales of US $ 1 trillion at the end of last year ,” said Patrizia Arienti , EMEA region fashion and luxury leader , Deloitte Italy . “ Whether total global market growth is in single or double digits will depend on many factors , including larger geopolitical factors and their impact on tourism . Growth in the luxury goods industry will continue , unlike in several other industries .”
Eugene Ho , Deloitte Southeast Asia ’ s consumer and industrial products industry leader , added : “ With continued good economic growth , the Southeast Asian region is attempting to gain ground on the retail and luxury goods industries . More and more brand names are entering the South-east Asian markets , especially at the luxury segment to capitalise on the growth of the young middle-class consumers .”
“ Furthermore , with the growing number of consumers falling into the middle-income group , this leads to changes in their spending priorities . For example , affluent younger consumers are starting to hunger for more premium and branded goods . The future market is very much going to be driven by the younger , tech-savvy and more affluent generation . Businesses must recognise the need to adjust their business strategies and implementing digitally-enabled business models to meet consumers ’ evolving expectations to enhance the shopping experience .”
Growth among the Top 100 was weakened in particular by the 10 companies which experienced double-digit sales decline in FY2016 , including two Top 10 players — the Swatch Group and Ralph Lauren . However , FY2016 seems to mark the bottom of the downturn in luxury goods sales growth for most companies .
The report also found that China , France , Germany , Italy , Spain , Switzerland , the UK and the US together made up 83 % of the Top 100 luxury goods companies and 90 % of Top 100 luxury goods sales .
Additionally , cosmetics & fragrances was the top-performing sector in FY2016 and was the only sector with improving composite luxury goods sales growth , at 7.6 %. ra
The luxury market has bounced back from economic uncertainty and geopolitical crises in 2016 , edging closer to annual sales of US $ 1 trillion at the end of last year .
8 Retail Asia June / July 2018