PARIS — Luxury goods sales were stable in 2014, but the pace of growth is slowing and global brands will have to adapt rapidly in order to serve the evolving expectations of consumers, according to a study published by Deloitte Global.
The top 100 luxury companies generated sales of $222 billion in the 2014 financial year, up 3.6 percent year-on-year, the “Global Powers of Luxury Goods” report found. This was less than half the 8.2 percent growth rate in 2013.
Average annual sales for these companies was $2.2 billion during the period, defined as financial years ending within the 12 months to June 30, 2015.
“The global luxury goods sector is expected to grow more slowly in 2016, at a rate many retailers may find disappointing,” said Ira Kalish, chief economist for Deloitte Global.
Related Galleries
“The growth rate is slowing in important markets such as China and Russia, although some markets continue to perform well and there are pockets of opportunity across the globe. India and Mexico for example are growing quickly, and the Middle East offers further growth potential,” he added.
The report said the sector has now passed into the midpoint of what Deloitte has previously termed the “decade of change.” The first half was characterized by the Chinese consumer and an explosion in the use of digital technology, resulting in strong growth, new markets and additional channels.
Deloitte expects the second half of the decade to be characterized by discipline, with changes including new consumer buying behaviors; a more complex business model with channels merging; an increase in international travel; the growing clout of Millennials, and the continued impact of global economic upheaval.
“The ‘path-to-purchase’ is evolving. Empowered by social networks and digital devices, luxury goods consumers are dictating increasingly when, where and how they engage with luxury brands,” said Bénédicte Sabadie, a partner at Deloitte France in charge of the luxury sector.
“They have become both critics and creators, demanding a more personalized luxury experience, and expecting to be given the opportunity to shape the products and services they consume,” she added.
France remained the world’s largest purveyor of luxury goods by percentage of sales, accounting for almost a quarter of revenues of the world’s top 100 luxury firms in 2014.
Composite sales were dragged down by nine companies which suffered a double-digit sales drop in 2014. Five of these were jewelers based in China or Hong Kong, including Chow Tai Fook, which fell to seventh position in the ranking from fourth the previous year, after logging a 17 percent drop in sales.
This was the only significant change in the top 10 list, which was topped once again by LVMH Moët Hennessy Louis Vuitton, Compagnie Financière Richemont and The Estée Lauder Companies.
The composite net profit margin for the top 10 firms rose to 13.2 percent from 11.7 percent the previous year, outperforming the top 100 companies by 1.8 percentage points.