TOKYO, JAPAN - DECEMBER 28, 2011: Bvlgari store in Ginza, one of the most luxurious shopping district in the world; Shutterstock ID 200810729; Usage (Print, Web, Both): both; Issue Date: 28 nov; Comments: wwd

MILAN — Despite a recent contraction in fine art sales and fluctuations in jets and yachts, demand for luxury continues to grow.

According to the Altagamma Worldwide Luxury Market Monitor by Bain & Co. presented here on Thursday, the global luxury market is expected to reach 1.26 trillion euros in 2019, up 8 percent compared with the previous year, or 4 percent at constant exchange rates.

The personal luxury goods segment is seen growing 7 percent to 281 billion euros, driven by China and young generations.

The study also confirms expectations of 3 to 5 percent annual growth at constant exchange through to 2025 for personal luxury goods, with sales reaching between 335 billion euros and 375 billion euros, despite potential sociopolitical issues, government commercial policies and other possible bumps.

“The customer is present, here and now, increasingly Chinese, younger, phy-gital, diverse, open, responsible and emotional,” said Bain & Co. partner Claudia D’Arpizio. “Those that intercept the customer are a step ahead. Customers react, observe and want to be heard, buying a brand they feel represents them and they are globally evaluating brands on their social responsibility commitment.”  In 2019, China is showing a 30 percent growth, confirming Chinese customers’ purchases redirected locally, followed by the rest of Asia and Japan. Impacted by social unrest, Hong Kong is declining by around 2 billion euros compared with 2018. “It is likely Hong Kong will not return to the splendor of the past and will not be able to sustain the existing amount of luxury stores, which will need to be resized,” said D’Arpizio. The Chinese are leading 90 percent of growth in 2019.

The Millennials (the Y generation) and the Z generation contributed to 100 percent of the market growth in 2019. Gen Y is expected to reach 50 percent of market value in 2035. And it is in China and in South East Asia that they show they are most dynamic and attracted by the personal luxury goods.

The online channel is the most dynamic in terms of growth, climbing 22 percent, especially in Asia and in the accessories category. “Shoes are the most successful online, with a 22 percent penetration,” said D’Arpizio. The retail channel continues to show stronger organic growth and the physical network is consolidating, potentially reaching a peak in 2020.

Ultra High-Net-Worth individuals represent around 30 percent of the global market, with spending habits that are increasingly more extreme. The middle class, especially in Asia, is expanding the luxury customer base, and entry-price lines and the outlet channel are growing as a consequence.

Shoes and jewels in 2019 confirmed they were the most dynamic categories with a 12 percent gain each, reaching sales of 21 billion euros in each segment. Shoes sales were fueled the casual-dressing trend, in particular the sneakers craze, especially in Asia.

Jewelry kept its traction, boosted by high jewelry, especially in Japan and Mainland China. Accessories grew 11 percent to 57 billion euros and beauty was up 7 percent to 60 billion euros, still driven by cosmetics and skincare. Apparel was up 5 percent to 64 billion euros, showing an improvement thanks to streetwear. The performance of watches was lackluster, up 1 percent to 39 billion euros, impacted by the slowdown in Hong Kong.

The secondhand market is growing, up 16 percent compared with 2018 and reaching 26 billion euros.

According to the study, consumers are increasingly more active, interacting with and evaluating the market and the brand, requiring emotions and concrete social responsibility strategies.

According to the Altagamma Consensus 2020, leather goods are growing the most, driven by new consumers in emerging countries and in China, while footwear is driven by the success of sports lines and frequent collaborations between luxury and streetwear brands.

The digital retail channel is up 13 percent, and the brick-and-mortar channel is up 4 percent.

According to Global Blue, in the last six years, tax-free shopping in Europe was one of the main growth drivers in luxury and high-end tourism, up 5 percent. In particular, after a weak 2018, the months between January and October this year are showing a positive trend of tax-free purchases with a 10 percent increase compared with the past year. This growth has been mainly led by American tourists, who represent only 8 percent of total but have posted a 25 percent increase in purchases compared with 2018.

Tax-free shopping In Italy was up 16 percent in the first 10 months of 2019; Spain and the U.K. were up 20 and 11 percent, respectively, while Germany was up 2 percent. France edged up 1 percent.

In Italy, the Chinese represent 35 percent of the total shoppers, followed by Russians (12 percent), Asians and Arabs (11 percent each) and Americans (7 percent).

In panel discussions following the presentation of the studies, Bulgari’s chief executive officer Jean-Christophe Babin said that China was a key focus shortly after he joined the company in 2013, which allowed the company to “grow to rank second from our fourth position back then,” he said without elaborating on the other labels. Being so strong in Asia is a “guarantee for global leadership,” he said. Commenting on parent company LVMH Moët Hennessy Louis Vuitton’s acquisition of Tiffany this week, Babin pointed to the two brands being complementary but very different. “Tiffany is a legendary storied American brand, with a focus on bridal and diamonds. We are a Roman, Italian brand with a focus on colorful gems and with a strong market in Asia,” he said easily.

Babin also noted how the “itinerant consumers” no longer rely on their “jeweler around the corner, but on global brands” that have gained their loyalty.

Angela Missoni, president and creative director of Missoni said one reason for the sale of a 41.2 percent stake in the family-owned company to Italian investment fund FSI last year, was that she had realized that “brand awareness was bigger than our business.” Describing the company as “a rough diamond,” she explained that she wanted to ensure the third Missoni generation would be able to work with a project. That includes a potential initial public offering, as reported. “FSI is the right partner for us, a patient partner,” she said, touting the experience vice chairman Michele Norsa, who is also a partner in FSI, brings to the company. “What we needed was expertise,” she said.

Fabio D’Angelantonio, chief executive officer of Loro Piana, also controlled by LVMH, touted the company’s vertically integrated chain, and highlighted the importance of  knowing one’s customer. In the case of Loro Piana, he described the brand’s consumers as “very specific, they seek the utmost quality in all the areas of life, they travel a lot, they are very sophisticated, they know quality and they have high expectations. In a week, they may be traveling through three seasons and continents. At the same time, although they want high-quality products, these must also be functional and adapt to their nomadic lifestyle.”

The RealReal founder and ceo Julie Wainwright said customers “are doing the math” as they realize that, in addition to being sustainability-minded, reselling is a business. The luxury reseller, which went public last summer, works well with Italian brands, which are are among the top performers, “relevant, beautifully made, and known for decades,” said Wainwright.

Pointing to a chart that showed how Louis Vuitton is the top-searched brand, followed by Gucci, Chanel and Saint Laurent, she noted that Gucci’s reinvention has helped climb the ranking quickly. “Heritage must always be paired with innovation,” she said. Gucci is also the gateway to luxury, she added. “When streetwear customers make the jump to luxury brands, they are most likely to buy Gucci, followed by Prada and Louis Vuitton.”

Apparel is the main category for The RealReal, followed by jewelry for women and watches for men. “More traditional watches are more interesting for younger people — the Apple watch is over, I am told,” showing her own with a laugh.  Branded jewelry “is doing much better, we have experts that authenticate the products and 100 gemologists. Streetwear is really big, and women are buying men’s, cross-shopping, there is a lot of fluidity and not only among young people,” she said.


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