FOR IMMEDIATE RELEASE
Contact: Cheryl Krauss
Bain & Company
Telephone: +1 646-562-7863
STRENGTH BY LUXURY GOODS
SHOPPERS IN ASIA AND ONLINE BRING GLIMMERS OF HOPE TO BELEAGUERED
INDUSTRY, SAYS BAIN & COMPANY IN RELEASE OF ANNUAL WORLDWIDE
Smaller Than Expected
Decline Forecast for 2009; Positive Growth Predicted for 2010; Full
Recovery Not Expected Before 2011
Milan-October 21, 2009- Buoyed by a projected
12% year-over-year increase in sales in 2009 in mainland China and
20% growth of sales online, the decline for the worldwide luxury
goods industry will be less than expected in 2009 and poised for 1%
overall positive sales growth in 2010; this is according to
findings from the 8th edition of Bain & Company's annual
'Luxury Goods Worldwide Market' study. Sales for 2009 are projected
to decline by 8% to 153 billion euro worldwide at current exchange
rates, a 20% downward revision versus the 10% year-over-year
decline forecasted in April. The authors find, however, that a full
recovery will not occur until 2011 when the industry is expected to
grow by 4.2% for the full year. Results of the study were presented
Monday at Altagamma's 2009 Osservatorio conference by Claudia
D'Arpizio, a Milan-based Bain & Company partner and
widely-recognized global luxury goods industry expert.
"Luxury goods markets are stabilizing," said Ms. D'Arpizio. "We
are seeing less discounting and mark-downs and more signs of
increasing consumer confidence. Growth will be timid in 2010 but
it's showing movement in the right direction."
Luxury sales in mature markets show continued softness. Bain
predicts that 2009 sales will be down 16% in America, 10% in Japan
and 8% in Europe versus 2008 levels. But 10% projected sales growth
for luxury goods overall in Asia will partially dull the impact of
Emerging markets will also see the greatest growth in new
openings of directly-operated stores (DOS). Of the 300 estimated
store openings globally in 2009, 15% will be in mainland China, 25
% elsewhere in Asia, 30% in the Middle East, and 15% in Eastern
Europe and Central Asia. The remaining 15% will largely come from
so-called Tier 3 cities in the U.S. (e.g. Denver, Tucson) and the
rest of the world.
"Aspirational luxury shoppers in Asia and other emerging markets
are fueling sales growth in 2009," said Ms. D'Arpizio. "They remain
bullish on brands."
Existing stores, conversely, have struggled, as brands absorb
the full-year effect of locations opened in 2008 (~750 stores) and
as department stores confront their own challenges. The study
forecasts a 2009 decline of 4% in sales at direct-operated luxury
stores, compared to 11% declines in wholesale. Online is proving to
be a growth area, with a roughly 20% increase worldwide, but this
channel still accounts for less than 3% of total sales.
The study finds that declines are hitting product categories,
- Apparel sales will fall by 11% worldwide. In womenswear, many
shoppers began the year by "shopping their closets," deferring new
purchases, and focusing on more durable items with less fashion
content. Men, too, deferred purchases for more formal wear, while
shifting their purchases to more casual items. For both men and
women, accessible brands have seen the strongest impact, as
consumers shifted to either discounts on higher-end brands or fast
- Jewelry, watches and other hard luxury items will be hit
hardest in 2009, with a forecast decline of 18%. These categories
will feel an even deeper impact from postponed purchases than
apparel, with the additional pressure of "luxury shame" depressing
purchases of more ostentatious items.
- Leather, shoes and accessories will hold the line with a
projected 1% decline. These purchases represent more affordable
ways for consumers to stay loyal to their favorite luxury brands.
Branded "it" bags from core leather goods brands are seeing the
strongest performance among bags, while shoes still allow women to
integrate less expensive fashion items into a mix-and-match
- Perfume and cosmetics are expected to fall by a more than
anticipated 4% in 2009, especially as these products appeal to the
broadest base of accessible luxury shoppers. More cosmetics
consumers this year expressed a willingness to trade down to
premium or sub-premium products. In fragrances, more brands
deferred new product launches.
Bain concluded the presentation with its prediction of 10 global
luxury trends for the coming decade starting in 2010:
- Younger consumers and new groups such as working women will
become the dominant segments as baby boomers age and retire
- Aspiration will evolve into new relationships with brands as
consumers look to fill different emotional needs with their luxury
- Retail networks and product offerings will see greater and
greater customization by country and even by city-one size fits all
has stopped working
- Growth in China, South Asia and Central Asia may cause Asia to
overtake Europe and the Americas as the largest global luxury
- Asia's diversity (more than 15 countries, more than 300 cities,
and more than 50 million consumers) will stretch luxury brands'
marketing and supply chain capabilities
- Market pressures in a turbulent recovery will drive a second
wave of luxury consolidation
- New luxury players will emerge as tastes and consumers change,
including brands based in emerging market companies
- The luxury shopping experience will transform as direct-owned
stores, department stores and outlets look for ways to draw in the
decade's new luxury shoppers
- Online retail is still in its infancy, but quickly becoming
more than a niche
- Retailers will treat new shoppers as "in play," and offer
competitive products to those produced by typical luxury
"Luxury has been down, but it's not out," concluded Ms.
D'Arpizio. "The world of luxury will see dramatic shifts in the
For a copy of the 8th edition of Bain's Luxury Goods Worldwide
Market study or to schedule an interview with Claudia D'Arpizio,
please contact Cheryl Krauss at email: email@example.com or
+1 646-562-7863, or Frank Pinto at email: firstname.lastname@example.org or +1
# # #
About the Bain 'Luxury Goods Worldwide Market'
Bain & Company, in cooperation with Altagamma - the flagship
trade association for the Italian luxury goods industry - has
analyzed the market and financial performance of 200 of the world's
leading luxury goods companies and brands. The database of
companies, known as the 'Luxury Goods Worldwide Market
Observatory,' has become a leading and much studied source for the
international luxury goods industry. Bain publishes its annual
findings in its 'Luxury Goods Worldwide Market' study, which was
first published in 2000.
2010 Euro forecast in constant exchange rates. All other years
are in current exchange rates.
About Bain & Company, Inc.
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serves clients on issues of strategy, operations, technology,
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For more information visit: www.bain.com.