According to the fifth annual Global Powers of Luxury Goods report by Deloitte, 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. The report examines and lists the 100 largest luxury goods companies globally, based on the consolidated sales of luxury goods in FY2016. 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.
Patrizia Arienti, EMEA Region Fashion & Luxury Leader, Deloitte Italy says, “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 2017. 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 & Industrial Products Industry Leader says, “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 Southeast 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.”
Italy is once again the leading luxury goods country in terms of number of companies, while France has the highest share of sales. 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. Spain and France reported the highest growth rates of luxury goods sales.
Among the Top 10 companies, three are conglomerates participating in multiple sectors of the luxury goods market; two are cosmetics and fragrance companies, two are jewellery and watch companies, two are fashion companies, and global eyewear leader Luxottica is the only accessories company. Three are headquartered in the US, three in France, two in Switzerland and one in each of Italy and Hong Kong SAR.
Between FY2014 and FY2016, composite luxury goods sales for the Fastest 20 companies increased at a compound annual rate of 15.1%, nearly four times the rate for the Top 100, but 7.1% points down on the previous year. The strongest product sectors in the Fastest 20 were once again clothing and footwear (ten companies) and jewellery and watches (five companies).
Sales by companies in the luxury clothing and footwear sector were lower in FY2016 than in the previous year, although currency-adjusted sales grew by 0.2%. Both sales growth rates and net profit margin fell for the second year in succession. With 38 companies, this product sector has by far the largest number of companies in the Top 100. Cosmetics and fragrances was the top-performing sector in FY2016 and was the only sector with improving composite luxury goods sales growth, at 7.6%.
All eleven of the companies in the multiple luxury goods sector have by far the largest average size among the Top 100. The average annual luxury goods sales was US$6.3 billion, and together they accounted for 32.2% of the Top 100 luxury goods sales.