- The Straits Times
It seems the world’s most affluent can’t get enough of luxury items – even in the face of an economic slowdown.
According to new report by Deloitte Global, the world’s top 100 luxury goods companies generated aggregated revenues of US$247 billion in fiscal year 2017, US$30 billion more than the year before.
Annual growth also jumped to 10.8 per cent, on a currency-adjusted composite basis, much higher than the previous year’s 1.0 per cent growth, Deloitte said. Out of the 76 per cent who reported growth in their luxury sales, half recorded double-digit year-on-year growth.
This is despite the economic slowdown of in major markets including China, the Eurozone and the US, the global consultancy said in its 2019 Global Powers of Luxury Goods report.
New types of affluent consumers are emerging
The report also identified a new consumer class class who is likely to become or remain affluent or ultra-affluent in the future.
Dubbed the “HENRYs” (high-earners-not-rich-yet), this emerging group of highly-paid consumers is increasingly valuable to luxury brands, as it allows them to both secure valuable present customers, as well as build client relationships with the most affluent customers of the future.
Within Southeast Asia, luxury brands also need to keep on eye on the rise of the young and savvy mass affluent consumers, Deloitte said.
Unlike traditional luxury consumers typically associated with excessive consumerism, elitism, and guilty pleasures, these mass affluent consumers “are looking to trade up to premium products in certain product categories, and seek greater value for money, regarding brand history and heritage as much less important than attributes such as quality, customer service, and design,” said Eugene Ho, leader of Deloitte Southeast Asia’s Consumer Industry.
“This aspirational demographic is also heavily influenced by social media, and are more socially and environmentally conscious, placing high expectations on brands to be sustainable and ethical,” he added.
10 brands dominate half of all sales among top 100
To be considered among the top 100 luxury goods companies in 2017, a company needed to have a revenue of at least US$218 million, up by US$7 million from FY2016, Deloitte said in its report.
Among the 100, the top 10 companies accounted for nearly half (48.2 per cent) of the total luxury goods sales. Growth of the top 10 also outpaced that for the top 100 companies, at 14.2 per cent and 10.8 per cent respectively.
Out of the top 100, a whopping 88 companies are headquartered in nine countries, and account for 93.4 per cent of luxury goods sales.
Among the Top 10 luxury goods companies, three are headquartered in France, two each in the United States and Switzerland, and while Italy, UK and Hong Kong had one each.
Hong Kong’s Chow Tai Fook Jewellery Group was the only Asian company to be in the top 10. According to Deloitte, the jewellery company reported a 15.4 per cent growth in luxury sales for 2017, a rebound from the previous year’s 9.4 per cent decline.
As expected, France had the largest companies with an average size of US$8.29 billion, which is much higher than the average Top 100 size of US$2.47 billion, the report added.
France was also the best-performing country, achieving 18.7 per cent composite sales growth in luxury goods in FY2017, and also contributed the largest share to the total sales of Top 100 luxury goods companies.
Although Italy has the highest number of companies at 24, it also had the lowest sales growth rate.
Cosmetics and fragrances was the top-performing sector, with 16.1 per cent sales growth, mainly due to the double-digit year-on-year growth of seven companies out of the total 11 in the sector, the report said.