PAOLO ZEGNA OPENS ALTAGAMMA CONFERENCE
PAOLO ZEGNA OPENS ALTAGAMMA CONFERENCE
 

16 Oct. 2012

Osservatorio Altagamma Foresees Luxury Market Growth

The 2012 edition of the Altagamma Conference just wrapped up in Milan with a panel of studies on the luxury sector. It was predicted that the high-end industry would see growth in 2012, though more moderate than in 2011, and even more in 2013. The conference highlighted growth driven by leather goods, shoes, accessories, jewelry, watches, and Asian markets while emphasizing tax-free shopping as a key element for the European Union.

According to studies presented by Fondazione Altagamma and SDA Bocconi, as well as a sample of 77 luxury companies, the 2011 fiscal year showed positivity for the fashion and luxury markets with an increase of 12% compared with 2010 (+11.7%). However, the first six months of 2012 revealed that 53 of the sample’s companies showed slowed growth (12.1% to 7.8%) and lowered profitability (10.1% to 9.6%).

Altagamma’s general secretary Armando Branchini presented the Altagamma Consensus survey for 2013, which predicted that the highest growth in luxury goods consumption would be achieved by leather goods such as footwear and accessories (+10%) and jewels and watches (+8%), followed by apparel (6%) and fragrances and cosmetics (+4%). Market areas registering the highest growth came down to Asia (+17%), Latin America (+10%), North America (+6%) and Europe (+4.5%).

Consulting company Bain & Co, together with Altagamma, estimate that by the end of 2012 the personal luxury goods market will reach €212 billion in sales, registering a 10% growth compared with 2011’s €192 billion. When considering the Euro exchange rate, the growth amounts to about 5%, but by 2015 might reach over €240-€250 billion in sales.

Driving this growth in 2012 was the Asian-Pacific market and especially China, which is projected to grow by 18% while the Americas are expected to grow by 13%. In Europe, growth will reduce approximately by half (to 5%) of what it registered last year. E-commerce is continuing with a 25% yearly growth and discount outlets at 30%. Accessories and leather goods have become the largest piece of the market, now at 27% of sales, due in part to an increased interest from male consumers.

In terms of distribution channels, retail continues to be a bigger driving force than wholesale. According to a 2012 Bain & Co survey applied to 220 companies, 550 monobrand stores opened in the last year. Meanwhile, the wholesale channel suffered the most because consumers tend to buy via multibrand e-commerce platforms rather than what they perceive as “old" multibrand boutiques.

Referring to new consumer attitudes, Bain & Co partner Claudia D'Arpizio said: "Among new consumer types - especially in the luxury car market - are the eco-boomers, who are increasingly interested in hybrid cars as opposed to baby boomers, who are drawn toward luxury cars. The Y Generation and especially the Z Generation (0-20 year-olds) will also be important, as they are more interested in creating a personal experience from the shopping process. Another curious and increasingly important aspect has emerged from the hotel market with the increase of five-star room offers and the way in which consumers can interact, ask questions and express judgment regarding offers via social networks." All of these elements show how vital it is to define new alternative consumer approaches in order to intercept new consumers and new shopping attitudes.

Finally, European tax-free shopping was reported to be worth €30 billion in sales and will close 2012 with a 28% growth, with an additional 18% increase expected in 2013. Top spenders were the Chinese (who accounted for 23% of the total in the first nine months of the year, up 62% since 2011’s January-September period) and the Russians, who ranked second. The most preferred stop for foreign shoppers was France (attracting 23% of non-European tourists), followed by Italy (attracting 19% of total visitors), the UK (18%), and Germany (16%), which registered the highest growth (+52%) because of the increasing importance of its international hubs and the growth of its driving domestic sales.

Maria Cristina Pavarini

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