Altagamma's chairman: Andrea Illy
04 Feb. 2014
Luxury market to reach €880 billion worth by 2020
Italy’s Fondazione Altagamma has just presented two new studies on the increasingly diversified profiles of global high-end consumers and the boom of mono-brand stores. The studies have been carried ahead in partnership with Boston Consulting Group (BCG) and EXANE BNP Paribas.
The True Luxury Global Consumer Insight, carried out for the first time in partnership with BCG involved 40,000 respondents, over 20 countries and focuses on high-end consumers. The True Luxury Global Consumer Insight concentrates on the value and origin of products. It focuses on a consumer who is a globetrotter who is willing to make purchases outside their country of origin. They are highly sensitive to word-of-mouth and social media, and are keen advocates of products. The consumer is completely immersed in the digital world and uses the Internet for information, to compare prices, and to make contact with the brand; however, this kind of consumer still relies on physical stores to varying degrees, according to his/her age and nationality. The study focuses on a target of approximately 380 million consumers, and especially on an elite of 32 million "Core" luxury consumers, spending an average €30,000 each per year. It highlights a varied range of purchasing habits and methods to look for and share the latest trends.
The study also found that the luxury sector is predicted to register an organic growth in the next ten years. Consumers of luxury personal items and experiences will increase from 380 million today to 440 million by 2020 with overall spending rising from approximately €730 billion to €880 billion euro. The growth will be mainly driven by “core consumers” with an increase of about 10 million new consumers and +€85 billion in 2020.
The survey has revealed seven general megatrends that will have a significant impact on this sector at a global level in the next ten years. Among them, the most significant will be an increased attention to quality and “made in”, the importance of male consumers, globetrotting consumers willing to make purchases while travelling, and the importance of shopping – on- and off-line.
The study has also devised 12 distinct consumer profiles including 8 profiles at a global level, 2 at a country level and 2 at a gender level. The eight global consumer profiles showed the most significant to be the “Absolute Luxury”, whose main motto could be summed up as “Luxury is my commodity”, the “Globetrotter” a “Mega-city-goer” who loves to share luxury experience with family and friends, the fashion-addicted “Fashionistas”, the “Status Seeker” who is keen on showing off their status, the spoiled rich kids also indicated as “#Littleprince”, the “Social Carpet”, who are willing to pay for eco-friendly luxury products, and the “Class-pirational” who are interested in showing off within their own business and working context community.
The other Altagamma report emphasized the importance of retail development for the growth of companies. According to the study, high-end brands have gradually transformed themselves into retailers. Moreover their retail activities have contributed for an about 30% growth in selling luxury goods between 2005 and 2013.
By 2020 they expect that direct distribution will increase from 31% to 40% of total distribution, while franchising will decrease from 10% to 6%, department stores from 23% to 19% and wholesale will remain 36%. High-end personal goods consumption is expected to increase from the current €217 billion to €310 billion in 2020 (44% of whose related to on-line distribution). The current 12,500 single-brand stores investigated in 2013 have registered an average growth of 4.34% yearly in the last seven years. By 2020 they are expected to become 16,000 reaching a growth rate of 3.6% compared to 2013.
Maria Cristina Pavarini
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