Overview of the Urban Luxury Retail Marketplace
Luxury Retail Remains
in a Growth Mode Of the top 100 brands in the world in terms of financial performance, earnings & influence of consumer
choice, 7 of them are luxury fashion & accessory brands.
Louis Vuitton: value $24.89 billion, up 6 percent
Gucci: value $10.5 billion, up 7 percent
Hermès: value $7.6 billion, up 23 percent
Cartier: value $6.9 billion, up 26 percent
Tiffany & Co.: value $5.44 billion, up 5 percent
Burberry: value $5.9 billion, up 20 percent
Prada: value $5.57 billion, up 30 percent
Source: Interbrand’s Annual Best Global Brands, 2013
,
Luxury Market Forecast
Bain & Company:
The luxury goods market is expected to grow 4 to 5 percent globally in 2013 and
5 to 6 percent on a yearly average through 2015
This represents a slowdown compared with the past three years, when luxury goods showed annual double-digit growth.
Categories:
Perfumes & Cosmetics: 5 percent growth
Leather Goods & Accessories: 7 percent growth
Jewelry & Watches: 7 percent growth
Apparel: 6 percent growth
US luxury growth projected at 7 percent
Asia luxury growth projected at 10 percent.
Source: WWD, May 16, 2013, “Luxury Enters Single-Digit Era”
Who are the luxury clients Luxury Consumers in the US, Western Europe, Brazil, China, Japan & Russia
Aspirational
Mass Market
Rising
Middle
Class New Money Old Money
Beyond
Money
Household Income: Mature Markets > $85,000 > $170,000 > $1,000,000 > $1,000,000
Household Income: Emerging Markets > $29,000 > $55,000
Number of households in this category 115 million 25 million 6 million 1 million 0.5 million
Cosmetics & Fragrances 60% 30% 25% 20% 10%
Leather Goods & Accessories 20% 25% 20% 10% 5%
Fashion & Clothing 10% 30% 30% 30% 15%
Furniture & Decorations 5% 10% 10% 20% 35%
Watches & Jewelry 5% 5% 15% 20% 35%
Percent of Total Luxury Spending 30% 24% 36% 7% < 5%
Sources:
Boston Consulting Group: The New World of Luxury , 2010
Robert Frank, The Wall Street Journal : "The Five Species of Luxury Consumer," December 2010
How luxury clients define “luxury”
In survey of luxury shoppers with HHI > $150,000:
The differentiator between luxury & mainstream goods is:
Quality: 60 percent
Price: 55 percent
Craftsmanship: 48 percent
Prestige: 47 percent
Design: 38 percent
Older wealthy shoppers are notably more selective (51% vs. 43%) on craftsmanship than their younger peers.
Source: Luxury Institute, 2013
Many luxury brands have different levels or collections….
“We offer two primary collections: the Michael Kors luxury collection and the MICHAEL Michael Kors accessible luxury collection.”
“The Michael Kors collection establishes the aesthetic authority of our entire brand and is carried in many of our retail stores as well as in the finest luxury department stores in the world, including, among others, Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Holt Renfrew, Harrods, Harvey Nichols and Printemps.”
“In the Michael Kors collection we offer accessories, including handbags and small leather goods, many of which are made from high quality leathers and other exotic skins, footwear and apparel, including ready-to-wear womenswear and menswear.”
“Generally, our handbags and small leather goods retail from $500 to $6,000, our footwear retails from $300 to $1,200 and our women’s apparel retails from $400 to $4,000.”
Source: 2013 Michael Kors Annual Report
Many luxury brands have different levels or collections…..
“In 2004, we saw an opportunity to capitalize on the brand strength of the Michael Kors collection and address the significant demand opportunity in accessible luxury goods, and we introduced the MICHAEL Michael Kors collection, which has a strong focus on accessories, in addition to offering footwear and apparel. The MICHAEL Michael Kors collection is carried in all of our lifestyle stores as well as leading department stores throughout the world.” “Generally, our handbags retail from $200 to $800, our small leather goods retail from $45 to $200, our footwear retails from $70 to $500 and our women’s apparel retails from $50 to $500.” Source: 2013 Michael Kors Annual Report
Many luxury brands have multiple retail store platforms
“Within our retail segment we have three primary retail store formats: collection stores, lifestyle stores and outlet stores. Our collection stores are located in some of the world’s most prestigious shopping areas, such as Madison Avenue in New York and Rodeo Drive in California, and are generally 3,200 square feet in size.”
Source: 2013 Michael Kors Annual Report
Many luxury brands have multiple retail store platforms
Our lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and are generally 2,200 square feet in size.
Source: 2013 Michael Kors Annual Report
Many luxury brands have multiple retail store platforms
“We also extend our reach to additional consumer groups through our outlet stores, which are generally 2,800 square feet in size. In addition to these three retail store formats, we operate concessions in a select number of department stores in North America and internationally.”
Michael Kors:
Arriving soon to your Downtown?
“We believe that there is significant opportunity to continue expanding our retail store base in North America and to increase our North American retail store base to approximately 400 locations in the long term. We will look to open new stores predominately in high traffic areas of street and mall locations in high-income demographic areas and will adhere to our already successful retail store formats, which we believe reinforce our brand image and generate strong sales per square foot.”
Source: 2013 Michael Kors Annual Report
Motivation for location
Demonstrating that the brand is a force in
the global luxury marketplace:
“Our flagship in London is on Regent
Street [with] very high visibility, and we
wanted to have the same thing in New
York,” said Amy Nelson-Bennett, chief
executive officer [of Molton Brown]. “When
we opened that one in the U.K. about 10
years ago, it transformed the brand in
terms of a visibility statement. [It showed]
we were a serious luxury brand. Our
feeling is it’s going to do the same in New
York.”
WWD, Oct 2013
Motivation for location Choosing a place that is known to have buzz:
“Columbus Circle is one of the key global flagship locations that have been
strategically positioned around the world,” Mark Brashear said, CEO of Hugo
Boss. WWD, Sept 2013
Motivation for location The most important thing,
though, is that the location
maintains a high concentration
of high end customers:
“We don’t mind being pioneers
in new and unchartered areas.
Wall Street is a perfect
example. We’ve been there
since 2007, and it’s one of our
most successful boutiques.” --
Hermès CEO Robert Chavez.
WWD, August 2013
Motivation for location “The store on Fifth
Avenue next year will
be more international,”
said Stefano Sassi,
referring to Valentino’s
forthcoming plans to
redesign its Fifth
Avenue flagship as a
‘power statement.’
“But [Madison] is much
more devoted to the
local customer,
although Chinese or
Japanese or Brazilians
are coming to our store
there more than ever.”
WWD, August 2013
Recruitment: Identify Connections Among Brands Jones Group
Brian Atwood, Stuart Weitzman
Kering
Gucci, Bottega Veneta, Saint Laurent, Alexander McQueen, Balenciaga, Brioni,
Stella McCartney, Sergio Rossi, Boucheron, Girard-Perregaux
Labelux
Bally, Belstaff, Jimmy Choo
LVMH
Louis Vuitton, DKNY, Donna Karan, Celine, Thomas Pink, Bulgari, Tag Heuer
PVH
Calvin Klein, Tommy Hilfiger
Richemont
Cartier, Chloe, Montblanc, Piaget, Vacheron Constantin, Van Cleef & Arpels
Independents
Chanel, Coach, Michael Kors, Prada, Ralph Lauren, Giorgio Armani, Tiffany.
How do you reach these brands?
Encourage Pop-Ups Hermès Opens Silk Bar Pop-up in New York [Shops at Columbus Circle]
“This is not like walking into our Madison Avenue store,” [Hermès CEO Robert] Chavez said of the installation, which is intended to give consumers a “sense of urgency” to visit the shop this month. He also said the highly trafficked location will help attract new as well as existing clients who might discover the silk collection in a different way.”
WWD, October 1, 2013
MarieClaire.com, October 1, 2013
Growth of single ownership outdoor urban luxury centers
Growth of single ownership outdoor urban luxury centers
If you plan on organizing an event in the luxury
marketplace, be sure to pre-answer the most common
question asked by retailers: Who else is participating?
Great source for free intel: LuxuryDaily.com
Looking forward to seeing you on
Madison Avenue!