The report looks at the world’s 100 largest luxury goods companies, which were responsible for $222bn in sales during fiscal 2014. That figure represents a 3.6% increase in sales year-over-year, according to Deloitte.
More than just an examination of those top companies and their sales, the report “also provides an outlook on the global economy; an analysis of merger and acquisition activity in the industry and discusses the key forces shaping the luxury market,” notes Patrizia Arienti, EMEA fashion and luxury leader for Deloitte Touche Tohmatsu Limited, in her letter opening the Global Powers of Luxury Goods 2016 report.
The US market remains the largest for luxury goods. Though Italy has the highest number luxury good companies, according to Deloitte’s data.
Consumer spending in the US was up, but overall the luxury market slowed in this country. A fact Deloitte attributes to the strong dollar and a decline in trade from Chinese tourism. “In the coming year growth in the market is likely to continue, although the rate of growth could be affected if the dollar continues to appreciate,” predicts the report.
In Latin America the luxury goods market is growing too. There, Mexico and Brazil standout. “The outlook for luxury goods is very optimistic,” reports Deloitte, “driven by Mexico’s fast growing middle-class and upper-middle-class who are seeking ever-more luxurious lifestyles and looking to differentiate themselves.”
In Brazil spending has slowed a bit. And, according to the Global Powers report, affordable luxury brands are gaining market share. “Consumers are purchasing more discreet luxury items to avoid appearing ostentatious in light of the current economic climate and wider social issues.”
Top beauty companies
LVMH ranks number one on the Deloitte list of global luxury good brands, with sales for fiscal year 2014 of over $23m.
US-based Estée Lauder Companies, which includes the MAC, Clinique, Aveda, Jo Malone, and several licensed fragrance brands, holds the number three spot. That company had over $10m in sales for the period covered by the report.
L'Oréal Luxe, the other beauty company in the top ten, ranks at number 8 with over $8m in sales. The L'Oréal Luxe brands comprise Lancôme, Biotherm, Helena Rubinstein, Urban Decay, Kiehl's, and more.
In the full list of 100, 12 cosmetic and fragrance companies rank, including Shiseido, Coty, Elizabeth Arden, L'Occitane, Puig, and Inter Parfums.
The report points to several factors that are influential to the luxury goods market: “an evolution in consumer buying behaviours; the merging of channels and business model complexity; an increase in international travel; the growing importance of the millennial consumer; and the continued impact of the global economy. All of these factors create opportunities for the luxury goods sector,” notes Deloitte.
And trends analysts focused specifically on the beauty sector see opportunity as well, but mostly for brands willing to adapt to current consumer expectations. Read ‘Luxury beauty brands have a lot to learn about modern consumer expectations’ on Cosmetics Design to learn more.