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True Luxury - 2014/2015 - BCG
- 2. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 1
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
This volume contains copies of slides presented by Antonio Achille, Partner and Managing Director
of the BCG Milan office, and Armando Branchini, Deputy Chairman of Fondazione Altagamma,
during the "Consumer and Retail Insight" event held in Milan on January 22nd 2015.
The presentation is based on a research that BCG developed during the month of November 2014,
interviewing 10'000 Top Luxury consumers from 10 countries (Italy, France, UK, Germany, US,
Japan, China, Brazil, South Korea and Russia).
During the presentation, the slides served as the focus for discussion; they are incomplete without
the accompanying oral commentary
This document will be most meaningful, therefore, to those who attended the meeting
Disclaimer
- 5. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 4
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
60%
Organic growth: 2 / 3 of next decade growth
1. Europe (Italy, France, UK, Germany, Spain, Nordics), US and Japan; 2. Referrers to personal luxury (apparel, accessories, hard luxury, Perfume & Cosmetics)
Note: Last decade Personal Luxury market CAGR growth ~5%; upcoming decade Personal Luxury market CAGR growth ~4%
Source: Bernstein / BCG analysis
Last decade growth by component2 Upcoming decade growth by component2
Total
growth
100%
Volume
20%
20%
Emerging
markets
35%
Traditional
Markets1
25%
Price
- Mix
40%
Organic growth
(LFL)
Retail expansion
100%
Total
growth
Volume
30%
Price
- Mix
40%
Emerging
markets
10%
Traditional
markets1
20%
Organic growth
(LFL)
70%
Retail expansion
.
30%
- 9. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 8
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
All luxury categories in scope
5472
154
350
354
62
4941121
61
67
1,385
0
500
1,000
1,500
Hotel &
Exclusive
vacations
Food
& Wine
Furnit-
ures
Perfumes
&
Cosmetics
Watches
&
Jewelry
ApparelAcces-
sories
Arts Other2Techno-
logy
Cars &
Yachts
Total
Personal luxury
(290 €B)
Experiential luxury
(465 €B)
Cars &
Yachts
(350€B)
Luxury market (€B,2014 retail value)
1.Personal and Experiential luxury 2. Including Private Jets, Art de la table, etc
Note: Some numbers are rounded.
Source: BCG 2014 specific survey, BCG-IPSOS market research
Covered by True-Luxury Global Consumer Insight
P&E 1 Market:
755 €B
Others
(280 €B)
- 12. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 11
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Short term: Luxury Barometer® indicates
rebound of confidence in 2015 vs. 2014
24% 29% 24%
43%
48%
39%
33%
23%
37%
Less
(-20%)
Same
More
(+20%)
201520142013
1. Index calculated as percentage of customers who see growth in spend less the percentage who foresee a decrease in spend (Positive – Negative) .
The index represents a proxy of the expected growth of spend in Luxury by Top Luxury consumers
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
% of respondents
Luxury
Barometer®1 9pp 13pp-5pp
"Do you expect to spend more or less on luxury products in the next 12 months?"
Short
term
- 16. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 15
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Global trends confirming their importance
Confirmations Changes in Trajectory New Trends
Advocacy era continuing: 80% of consumers willing to become brand ambassador
"Made in Italy" still rules: 1st preferred manufacturing country
– Leadership in all categories but cars (1st Germany) and watches (1st Switzerland)
53% of Luxury consumers spend made out of the home country
– Drivers: convenience key for Emerging Markets; part of the journey experience
for Mature Markets
Exclusivity key for long term creation and not granted: 25% of luxury brands at risk of
loosing exclusivity based on consumer declarations
"Made in" still rocks: 80% of consumers actively check where products are "Made-In"
- 17. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 16
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Changes in trajectory
Confirmations Changes in Trajectory New Trends
Intro values still roaring with selective extro values rebound (from 27% to 34%)
Word of Mouth becoming 1st influence lever and increasingly digitally enhanced
Digital growing importance with online influencing 62% vs. 53% of total luxury purchases
Store windows losing relevance vs. online (from 39% to 32%): is store role changing?
Brands website preferred e-commerce channel: websites quality and customer care
more important than price
Omnichannel getting momentum, 75% of consumers asking for it
- 18. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 17
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Intro values still roaring
Selective rebound of Extro values?
76% 76% 71% 70% 66% 62% 61% 60% 59% 56%
24% 24% 29% 30% 34% 38% 39% 40% 41% 44%
• Quality
• Exclusivity
• Craftsmanship
• Timeless
Intro
values
• Adorned
aesthetics
• Brand visibility
• Customization
• Being Cool/Sexy
Extro
values
"What is luxury to you?"
% of respondents1
1. Respondents were asked to rank the top 3 values: the graph represent the value ranked as the most important
Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries)
2013 Intro
Value Avg.
73% 73% 83% 83% 72% 69% 69% 61% 75% 69%
2014: 66%
Values
- 19. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 18
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Word of Mouth: 1st influence lever,
overcoming magazines
% of respondents
TV &
Movies
Seen
Wore
Celebrities
Brand
websites
26%
31%
39%
32%
32%
19%
30%
23%
Tailored
offers
Store
windows
Events
Magazines2
WoM 49%29% 20%
Seen
Worn
13%
Celebrities 20%
Events 20%
Tailored
offers
22%
TV &
Movies
24%
Brand
websites
34%
Store
windows
39%
WoM1
43%32%
11%
Magazines 50%
1 Includes WoM, Social Media and Other Social blogs 2. Editorials and Commercial in Magazines
Note: multiple choices possible, out of top 3 ranks
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
"Which of the following has an impact on your purchase decision?"
2013 Different WoM influence across nationalities
34%
23%
10%
41%
22%
19%
46%
30%
17%
47%
33%
14%
49%
25%
24%
52%
30%
21%
52%
26%
26%
53%
35%
18%
55%
22%
33%
58%
41%
17% Avg.
49%
Social Media & Blogs Physical
2014
WoM
- 25. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 24
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
For online shoppers brands website
1st option; experience more important than price
"Which kind of online store
did you buy the product from?"
1.9x
Flash sales sites 2%
Others kind of websites
(travels, restaurant, ...)
8%
Luxury-specialized
etailers
16%
Dept. store website 18%
Online marketplace 20%
Brand website 37%
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
% of respondent % of respondent
"Which factors are more important
when buying on line?"
Free return
Exclusive
collections
21%
22%
Payments
accepted
24%
Brand
carried
25%
Online customer
care quality
29%
Website
navigability
31%
20%Price discount
Digital
- 32. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 31
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
8 Global segments, 3 of them counting for ~50%
Country
specific
2.2 2.8 1.6 1.8 2.1 3.0 2.3 2.2 1.5 1.2
9% 11% 6% 7% 8% 11% 9% 8% 6% 5%
30 8 10 10 7 3 9 10 4 4
67 22 17 17 14 8 21 21 6 5
24%
2.5
10%
17
41
15%
2.8
11%
13
35
13% 8% 6% 6% 5% 3% 8% 8% 2% 2%
(M)
(%)
(K€)
(Bn€)
(%)
Segment
size
Current
value
Avg.
Spend1
Gender
specific
Global segments (gender / geography balanced)
counting for ~50%
of lux. market
Note: This table represent Luxury Consumer of Beyond Money, Very High, High and a projection proxy of Top Aspirational consumers 1. Not including Cars & Yachts
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
Absolute
Luxurer
Experien
cer
Mega
citier
Fashioni
sta
Social
Wearer
#Little
Prince
Status
Seeker
Classpira
tional
Timeless
Proper
Omni
Gifter
Luxe
Immune
Rich
Upstarter
- 37. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 36
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Quality and exclusivity not negotiable,
off price and low entry price disaffection triggers
Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries)
Purchase Enablers Disaffection triggers
18
20
21
21
22
23
23
26Craftsmanship/quality
Adorned aesthetics
Customer care
Brand visibility (logo)
Value for money
Shopping experience
Customization
Exclusivity
17
18
18
19
22
25
27
Stores too Large
Production outside
home country
Too many categories
Owned by
majority of friends
Poor distribution
Fake copies
Low entry price
Too much off-price 30
- 38. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 37
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Handbags: 67% of Absolute Luxurer
researching online
"Where did you buy handbags?
Where did you researched them?"
"Why did you researched online for handbags?"
Follow/influence trends 14%
Price and product comparison 17%
Access to
brand content
23%
Opinion & Feedback Sharing 27%
Interaction with brand
32%
Gathering information
on product
42%
% of respondents
2%
Pure onlineShow
rooming1
7%
Researched
Online
Purchased
Offline
67%
Pure in
store
23%
Total
100%
Overall
Avg.
38% 45% 8%9%
1. viewed in store, purchased on line
Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries)
- 40. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 39
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
The CONSUMER era: key takeaways (I)
2 / 3 of the next decade's growth will be organic
Growth to continue...:
– Short term (2015): rebound in luxury confidence already in 2015
– Mid term (2021): 390M consumers to become 465; market to increase by 260€Bn
....but at multiple speeds:
– Consumers: Top Luxury (4% of total) making 40% of growth alone
– Geographies: US, China, EU and ME accounting for 55% of total growth
– Sectors: Experiential luxury growing faster than Personal luxury
– Categories: Jewelry & Watches and Leather 1st contributors to growth in Personal
- 41. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 40
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
The CONSUMER era: key takeaways (II)
Consumer: Confirmations and new realities
– Made in still rules, but not granted
– Digital influence reaching new heights
– Omnichannel from buzzword to reality
– Sustainability is happening
12 unique segments entering your stores with different expectations
– Absolute Luxurer, Megacitier and Experiencer representing 65% of future growth
Consumer lens the only way to capture future growth
– Leather: Absolute Luxurer looking for craftsmanship and brand specialization...
– Apparel: Casualization led by Megacitier,..
– Jewelry: Omni Gifter picking pure jewelry brands only,...
– ...
Consumer Insight next competitive
advantage: there will be winners and losers
- 42. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 41
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
Antonio Achille
Partner and Managing Director - Milan
Antonio Achille is a Partner and Managing Director in the Milan office. He is a senior leader of the
Consumer & Retail team and he co-leads globally the Luxury practice for the firm.
For 20 years, he has been advising National and International Groups on issues that include corporate
strategy, growth acceleration, clients strategic segmentation, organization redesign and Post Merger
Integration. In the Luxury and Fashion sector his experience includes apparel, eyewear, accessories,
selective fragrances, jewelry/hard luxury and experiential luxury. The geographical scope of his work
includes most of the developed and emerging luxury markets (EU, North America, China, Turkey,
Korea, Middle East ….).
He has developed an extensive knowledge on the Global Luxury Consumer and he is responsible for
the database that includes a comprehensive view on over 40.000 consumers from 20 countries,
developed in cooperation with Altagamma, the trade association for the Italian luxury industry.
The actionable insights of the study are presented at the yearly event “True-Luxury Global Consumer
Insight”.
In addition he contributes to the annual Luxury Summit, one of the most valued discussion forum for
the sector. He is also member of the Scientific Committee of one the first Italian master on Luxury.
He is author and co-author of most of the recent BCG publication on Luxury such as "Luxury
ecosystem advantage", "Shock of the New chic", ... Antonio is extensively quoted, as Luxury and
Consumer expert, in Italian and International media, such as FT, WWD, Bloomberg, CNBC,
FashionIllustrated, Il sole 24 ore, Il Corriere della Sera,...
Prior to joining BCG he worked for Arthur D. Little. He graduated magna cum laude from the
“Università L. Bocconi” of Milan where he holds a degree in Business Administration.
- 43. P-Altagamma-317971-01-22Jan15-AAc-mil_Published_short.pptx 42
Copyright©2015byTheBostonConsultingGroup,Inc.Allrightsreserved.
About BCG and its Luxury practice
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s
leading advisor on business strategy. We partner with clients from the private, public, and
not-for-profit sectors in all regions to identify their highest-value opportunities, address their
most critical challenges, and transform their enterprises.
Our customized approach combines deep insight into the dynamics of companies and markets
with close collaboration at all levels of the client organization. This ensures that our clients
achieve sustainable competitive advantage, build more capable organizations, and secure
lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries.
Within the Firm, The Luxury practice, with more than 200 experts worldwide, advises Brands
and Retail companies bringing together the experience of its centers of competence located in
all key must-be geographies for the sector: Milan, New York, Paris, Shanghai, Hong Kong and
Tokyo.
BCG Luxury team has a deep and relevant experience driving profitable growth with leading
Brands and Retail companies, from strategy to marketing and operations, and a unique point of
view on consumer segmentation.