Emerging consumer markets continue to drive luxury market growth. In China, Russia and the United Arab Emirates, markets that we have categorised as emerging luxury markets, the percentage of consumers claiming to have increased their spending in the last 5 years was 70 percent, compared to 53 percent in the more mature markets (EU, US and Japan), according to the fourth annual Global Powers of Luxury Goods report issued by Deloitte Global.

The report examines and lists the 100 largest luxury goods companies globally, based on publicly available data for consolidated sales of luxury goods in FY2015 (which we define as financial years ending within the 12 months to 30 June 2016). It also discusses the key trends shaping the luxury market and provides a global economic outlook.

“Travel and tourism is still a great growth opportunity for the luxury sector,” said Patrizia Arienti, EMEA Region Fashion & Luxury Leader, Deloitte Global. “Almost half of luxury purchases are made by consumers who are travelling, either in a foreign market (31 percent) or while at the airport (16 percent). This rises to 60 percent among consumers from emerging markets, who typically do not have access to the same range of products and brands that can be found in more mature markets.”

“Traditionally, luxury players in Southeast Asia capitalised on the influx of tourists from markets such as China, where the US dollar-adjusted prices for equivalent items were, on average, higher,” said Eugene Ho, Consumer & Industrial Products Industry Leader at Deloitte Southeast Asia. “However, with luxury brands closing price differences across markets, the opportunity for consumer arbitrage has been diminishing in recent years. Instead, luxury brands should adapt to the changing marketplace and focus on providing the consumer with greater service personalisation, wider product selections, and higher quality after-sales service, as the increasing consumer sophistication means that price is no longer the sole – nor most important – purchasing determinant.”

Based on publicly available data, the world’s 100 largest luxury goods companies generated sales of US$212 billion in FY2015. The average luxury goods annual sales for a Top 100 company is now US$2.1 billion.

“The essence of luxury is changing from an emphasis on the physical to a focus on the experiential and how luxury makes you feel”, said Vicky Eng, Retail Sector Leader, Deloitte Global. “However premium quality remains a ‘must have’ and consumers retain a keen eye for craftsmanship and hand-made products”.

With its diverse market of consumers possessing varying levels of maturity in terms of luxury knowledge, Southeast Asia also presents luxury goods companies with an opportunity to optimise their range and prices for local markets. “Broadly speaking, we can identify two different groups of consumers in Southeast Asia,” said Eugene. “We have the emerging luxury consumer that desires conspicuous consumption, such as logos with high brand recognition, as well as the sophisticated consumer that prefers understated, discreet luxury, relying on his or her knowledge of a brand’s history, craftsmanship and exclusive brand codes. With the right use of customer data and analytics, brands can find ways to maximise their sales at the optimum range and price points for each market.”

Key findings from the report include:

· Luxury goods sales growth up – sales for the world’s 100 largest luxury goods companies grew by more than 3 percentage points in FY2015. Most currencies weakened significantly against the US dollar, which benefited many multinational companies based in other regions who experienced favourable currency effects, driving up reported sales. In the Top 100, only six companies reported double-digit sales decline in FY2015; half of these were jewellers, the product sector which continued to experience volatile demand.

· Italy is once again the leading luxury goods country in terms of number of companies, while France has the highest share of sales – with 26 companies in the Top 100, Italy has more than double the number based in France. However, the predominantly family-owned Italian companies are much smaller, with average luxury goods size of US$1.3 billion, which is around a quarter of the average US$5.1 billion luxury goods sales for the French companies.

· Companies in the multiple luxury goods sector nearly double sales growth – compared to the previous year and leads profitability, while bags and accessories continue to be the fastest growth sector.

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