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8/9/2019 Luxury Markets_General 2008
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The luxury marketFacts, figures, trends
for fashion, accessories, watches, fragrances
medialine.de/facts
Withext
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pageon
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Summary
Facts for your future.
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Luxury-goods market
Segments of the luxury-goods market 2008*
by sales worldwide (in %)
* Estimate** E.g. watches, jewelleryFigures in brackets: Change compared to previous yearSource: Bain & Company/Altagamma
Tableware (-2%)
Garments (+/-0%)
Perfumes & cosmetics (+3%)
28
4
23
21
Hard luxury goods** (+7%)
22
Accessories (+5%)
Total sales: EUR 175 billion
Core segments o the market
hold their own
Generally speaking, garments, accessories, jew-
ellery, watches, ragrances and cosmetics are
considered to be constituent parts o the luxury
market. This viewpoint was also adopted in a
study conducted by Bain & Company on behal
o Altagamma, the Italian Association o Luxury
Goods Manuacturers. According to this survey,
garments account or around 28 percent o the
market while accessories, ragrances, cosmeticsand hard luxury goods (especially luxury watch-
es and jewellery) account or 21 to 23 percent.
The market researchers also counted high-grade
tableware as a small segment o the luxury-goods
market. In a study entitled Global Luxury Retail-
ing 2007, Verdict deined the market along
similar lines. In this case, however, ashion / gar-
ments, ragrances, cosmetics, watches and
jewellery and accessories are joined by urniture
and other product groups.
Luxury-goods market up in 2008
but decline expected in 2009
In 2008, the volume o sales in the worldwide
luxury-goods markets rose by three percent to
EUR 175 billion. The development o the luxury
market was hampered, in particular, by the nan-
cial crisis, the stock-market collapse and severe
exchange-rate fuctuations. For 2009, however,
the experts rom Bain & Company anticipate a
decline the rst since 2003. At constant ex-
change rates, they expect a turnover o between
EUR 163 and 170 billion (172 to 178 billion at
current rates). The largest share o the luxury
market by volume is held by Europe. However,
growth in Europe is currently being red by the
upcoming countries o East Europe and the
Asian-Pacic region. Tomorrows leading markets
or luxury products will include not only China
and India but also Russia and Brazil. According
to the experts rom Bain & Company, these
Development of the luxury-goods market
Sales worldwide (in EUR billion)
* EstimateSource: Bain & Company/Altagamma
76
2008*2007200620052004200320022001200019991998199719961995
84
9398
134
111
159
170
130134
128134
146
175
Luxury-goods market by regions 2008*
Sales worldwide (in %)
* EstimateFigures in brackets: Change compared to previous yearSource: Bain & Company/Altagamma
Rest of the world (+9%)
Europe (+5%)
America (+/-0%)
38
5
33
12
Asia/Pacific (+15%)
12Japan (-7%)
Total sales: EUR 175 billion
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HNWI population by countries 2008
Top 10 (in thousands)
Source: Capgemini Lorenz curve analysis (World Wealth Report 2009)
Japan
Germany
China
France
Canada
Switzerland
Italy
Brazil
2,4603,019
1,3661,517
810833
364413
362491
346396
213281
185212
164207
131143
2008
2007
UnitedStates
UnitedKingdomWealth in Germany unchanged
In terms o the number o wealthy individuals,
Germany holds third place in the world ranking.
In 2008, 54 percent o all wealthy people lived inGermany, the USA and Japan. Moreover, per-
sonal wealth and the number o HNWIs in Ger-
many ell less because many rich Germans
pursue a conservative investment policy and
there was no property bubble.
Tourists rom threshold countries
purchase more in Germany
Besides the domestic consumption o high-in-
come Germans, the expenditures o oreign tour-
ists in Germany are also important or the luxury
market. In particular, Russians and Chinese
spend large sums o money during the vacation
period and, despite the crisis, actually increased
their expenditures in 2008 compared to 2007. By
contrast, travellers rom other western industrial
nations, such as Switzerland, the USA and Japan,
spent more careully in 2008.
Luxury orientationis multi-aceted
The signicance o luxury diers greatly in the
various segments o the population. For around
50 percent o people, luxury also means the pos-
sibility o treating onesel. Fine dining is also
popular among hal the population. Many Ger-
mans spend reely, especially on ashions, and
then they are inclined to spend more. Around ten
percent are very keen on hard luxury goods
exclusive brands, watches and jewellery.
Attitudes towards luxury (in %)
* Agree completely/on the whole** Applies completely/on the wholeBasis: Inhabitants aged 20 to 69Source: Communication Networks 13.0 / potential: 49.55 million
I buy primarily exclusive brands*
I like to shop in exclusive/up-market boutiques*
When I go shopping, it sometimes happensthat I spend more money than I intended*
At present, I mainly wear in clothing brands**
I enjoy buying clothes*
Watches are an important aspect of my outfit*
Jewellery is an important aspect of my outfit*
The brand is important even if other less well-knowncompanies offer the same quality at a lower price*
I am happy to spend somewhat moreon a meal in elegant surroundings**
For me, luxury means having time for myselfand to do something for myself**
38.1
49.7
13.4
14.8
12.3
36.8
10.8
8.4
7.8
49.8
Tax-free shopping in Germany 2008
Share of total sales by countries (in %)
Source: German National Tourist Board (DZT/Global Refund 2009)
Russia
China
Switzerland
Korea
Japan
Brazil
United
ArabEmirates
26.6
12.8
8.0
4.1
2.9
2.8
+37.4%
+7.8%
-2.0%
+22.2%
-23.9%
-30.4%
-19.2%
+12.1%2.0
2.3
UnitedStates
Luxury-goods market
countries are likely to grow at rates o between
20 and 35 percent over the next ve years. In the
uture, long-term growth in the wealth o people
in emerging nations and the increasing number
o High Net Worth Individuals (HNWI) will gener-
ate new impulses or the luxury market.
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Major luxury groups 2008/2009*
(in EUR billion)
* Different business-year periods in some casesSource: Corporate information, own research
17.19LVMH
Richemont
Swatch Group
Polo Ralph Lauren
Gucci Group
Herms
Phillips-Van Heusen
Armani Group
Burberry
5.42
2.21
3.77
1.76
3.38
3.39
1.75
1.62
1.07
Valentino FahionGroup (Hugo Boss)
Luxury holdings top the market
Today, many o the most valuable luxury brands
belong to major luxury-goods groups, e.g., Louis
Vuitton belongs to LVMH, Gucci to PPR and
Cartier to Richemont. Others have been quoted
independently on the stock market or many
years, e.g., Herms, Tiany & Co. and Bulgari.
Additionally, many luxury brands are still managed
by the ounding amilies or owners, e.g. Chanel
and Rolex, and they provide virtually no inorma-
tion about the development o their business.
Some owner-managed labels, including Prada,
Versace and Salvatore Ferragamo, are consider-
ing going public. In view o the current situation
on the nancial markets, however, these plans
have been postponed or the time being.
Luxury brands
The worlds most valuable luxury brands 2008
Top 15 by brand value (in EUR billion)
Source: Interbrand (The Leading Luxury Brands 2008)
Louis Vuitton (F)
Gucci (I)
Chanel (F)
Rolex (CH)
Herms (F)
Cartier (F)
Tiffany & Co. (USA)
Prada (I)
Ferrari (I)
Bulgari (I)
Burberry (GB)
Dior (F)
Patek Philippe (CH)
Ermenegildo Zegna (I)
Salvatore Ferragamo (I)
3.278
16.718
3.836
3.541
4.918
6.388
3.257
2.775
2.730
2.577
2.542
1.578
0.855
0.633
0.559
Brands are particularly valuable
in the luxury market
The brand is the most important asset or manu-
acturers o luxury products. Hence, it is not
surprising that many luxury brands rank among
the most valuable in the world. The biggest lux-
ury brand, Louis Vuitton, also holds 16th place in
the ranking o all international brands. Gucci,
Chanel, Rolex and Herms are also brands that
have an excellent reputation in this market and
generate appropriate levels o sales with theirgood names.
Europe is the most important region o origin or
international luxury brands. Italy and France are
particularly prominent, as is Switzerland when it
comes to watch brands. Thus, the Swiss Rolex
and Patek Philippe brands also made it into the
ranking. Other leading names include Omega,
Chopard, Longines and TAG Heuer. O the US
brands, only one brand, Tiany & Co., managed
to get into the top 15.
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Fashion
Luxury garments worldwide
Market volume (in EUR billion)
* EstimateSource: Bain & Company/Altagamma
Women Men
23.522.0
2008*20072006 2008*20072006
22.0
23.5 23.523.6
* In constant pricesIndex: 2003=100Source: German Statistical Office (Statistisches Bundesamt)
Development of garment sales
in the retail trade* by quarters (index)
92.2
89.0
80
90
100
110
120
130
2009200820072006200520042003200220012000
Luxury ashion market
stagnating worldwide
The worldwide market or luxury ashions has
grown continuously over recent years. On behal
o Altagamma, the Italian Association o Luxury
Goods Manuacturers, the Bain & Company
market research institute calculated an average
annual rate o growth o 4.5 percent or womens
ashions and six percent or mens between 1998
and 2008. In 2008, the rate o growth declined
signicantly to a certain extent as a result oeconomic uncertainties but also due to currency
fuctuations.
Garment trade in Germany
holding its own
In Germany, the garment trade rang up sales
worth just over EUR 60 billion in 2007. According
to estimates, there was no continuation o this
trend in 2008 and, in view o the crisis, it is un-
likely to resume in 2009. A more positive estimate
comes rom the BTE trade association and its
estimates show stable results or the rst our
months o 2009. However, this does not apply
to the luxury-article segment, which has been
suering rom a all in demand rom oreign cus-
tomers in Germany.
The most important segment or the German
garment trade continues to be womens ashions.
In 2007, sales in this segment climbed by around
seven percent according to BTE, so that it ac-
counted or almost hal o the entire garment
market. In the mens wear segment, too, sales
jumped by almost ve percent in 2007 so that
boys and mens clothing represented approxi-
mately 25 percent o the total. The HML Index or
Sales in the Specialist Trade shows the develop-
ment o sales in the rst our months o 2009.
Sales by segments Jan. - April 2009
Change over the same period last year (in %)
Basis: Merchandising systems with annual sales of approx EUR 6 billionSource: HML Modemarketing
+8.8
Womens wear Mens wear
+4.9
+4.3
+1.6
-0.5
-1.7
-5.2
-5.6
-6.6
-21.5
Dresses
Coordinates
Knitwear
Trousers
Blouses
Blazers
Coats
Skirts
Outdoorjackets
Costumes/trouser suits
Total
womens wear
Total
mens wear+1.2
Suits
Coats
Knitwear
Trousers
Sports jackets
Shirts
+4.1
Outdoorjackets
+3.6
+2.2
+0.4
-0.6
-1.1
-2.0
+0.7
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Fashion
Sales of the German fashion industry
(in EUR billion)
Basis: Companies with 20+ employees; from 2007 with 50+ employeesSource: textil+mode trade association
2008200720062005
8.939.239.279.23
German ashion industry
in a difcult situation
As expected, 2008 was somewhat disappointing
or the German ashion industry. According to the
textil+mode and GermanFashion trade asso-
ciations, there was a decline in the sales o
the countrys garment manuacturers. Although
based on slightly dierent gures, both associ-
ations registered a decrease o 3.5 percent
whereby the biggest alls took place in the major
segments o outerwear, knitwear and underwear.To date, this negative trend has continued into
the current year, 2009.
One o the main reasons or the sales diculties
o the German ashion industry is the decline in
exports, which have been aected by the eco-
nomic crisis since the autumn o 2008. Overall,
exports o garments only remained stable in 2008
with an increase o one percent a below-aver-
age rate o growth in comparison to the German
economy as a whole. In particular, exports to theEU 15 especially to important countries such
as Austria, The Netherlands and France suered
rom the crisis and sank signicantly. On the
other hand, there was an increase in exports to
expanding regions such as the eastward expan-
sion o the EU, the Asia / Pacic region and the
Middle East, including the Arabian Gul States.
Export development by countries* 2008
Change over the previous year (in %)
* From an export volume of EUR 10 mill ionSource: GermanFashion/German Statistical Office (Statistisches Bundesamt)
+76.3
+60.6
+26.8
+26.3
+24.7
-14.5
-14.3
-13.0
-12.9
-10.8
Top 5 winners
Slovakia
Poland
Saudi Arabia
PR China
Serbia
Top 5 losers
Estonia
United Kingdom
Spain
Italy
Finland
Garment suppliers in Europe 2007
Sales (in EUR million)
* 2007/2008 business year * * Wholesale sales * ** EstimatedSource: Textilwirtschaft
4,400
3,250*
2,147
1,956
1,504
1,456*
1,443
1,347
1,340
1,320
1,244**
1,200***
1,126***
878
850***
Adidas Group
Esprit
Valentino Fashion Group
Benetton Gruppe
Triumph Int. Holding
Burberry Group
Multiline
PPR/Gucci Group
Tommy Hilfiger
Only the Brave
Bestseller Gruppe
Max Mara Fashion Group
LVMH-Gruppe
Giorgio Armani
Dim Branded Apparel
Luxury groups are leaders
in the ashion market
In Europe, some luxury brands and corporate
groups rank among the biggest garment suppli-
ers with international groups being particularly
well represented. In Germany, however, the mar-
ket tends to be dominated by domestic manu-
acturers, such as Hugo Boss, Escada, Gerry
Weber, the Ahlers Group (Baldessarini, Pierre
Cardin, etc.) and F.W. Brinkmann (Bugatti, etc.).
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Accessories
Luxury accessories successul
Over recent years, leather goods and shoes have
ranked among the most successul segments in
the luxury-goods market. According to calcula-
tions by Bain & Company on behal o Alta-
gamma, average annual growth in the shoe
segment amounted to around seven percent
between 1998 and 2008. For 2007, the market
researchers noted a dominant trend in the seg-
ment growth was primarily driven by the top
luxury brands. The demand or cheaper andupcoming brands was signicantly lower.
Leather-goods trade satisfed
According to BBE Retail Experts, there is a clear
upwards trend in the German leather-goods
market with sales having risen by ten percent
rom 2004 to 2008. And urther growth in the small
segment is predicted or the uture. For 2008, the
Federation o the German Leather Goods RetailTrade (Bundesverband des Deutschen Leder-
waren-Einzelhandels BLE) estimates a market
volume o EUR 2.1 billion. In recent years, the
market trend has been towards ashion articles
and leisure accessories. According to the German
Leather Goods and Plastic Products Association
(Bundesverband Lederwaren and Kunststo-
erzeugnisse BVLK), sales in the German
leather-goods industry were driven by domestic
demand and rose by about one percent in 2008.
Market for luxury accessories worldwide
Market volume (in EUR billion)
* EstimateSource: Bain & Company/Altagamma
Leather goods Shoes
19
17
2008*20072006 2008*20072006
7.07.6
8.2
20
Sales in the leather-goods retail trade 2008*
By segment (in %)
* EstimatesSource: Federation of the German Leather Goods Retail Trade
(Bundesverband des Deutschen Lederwaren-Einzelhandels BLE)
10
10
3025
25
Total sales in 2008: EUR 2.1 billion
Baggage
Womens handbagsBusiness/school
Small leathergoods
Miscellaneous
Sales development in the German shoe retail trade
By quarter years in constant prices (index)
Index: 2005= 100Source: German Statistical Office (Statistisches Bundesamt)
I
2009
IVIIIIII
2008
IVIIIIII
2007
IVIIIIII
2006
IVIIIIII
2005
80
111
99
111
106
79
108
83
120
115
83
117
109
117
112 113
83
Shoe trade stable
The German shoe retail trade achieved a positive
result in 2008 according to gures published by
the German Statistical Oce (Statistisches Bun-
desamt). However, the Federation o the German
Shoe Industry (Hauptverband der Deutschen
Schuhindustrie HDS) reports a 3.6 percent
decline in sales revenues or 2008, caused pri-
marily by a low level o demand in the domestic
market. By contrast, oreign sales rose slightly.
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Watch-export nations 2008 (Top 5)
Source: Association of the Swiss Watch Industry (Verband der Schweizerischen Uhrenindustrie FH)
Switzerland
Hong Kong
China
France
Germany
15.8
7.1
2.7
1.5
1.5
Exports of watch productsby value (in USD billion)
Exports of wristwatchesby quantity (in million)
China
Hong Kong
Switzerland
Germany
USA
550.3
425.8
26.1
12.9
6.4
Swiss watches lead the
luxury-watch market
The most important export nations or watches
are Switzerland, Hong Kong and China. Charac-
teristic o the Asian manuacturers is the bulk
business in quartz watches. In 2008, China ex-
ported around 550 million watches, the average
price o which, however, was just two dollars. The
price o watches rom Hong Kong rose slightly to
an average o eleven dollars. The quantity ex-
ported was also high at around 426 million. Bycontrast, Swiss watches are positioned in a com-
pletely dierent segment and are an institution in
the international luxury market. Switzerlands
watchmakers have a long tradition. They use the
nest, top-grade materials and are characterised
by great precision and cratsmanship, especially
in the case o mechanical watches. And this is
refected in the average price per Swiss watch
exported, which was EUR 563 in 2008 when
Swiss watches continued their triumphal world-
wide advance with an increase in both the valueand quantity o watches exported, especially
high-quality mechanical wristwatches. However,
sales declined in the rst months o 2009. As well,
no export increases could be achieved in the
upcoming regions o Asia.
Source: Association of the Swiss Watch Industry (Verband der Schweizerischen Uhrenindustrie FH)
Exports of Swiss wristwatches
by value and quantity
Value (in CHF billion)Quantity (in million)
200820072006200520042003
9.310.1
12.7
15.9
14.8
11.4
6.2
4.7
24.4 24.9
Jan.-May
2008
Jan.-May
2009
24.4 24.9
26.125.9
10.27.7
Watches and jewellery
German watch industry
eeling the pinch
The German watch industry was unable to gener-
ate an increase in sales over recent years and, in
2008, they ell to just over EUR 500 million. Ac-
cording to the Association o the Jewellery and
Watch Industry (BV Schmuck + Uhren) on the
occasion o the Inhorgenta air, developments
were generally positive in the rst three quarters
o the year beore the impact o the crisis was elt
in terms o a decline in the number o orders
received, as well as postponements and cancel-
lations, especially on the export side.
Sales* of the German watch industry
(in EUR million)
* Estimated on the basis of companies with 20 or more employees (50 or more from 2007)Source: Association of the Jewellery and Watch Industry (BV Schmuck + Uhren)/
German Statistical Office (Statistisches Bundesamt)
2008200720062005
501.6
541.2
581.0
627.5
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2008 was a good year or
the German jewellery industry
Despite the infuence o the nancial and eco-
nomic crisis, Germanys jewellery manuacturers
were once again able to boost their sales, which
rose to around EUR 807 million in 2008, an in-
crease o approximately ve percent. The Christ-
mas business was also satisactory in 2008. In
view o the current crisis, however, the jewellery
sector is taking a somewhat pessimistic view o
the immediate uture. Exports o jewellery romGermany were also good in 2008 and rose by
eight percent to EUR 884 million. The most im-
portant importers o German jewellery were EU
countries and members o EFTA (Iceland, Liech-
tenstein, Norway and Switzerland). The situation
is dierent in the case o imports into Germany
the bulk in terms o value is imported rom
outside Europe with China being a particularly
important producer o costume jewellery.
Precious materials generatethe greatest sales
According to an analysis by BBE Retail Experts,
there is also a trend towards polarisation in this
market with the most successul brands being
those in the uppermost segment, e.g., belonging
to LVMH and Richemont. Also successul at the
other end o the spectrum are suppliers o inex-
pensive costume jewellery, such as Bijou Brigitte
and beeline. However, this only refects the de-
velopment o the individual segments o the
jewellery to a certain extent because the high
price o gold and platinum means that jewellery
made o these materials accounts or the biggest
share in terms o sales. The demand or jewellery
made o precious materials remained high at the
beginning o 2009 with less but more expensive
jewellery being purchased. In times o crises,
investors and buyers bank on goods o lasting
value and the high price o gold continues to
support this trend. Silver jewellery holds a stable
ten percent o sales.
Development of sales of the German
jewellery industry* (in EUR million)
* Estimated on the basis of companies with 20 or more employees (50 or more from 2007)Source: Association of the Jewellery and Watch Industry (BV Schmuck + Uhren)/
German Statistical Office (Statistisches Bundesamt)
20082007200620052004
807.0769.1762.5
792.4757.6
Imports/exports of jewellery 2008
Share by region (in %)
Source: Association of the Jewellery and Watch Industry (BV Schmuck + Uhren)/German Statistical Office (Statistisches Bundesamt)
Total imports:EUR 774.4 million (+3.1 %)
Total exports:EUR 884.3 million (+8.5 %)
EU
6
61
30
44
6
9
24
EFTA
EFTA
Rest ofEurope Rest of
Europe20
Othercountries EU
Othercountries
Product groups of the German jewellery
industry 2008* Share (in %)
* Estimated on the basis of nine months and companies with 50 or more employeesSource: Association of the Jewellery and Watch Industry (BV Schmuck + Uhren)/
German Statistical Office (Statistisches Bundesamt)
Silverware
Gold and platinumjewellery
Silver jewellery
76
5
6
3
Fancy jewellery
10
Costume jewellery
Watches and jewellery
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Perumes & Cosmetics
Growth in the world market or
luxury ragrances and cosmetics
Bain & Company market researchers calculated
that the worldwide markets or luxury ragrances
and luxury cosmetics were worth EUR 18.4 billion
and EUR 22.4 billion respectively in 2008. Thus,
these segments achieved a good average rate o
growth o ve and seven percent over the years
rom 1998 to 2008. In this connection, perumes
and ragrances were driven, in particular, by suc-
cessul product launches combined with ercecompetition and massive advertising.
Perumeries are optimistic
The trade with ragrances and cosmetics in Ger-
many announced a slight decline o less than one
percent or 2008. Although the previous year
started strongly, this was ollowed by several
poor months and, in particular, a disappointing
Christmas season. Nevertheless, the PerumeryAssociation (Parmerieverband) is taking a cau-
tiously optimistic view o 2009 because crises
have been good or Make-up & Co in the past.
Market for luxury fragrances/cosmetics worldwideMarket volume (in EUR billion)
* EstimateSource: Bain & Company/Altagamma
Luxury cosmeticsLuxury fragrances
18.0
2008*20072006
17.018.4
21.0
2008*20072006
22.421.8
Development of perfumery sales 2008
Source: German Perfumery Association (Bundesverband Parfmerien e.V.)
Total
Face care
Body care
+0.7
+2.7
+0.2
+1.0
+0.6
-0.3
-1.2
13.8%
13.4%
21.8%
6.1%
29.3%
15.8%
Decorativecosmetics
Womensfragrances
EUR 2.67billion
Share Change compared to previous year (in %)
Menscosmetics
Miscella-
neous
German market for body-care products 2008
by segments (in %)
* At consumer pricesSource: IKW Working Group market estimate
Other body-care productsSoaps / syndets
Hair-care products
Skin-care products
24.1
3.1
23.210.5
7.7
Bath/shower products
Deodorants
10.6
7.0
6.7
5.41.7
Decorative cosmetics
Dental/oral-careproducts
Womensperfumes/fragrances
Menscosmetics
Market or body-care growing
By and large, the beauty and care industry was
satised with business in 2008. Expenditures on
body-care products rose to EUR 12.6 billion. The
most growth was achieved in the elds o dec-
orative cosmetics and deodorants. According to
calculations by the Association o the Body Care
and Detergent Industry (Industrieverband Krper-
pfege- and Waschmittel IKW), Germans spent
EUR 153 each on body-care products, an in-
crease o three euros over 2007. Luxury cosmet-
ics grew equally in 2008. According to gures
published by the VKE cosmetics association,
which represents around 50 German manuactur-
ers and distributors o selective cosmetics, sales
o companies with medium to high-priced cos-
metics rose by 1.9 percent to EUR 1.7 billion.
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The uture o luxury goods
The evolution o luxury
Luxury is closely connected with shortage on the
one hand and desirability on the other. People
are prepared to spend a lot o money on anything
that ulls both criteria, is dicult to achieve and
coveted. In view o the act that both the avail-
ability and desirability o goods and social tastes
change in the course o time, the notion o lux-
ury is subject to a constant process o change.
Through developments, such as the constant
growth in afuence, the collapse o traditionalamily structures and liestyle diversication,
luxury became an extremely heterogeneous and
individual phenomenon in the second hal o the
20th century. For the uture, it can saely be as-
sumed that the homogenous luxury market is a
thing o the past and that the sector will be
dominated by a variety o market segments, all
very dierent in character.
Luxury trends
by the size of the individual target groups
Source: Z_punkt
Democratisation of luxury
Climber luxury
Niche luxury
Immaterial luxury
Artificialshortage
Connoisseurluxury
Superluxury
Sizeoftheco
nsumergroup
Localisation of trends by availability
and material/immaterial aspects of luxury goods
Super luxury
Extremeshortage
Artificial
shortage
Immaterial
luxury
Moderateshortage
Source: Z_punkt
Purelymaterial
Purely
immaterial
Climber luxury
Connoisseur luxury
Niche luxury
Democratisation
of luxury
Z_punkt The Foresight Company
Z_punkt The Foresight Company is a rm
o consultants or strategic questions re-lating to the uture, which has been sup-
porting companies and public authorities
in the elds o strategy, innovation and leadership since 1997.The Z_punkt consultants combine a strategic approach with the
results o research into trends and the uture, and help decision-
makers to cope with present-day problems without orgetting to
make preparations or the uture. Z_punkt works or companiesin the service, high-tech and consumer-goods sectors and has
great expertise and experience in various markets.
Z_punkt is responsible or the chapter on the uture o thismarket analysis. The chapter was written by Klaus Burmeister
and Bjrn Theis.
Facets o luxury
The trend analyses in the market concentrate on
the most important o these market segments
and attempt to do justice to the various acets o
luxury. Characteristic o modern luxury is that it
is, on the one hand, accessible to an increas-
ingly broad range o socio-economic groups
(democratisation o luxury) and, on the other
hand, increasingly dependent on belonging to a
specic group (niche luxury). Besides the as-
sertive demonstration o status by those who
want to document their ascent in the material
world (climber luxury), there is the boundless
luxury o the super-rich (super luxury). More
sensitive souls, or whom this showing o is re-
pugnant, withdraw into private worlds o luxury
where intimate connoisseurship counts (con-
noisseur luxury). New mechanisms are being
tried to create exclusiveness (articial shortage).
And, nally, there is a trend towards luxuries that
are ully decoupled rom goods and can only be
satised by services (immaterial luxury).
8/9/2019 Luxury Markets_General 2008
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Advertising market
Watches & jewellery market
Development of advertising expenditures (in EUR million)
* Jewellery shops, range advertising, wristwatches, internet: watches & jewellery, miscellaneousSource: Nielsen Media Research (gross advertising expenditures)
20082007200620052004
Miscellaneous*JewelleryWatches
78 77
89
106
113
44
32
1st half
of 2008
1st half
of 2009
Fashion & accessories market
Development of advertising expenditures (in EUR million)
Source: Nielsen Media Research (gross advertising expenditures)
20082007200620052004
Mail-order trade, textiles/shoesTextile stores/department storesRange advertising, textiles/garmentsCorporate image advertisingLeather goods & accessoriesShoesUnderwear & stockingsClothing
507
579 580605
567
276294
1st halfof 2008
1st halfof 2009
Advertising expenditures o the
clothing sector increasing
According to Nielsen Media Research, the gross
amount spent on advertising in above-the-line
media in 2008 amounted to around EUR 567
million or the ashion & accessories market as
dened here. This represents a drop o six percent
compared to 2007. In the rst hal o 2009, the
market grew, also by six percent. This growth is
due almost solely to the clothing segment and,
in particular, clothing stores, which signicantlyincreased their advertising to a total o EUR 197
million, an increase o almost 30 percent over the
same period the previous year. Most o this
growth can be traced back to the Peek & Clop-
penburg ashion chain, which now is close on the
heels o competitor C&A. However, despite cuts
o six percent, C&A remains the top advertiser in
this segment with expenditures o EUR 47 million.
While clothing stores spend more than hal o
their budgets on newspaper advertising and a
quarter on television commercials, the rest o theashion and accessories sector preers to invest
in consumer publications.
Fashion & accessories media mix
1st half of 2009 by segments (in %)
Source: Nielsen Media Research (gross advertising expenditures)
144.42
21.38
6.60
12.85
47.06
15.64
6.14
3.99
4.61
16.34
5 8Clothing stores
Womens wear
Mens wear
Sport/leisure wear
Shoes
Leather goods
Underwear
Budget inEUR million
2556 3
Daily newspapers Trade magazinesConsumer magazines PostersRadio
Cinema Internet
TV
Range advertising:textiles/garments
Mail-order trade,textiles/shoes
Textile stores/department stores
3
75 914 1
1
57 20 220
11 51 14 149 1
20 1932 3 8127
814 51 7 1
7816 4 2
69 31116
1 2462 112
7 261255
Hope pinned on advertising or
the Christmas season?
Companies in the clocks, watches and jewellery
sector boosted their expenditures on advertising
or the third year running in 2008. On this occa-
sion, however, the increase o six percent was
more moderate than in previous years. Although
advertising or clocks and watches especially
by luxury watch makers accounts or over 60
percent o total advertising expenditures in the
sector, jewellery manuacturers are catching up.
In the rst hal o 2009, the advertising market
shrank by more than 25 percent compared with
the rst hal o 2008. Given, however, that busi-
nesses run around 40 percent o their advertising
in November and December, it will not be pos-
sible to assess advertising expenditures or the
year until ater Christmas 2009. Around 90 per-
8/9/2019 Luxury Markets_General 2008
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Advertising market
Perfumes & cosmetics market
Development of advertising expenditures (in EUR million)
Source: Nielsen Media Research (gross advertising expenditures)
20082007200620052004
620
Sun/tanning lotionsFace and body-care productsComplete series, care & cosmeticsCorporate image advertising,body careDecorative cosmeticsBody careFace carePerfume & fragrance samples
626
695713
733
354 346
1st halfof 2008
1st halfof 2009
Watches & jewellery
Development of the media-mix structure (in %)
Source: Nielsen Media Research (gross advertising expenditures)
1st half of 2009advertising expenditures: EUR 32.40 million
2008advertising expenditures: EUR 113.24
Dailynews-papersTrade
magazines
69
1
442
15
20
2 22
68
21
Consumerpublications
PostersRadio
TV
Dailynews-papersTrade
magazines
Consumerpublications
PostersInternetRadio
TV
Perfumes & cosmetics media mix
1st half of 2009 by segments (in %)
Source: Nielsen Media Research (gross advertising expenditures)
61.47
128.91
49.30
49.29
7.70
39.58
2.81
6.67
32 1
Face care
Body care
Face/body care
Budget inEUR million
613
Complete series,care andcosmetics
3
36 6111 2
34 6211 3
16730 1
3 2981 60
25 1111 59 12
53 222 32 9
27 6411 7
Corporate imageadvertising
Perfumes &fragrances
Decorativecosmetics
Sun/tanninglotions
Daily newspapers Trade magazinesConsumer magazines PostersRadio
Cinema Internet
TV
Cosmetics sector to invest in
advertising against the trend
With an advertising budget o approximately EUR
733 million (gross), the perumes & cosmeticsmarket once again increased its expenditures
by about three percent in 2008. Expenditures
ell slightly in the rst hal o 2009. However, the
individual segments developed dierently with
companies increasing their advertising expend-
itures or ace and body care especially com-
plete series by almost 30 percent in 2008.
Advertising or decorative cosmetics was also
raised by eleven percent in 2008 and nine per-
cent in the rst hal o 2009. With an increase in
spending o over EUR 15 million (up 63 percent)in the rst hal o the year, care products and
cosmetics are most probably responsible or the
act that overall expenditures ell only slightly.
Perumes and ragrances, the second biggest
segment ater ace care in terms o advertising
expenditures, declined in 2008 and the rst hal
o 2009. Most companies attach great importance
to advertising, especially in times o economic
crisis. According to VKE cosmetics association,
almost 30 percent o companies in the luxury
cosmetics sector want to maintain their advertis-
ing expenditures in 2009 at the same level as in
2008. Another 17 percent plan to increase them.
As in the past, the emphasis is on classic adver-
tising in print media. However, the internet is
catching up quickly and, in this connection, the
sector currently aces a number o challenges in
relation to advertising. Thus, ollowing the rag-
mentation o the media, consumers are not only
more dicult to reach but are also characterised
by new patterns o consumption via new sales
channels. The result a urther increase in com-
petitive pressure.
cent o all advertising appears in the print media
with consumer publications holding a dominant
position in the media mix. Television commercials
play only a secondary role, a act rom which
other media, such as posters and radio, proted
in the rst hal o 2009.
8/9/2019 Luxury Markets_General 2008
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Communication
High level of interest in luxury products
Extremely/very interested (share in %)
Basis: Population aged 20 to 69 (49.78 million)
* Agree fully/on the whole with I mainly purchase exclusive brands and/orI like to shop i n exclusive/up-market boutiques
** Extremely/very important aspects for wristwatches: handmade and/or exclusive brandand/or well-known brand
Source: Communication Networks 12.0
Luxury buyers*(5.78 million)
17.8
11.6
21.722.0
27.4 26.6
33.6
27.5 26.3
32.3
20.3
46.0Premium-watch buyers**(8.85 million)
Population,aged 20-69
Fashion Trendsand
lifestyle
Genuine jewellery(gold, diamonds,platinum, etc.)
Cosmetics,perfumes,toilet water
Wrist-watches
Exclusive target groups
or exclusive products
Exclusiveness is a decisive keyword in the luxury
market. By no means can everyone aord these
expensive, high-quality products and thats
certainly not desirable because becoming an
article or the mass market would harm the aura
o such brands. Thereore, advertisers in the
luxury market must ensure they accurately target
consumers who are receptive to their brand and
who t with its image. For the luxury market de-ned here, these consumers could be luxury
buyers who explicitly preer selected brands or
shops. For luxury-watch makers, the very special
target group o premium-watch buyers is o
paramount importance. In the case o wrist-
watches, these buyers attach particular im-
portance to luxury qualities the watches must
be handmade or come rom exclusive and
amous brands.
Attitudes to fashion (in %)
Basis: Population aged 20 to 69 (49.78 million)* Agree fully/on the whole with I mainly purchase exclusive brands and/or
I like to shop in exclusive/up-market boutiques** Extremely/very important aspects for wristwatches: handmade and/or exclusive brand
and/or well-known brandSource: Communication Networks 12.0
When it comes to fashion trends,Im always up to the minute
17
32
51
21
33
45
11
38
21
13
31
70
31
46
19
20
31
41
49
47
5
22
16
20
10
30
23
27
9
37
I like to try new clothes
I always buy clothesfrom the latest collection
The brand is important evenif other, less renowned suppliers
offer the same qualityat a lower price
I prefer to buy one high-qualitygarment to two cheaper articles
A handbag and/or belt areimportant parts of my outfit
Watches and jewellery areimportant parts of my outfit
I change my watch to matchthe occasion and my outfit
I frequently buy accessories(belt, handbag, sunglasses) of
the same brand as my clothing
I frequently buy shoesof the same brand as my clothing
I frequently buycosmetics/fragrances of
the same brand as my clothing
Agree fully/on the whole with:
Populationaged 20 to 69(49.78 million)
Luxurybuyers*(5.78 million)
Premium-watch buyers**(8.85 million)
7
19
26
Luxury buyers are keen on ashion
Buyers o luxury products are very keen on
products rom the ashion, liestyle, jewellery,
cosmetics and watches segments and, in the
case o ashions, are particularly trend and brand
conscious. No less than one in two o them keeps
abreast o the latest developments. 70 percent
preer high-quality products. Moreover, they
attach great importance to a smart appearance
and accessories, such as bag, watch and
jewellery, which are oten sold as matching the
garments o a given ashion brand, are simply
part o this. They also tend towards well-known
brands when buying cosmetics and ragrances.
Premium-watch buyers are also characterised by
a very great anity to luxury. However, they are
signicantly less interested in ashion than luxury
buyers precision timepieces are their passion.
Premium-watch buyers are interested in watches
or watches sake and not as part o their outt.
8/9/2019 Luxury Markets_General 2008
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Communication
Advertising is credible generally speaking
Applies fully/on the whole (in %)
Basis: Population aged 20 to 69 (49.78 million)
* Agree fully/on the whole with I mainly purchase exclusive brands and/orI like to shop i n exclusive/up-market boutiques
** Extremely/very important aspects for wristwatches: handmade and/or exclusive brandand/or well-known brand
Source: Communication Networks 12.0
20
33
3940
33 32
23
2725
Populationaged 20-69
(49.78 million)
Luxury buyers*
(5.78 million)
Premium-watch buyers**(8.85 million)
109
16 16
13 14
Advertising in magazines
Advertising on television
Poster advertising
Advertising by e-mail
Advertising on theinternet/online services
Magazine ranking
Premium-watch buyers*
* Population aged 20 to 69 and as purchasing criteria for a wristwatch: handmade and/orexclusive brand and/or well-known brand
Basis: Top 12 by cost per thousand; affinity > 101; title selection (MA-adjusted):Current-affairs magazines, business press, lifestyle magazines
Format: 1/1 p. 4c bleed (average prices 2009 gross)Source: Communication Networks 12.0 / potential: 8.85 million
FOCUS
Stern
Der Spiegel
Guter Rat
Wirtschaftswoche
FOCUS-MONEY
Capital
Manager Magazin
Fit for Fun
Neon
Playboy
Cinema
FOCUS-BlueChip-Kombi
Cost per thousand(in EUR)
Coveragein %
12.5
14.0
13.0
2.3
3.4
1.8
3.2
2.5
2.8
1.9
2.4
1.4
13.6
44
43
48
69
92
97
100
103
109
117
112
47
79
Magazine positioning
Luxury buyers*
* Population aged 20 to 69 and agree fully/on the whole with I mainly purchase exclusive brandsand/or I like to shop in exclusive/up-market boutiques
Basis: Top 15 by cost per thousand; affinity >101; title selection (MA-adjusted): Current-affairs magazines,business press, lifestyle magazines
Format: 1/1 p. 4c bleed (average prices 2009 gross)Source: Communication Networks 12.0 / potential: 5.78 mil lion
Der Spiegel
Cinema
Stern
FOCUS
FOCUS-BlueChip-Kombi
FOCUS-MONEY
Cost per thousand (EUR)
Coverage (%)
Capital
Wirtschaftswoche
Bunte
MensHealth
Gala
FitforFun
Playboy
ManagerMagazin
50 60 70 80 90 100 110 120 130 140 150 160 170 180
0
5
10
15
20
Print advertising appeals
to luxury target groups
Luxury brands have to cultivate their image con-
tinuously and an important aspect o this is the
choice o appropriate advertising media. Al-
though, the two luxury-oriented target groups see
advertising as being more credible than the po-
pulation as a whole, there are signicant dier-
ences between the individual media, parallel to
the degree o receptiveness. For both luxury and
or premium-watch buyers, magazine advertise-ments are the most persuasive with 40 percent
o this target group according advertisements the
highest level o credibility. Poster campaigns are
also rated positively. Less well received is adver-
tising in the electronic media, on television and,
above all, in e-mails and on the internet.
Established media brands score
in the luxury market
O the various groups o magazines, news, current
aairs and business magazines are advertising
media o interest to advertisers in the luxury
market. FOCUS and FOCUS-MONEY are popular
with advertisers because they oer excellent
value or money and a clear target-group orien-
tation. For target groups o importance in mar-
keting and strategic terms, they provide extensive
coverage and outstanding cost eectiveness.
FOCUS is distinguished by broad coverage al-
most 13 percent o both the exclusive luxury
buyer and premium-watch buyer target groups.
And, by booking FOCUS-MONEY, the modern
business magazine, in the FOCUS BlueChip
combination, this coverage can be expanded
even more. FOCUS and FOCUS-MONEY oer
advertisers in the luxury market outstanding
planning eectiveness or communicating with
top target groups.
8/9/2019 Luxury Markets_General 2008
16/16
Your contacts
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Phone (+81) 4 67 25 27 63Fax (+81) 4 67 25 28 37E-Mail jiro.semba@bz01.plala.or.jp
NetherlandsPeter LandsheerePublicitas BVMercurius Building, 8th FloorHerikerbergweg 175NL-1101 CN Amsterdam Zuid-OostPhone (+31) 20 311 97 10
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