the luxury global consumer lnsight

True-Luxury Global Consumer Insight

Antonio Achille, Partner & Managing Director

True-Luxury Global Consumer Insightwe will address 5 "W" questionswe will address 5 W questions

Why now?

What makes our study unique?

d.Where will growth come from?


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What will it take to win luxury Consumer?

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Which luxury segments will drive growth?

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What's in for you?

20140124 Final Document FINAL SENT.pptx

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Organic growth: 2 / 3 of next decade growthOrganic growth: 2 / 3 of next decade growthLast decade growth components2 Upcoming decade growth components2

20%40%

d.

20%

100%

40%

25% 100%

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15%

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Price Total growth

Traditional Markets1

25%

Emerging markets

Volume Volume Total growth

Traditional markets1

20%

PriceEmerging markets

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tgrowthMarkets markets

Organic growth (LFL)

40%

Retail expansion .

60%

growthmarkets markets

Organic growth (LFL)

65%

Retail expansion .

35%


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1. Europe (Italy, France, UK, Germany, Spain, Nordics), US and Japan; 2. Referred to personal luxury (apparel, accessories, hard luxury, Perfume & Cosmetics)Source: Bernstein / BCG analysis

40%60% 65%35%

Consumer discontinuities to impact 100 €Bnindustry investments per yearindustry investments per year

Industry investments (2014, €Bn)

Intensity of discontinuity Example of discontinuity

Made-In 30-351• For 80% of Consumers "Made In" is keyProduction

d.

15-202

• Friends' opinions impact on 50% of purchases70% f C d t

Advocacy

Inc.

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25-303

• 70% of Consumer are advocate

• Fom monolithic Mono-brand Store experience

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10-154

store to diversified concepts

• 50+% sales influenced by digital

experience

Digital i t ti

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~100 €Bn

10 15• Digital in-store immersioninteractions


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Source: BCG 2013 specific survey1. Made-In calculated as 30% of COGS (with COGS industry avg. at 35-40% of revenues) 2. Advocacy calculated on marketing investments (industry avg. 6-8% of revenues), 3. Calculated sum of yearly rent for all stores (industry avg. 20% of retail revenues), plus refurbishment and key money where applicable for new stores 4.Calculated as digital strategy and platform investments (industry avg. 5% of revenues)

00 €

The CONSUMER eraThe CONSUMER era

+ConsumerDesign +Brand +Retail

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'80s '90s '00s 2014 next decade

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• Style & Design for elites

• Temple of desire

• The emerging of global brands

• Retail as part of brand experience

• "Real estate rush"

• Consumer: engine of top line and margin growth


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4Source: BCG 2013 specific survey


Why now?




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What's in for you?


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True-Luxury Consumers talk to you todayy y y

ClusterSample

(#)Avg. yearly spend including cars1(K€)

Ultra

Beyond money

Core 60 K€

130 K€

Avg 30K€ ~10K

d.

Very high

High

luxury 10 K€

3 K€

Avg. 30K€ ~10K

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Aspirational ~5 K<2K€

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Prospects ~25 K-

~30K

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Rest of the world


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1.Cars & YachtSource: BCG Analysis

worldFocus of analysis

One of a kind study: our approachOne of a kind study: our approach~10 K

Consumers

Core

Core luxury Consumers population base for:

• Identification of general trends

d.

luxuryg

• Definition of global segments

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Aspirational luxury Consumers population for:

~30 K ConsumersAspirational

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• Understand how many of them can be turned into core

luxury Consumers

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• Estimate Core luxury market future growth


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7Source: BCG ad hoc luxury survey

All luxury categories in scope: our actual sample spent ~230 M€ in luxury goods last yearspent 230 M€ in luxury goods last year

Luxury market (€B)

1 500

Personal luxury (285 €B)

Experiential luxury(445 €B)

Cars & Yacht

(320€B)

Others(270 €B)

d.

5070150320

1,500

1,000

1,320( )

P&E 1 Market: 730 €B

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335

6050

1,000

500

730 €B

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0

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TotalOtherArtsTechno-logy

Cars & Yacht

Hotel & Exclusive vacations

Food & Wine

Furnit-ures

CosmeticWatch & jewellery

Apparel2Acces-sories

Covered in the Global Luxury Consumer Insight


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1.Personal and Experiential luxuryNote: Some numbers are rounded.Source: BCG 2013 specific survey, BCG-IPSOS market research

Covered in the Global Luxury Consumer Insight

Mapped Consumers opinion on 100+ luxury brandspp p y

d.In

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Source: BCG 2013 specific surveyNote: Including: cars, hotel, furniture & design, sunglasses (not exhaustive)

Sounding board of WW leading brands to ensurerobustness and actionability of the insightrobustness and actionability of the insight

d.In

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10Source: BCG 2013 specific survey


Why now?




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380M Luxury Consumers to become 440M by 2020with P&E market growing from today 730 to 880 Bn€with P&E market growing from today 730 to 880 Bn€

Cluster 2013

# (M) Bn(€)1

2020

# (M) Bn(€)1

Core Ultra

Beyond 24

# (M) Bn(€)

4080

36

# (M) Bn(€)

60110

d.

luxury Very high

High917

9050

1221

11560

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260 42 345

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Aspirational 350 470 400 535

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Total LuxuryConsumers1 ~380 ~730 ~440 ~880


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1. Including experiential and personal luxury, excluding carsSource: BCG Analysis

Core Luxury Consumers growth at value led by US, China and EuropeUS, China and Europe

P&E1 Luxury market growth by country (€Bn)

34527400

y g y y ( )

Core luxury

+85€Bn

d.

34527351535

260300

luxury

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Aspirational 20065%

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0

100

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t02020Others2Middle

EastEuropeChinaUS2013

9 5 6 1 21 42# of Core


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1. Personal & Experiential Luxury market; 2. Including Japan, S. Korea, Russia, Brazil and RoWSource: BCG Analysis

1,8 1,1 0,6 0,2 6,3 10# of

Consumers New core

Aspirational Consumers growth at value led by China, US and EuropeChina, US and Europe

P&E1 Luxury market growth by country (€Bn)

535941016600

y g y y ( )

Core luxury

+65€Bn

d.

4101626470

400

y

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200

80%Aspirational

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t02020Others2Middle

EastEuropeUSChina2013

51 107 95 11 136 400# of Aspirational


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1. Personal & Experiential Luxury market; 2. Including Japan, S. Korea, Russia, Brazil and RoWSource: BCG Analysis

51 107 95 11 136 40015 10 6 1 22 50

# of Consumers

AspirationalNew Aspirational

Disaffection ~1M core luxury consumers impacted with 4Bn€ luxury spend at riskimpacted with 4Bn€ luxury spend at risk

1.0M

Disaffected

Passport: Key demos Shopping relevance

7% 6%6%8%

8

d.

Top countries

A 45 50

# of consumers1

Current value1

1.0 M

8 Bn€

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% Woman

45-50

49%

Value at risk

Current avg. lux. spend1

4 Bn€ (50%+)

8K€

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, % Woman

% with bachelor or higher degree

49%

88%

Current avg. lux. spend

Most trusted source of info

8K€

In storeadvice

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% with HH income in top 20%

100%


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1. 2013 valueNote that disaffected are current luxury consumers expected to decrease their spend on luxurySource: BCG ad hoc luxury study


Why now?




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What it will take to win Luxury ConsumersWhat it will take to win Luxury Consumers1

"Made In" still rocks2

Made In still rocks

The Advocacy era3

d.Man: what a surprise

The Advocacy era

4

Inc.

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Intrinsic values rebound

Man: what a surprise

5Global Consumer: catch me if you can

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Global Consumer: catch me if you can

DOS is dead long life to DOS

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7Di it l " h i li ti "

DOS is dead, long life to DOS


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Digital "physicalization"

Luxury: the art of balancing Intro and Extro values1

Luxury: the art of balancing Intro and Extro values

Intro values Extro values

Quality

Intro values

Adorned aestheticsBrand visibility

Extro values

Exclusivity

d.

CraftsmanshipTimeless Being Cool/Sexy

Customization

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Intro values roaring, also in China and S. Korea1

Intro values roaring, also in China and S. Korea"What is luxury to you?"

% f d t 1

17%25% 27% 27% 28% 31% 31% 32%

17% • Adorned aesthetics

Extrovalues

% of respondents1

d.

27% 27% 28% 31% 31% 32%39%

Intrinsic Avg. 73%• Brand visibility• Customization• Being Cool/Sexy

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83%83%69%72%73%73%75%

61%69%69% • Quality

Introvalues

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• Exclusivity• Craftsmanship• Timeless

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USUK ItalyJapanChina BrazilFranceRussia


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1. Respondents where asked to rank the top three values: the graph represent the value ranked as the most importantSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Quality and Exclusivity leading1

Quality and Exclusivity leading"What is luxury to you?"

USTotal Japan Brazil RussiaChinaS. KoreaEU 41

Intro valuesExtro Values

d.

Quality 57 58 68 55 45 63 40 61

% of respondents

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Craftsmanship 30

Exclusivity 35

28

36

43

22

32

25

34

59

27

26

12

38

33

46

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Adorned aesthetics 31

Timeless 29

34

27

24

44

37

37

17

18

34

37

33

11

36

23

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Customization 13

Brand 19

12

22

8

11

12

11

7

38

16

11

24

23

22

16


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Note: Multiple answer possible; 1. IT, FR, DE, UKSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Being Cool/Sexy 12 9 7 16 20 8 21 15

From values to purchase drivers:key for brands to place their bets in time

1

key for brands to place their bets in timeDeclared relevance1 Purchase driver2

UpcomingHigh relevance as value, low impact

d.

Actual Expected

pas purchase driver

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Same relevance as value and as

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Fading

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tgLow relevance as

value, still high impact as

purchase driver


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Note: 1. "What is luxury to you?"; 2. "Which are the key elements that you value the most when you purchase luxury products?"Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

ExpectedActual

p

Brand visibility still strong as purchase driver but expected to decrease, strong impact on China?

1

Emerging

expected to decrease, strong impact on China?

Total EmergingMarkets

China

d.

% of respondents

Inc.

All

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13 P P16 P.P. 32 P.P.

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32%19%

37%21%

43%

11%

13 P.P.

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Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1


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Simplicity is the new sexy1

Emerging

Simplicity is the new sexy


South Korea

d.

% of respondents

Inc.

All

right

s re

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11 P.P. 11 P.P.29 P.P.

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42%31%

41%30%

46%

17%

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Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1


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Exclusivity strong as a value and expected to grow as a purchase driver, with great relevance for Russia

1

Emerging

as a purchase driver, with great relevance for Russia


Russia

d.

% of respondents

Inc.

All

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11 P.P.12 P.P. 16 P.P.

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24%35%

28%40%

30%46%

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Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1

Actual purchase

driver2

Declared Value1


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~25% of luxury brands at risk of losing exclusivity1

25% of luxury brands at risk of losing exclusivity

"Which are the brands you think are losing exclusivity?"

15% 25%

% of top brands analyzed

d.

10%

Inc.

All

right

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100%

75%

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Brands risking to lose exclusivity3

Brands not at riskBrands already losing exclusivity2

Total brand1


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1. Analysis on top brands included in the survey with at least 200 respondents purchasing their products 2.Brands losing exclusivity: brands with at least 100 respondents declaring that the brand is losing exclusivity 3. Brands with 50 to 100 respondents declaring that the brand is losing exclusivity Note: for the entire analysis considered only brands with at least 200 respondents purchasing their products: ~100 brandsSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

What it will take to win Luxury ConsumersWhat it will take to win Luxury Consumers1 2

"Made In" still rocks

3

Made In still rocks

The Advocacy era

d.

4Man: what a surprise

The Advocacy era

Inc.

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Intrinsic values rebound 5



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"Made In" rocks in all geographies with emerging markets the most sensitive

2

markets the most sensitive"Do you check where luxury products you buy are made in?"

No

% of respondents

d.

No

Avg. 78%

Inc.

All

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Yes 87%

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71%

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27Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

"Made In Italy" outperforms "Made In France" and is first for all categories except watches & cars

2

is first for all categories except watches & cars

% over "Made In" respondents

"Which country of manufacturing do you consider the best for Luxury?"

40

60

~3x

% over Made In respondents

~5x~3x

d.

20

40

44

17

Inc.

All

right

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0 91417

"Made in" "Made in" Ranking "Made in" "Made in"

ton

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Italy France

#1

#1

#2

#2

Clothing

Accessories1

RankingGermany

#4

#4

Switzerland

#8

#7

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#1

#2

#2

Accessories

Jewelry

Watches #2 #4

#4

#4

#3#1

#3

#7


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Cars #2 #5

Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)Note: 1. Accessories include handbags, shoes and sunglasses

#1#8

"Made In Italy" outperforms "Made In France" from US to Far East; China and Brazil where closer

2

US to Far East; China and Brazil where closer"Which country of manufacturing do you consider the best for Personal Luxury1?"

"Made In France""Made In Italy" % of respondents1

d.+4 2x

+7.7x

1 2+2.4x

+2.6x+4.8x+5.9x

Inc.

All

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63%68%60%61%

+4.2x

1.4x

1.2x

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8%

63%

12%

49%

24%34%38%

47%

11%21%

51%

24%

60%61%

13%

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t8%

US Citizen

12%

ChineseGerman

11%

JapaneseSouth Korean

BritishRussian Brazilian

"Made in Italy" clear winner Close competition


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1. % over "Made In" respondents with focus on Personal Luxury including handbags, shoes and clothing Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

"Made in Italy" clear winner Close competition



3

Made In still rocks

The Advocacy era

d.


The Advocacy era

Inc.

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Word of Mouth is a key influence lever3

Word of Mouth is a key influence lever

"Which of the following has an impact on your purchase decision?"

Different WoM influence across markets

W M ( h i l)S i l di

% of respondents

d.Store windows 39%

WoM &Social M.2 44%32% 11%

Magazines1 50%

45%46%48%

61%

14%

WoM (physical)Social media

A 44%

Inc.

All

right

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TV & Movies 24%

Brands websites 34%

Store windows 39%9%

8% 9%11%

38%

12%

38%

15%

40%

12%

43%44%45%46%

17%

Average 44%

ton

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Events 20%

Invitations 22%9%

26%

26%

15%

28%32%35%37%29%

39%48%

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Seen wore 13%

Celebrities 20% 17%26%22%

28%


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1 Including fashion, lifestyle and other magazines and newspapers 2. Respondent influenced by Social media and other Websites but not by physical Word of MouthNote: multiple choices possible; Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

2 out of 3 luxury Consumers are active advocates. Quality and design key to activate them

3

Quality and design key to activate them" Please indicate the reason why you have recommended

this brand"" Have you recommended a brand

in the last 12 months?"

% of Advocates respondents

d.

28%Non

advocatesSuperior style/design 31%

Superior quality1 38%

Inc.

All

right

s re

serv

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41%Advocates

when prompted Superior value for money 19%

Admired when wearing it 21%

ton

Con

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, prompted72%

Wide assortment of products 15%

Identification with this brand 16%

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31%Advocatesspontaneously

Wide assortment of products 15%

15%Excellent service


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Luxury consumers

Omni-media key to stay closer to a Consumer who has multiple points of influence

3

who has multiple points of influence"Which of the following usually has an impact on your purchase decision?"

USTotal Japan BrazilRussia China S. KoreaEU 41

d.Word of Mouth & 44

Magazines 50

% over respondents

40

48 49

48 26

41

43

51

61

65

44

50

46

50

Inc.

All

right

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serv

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Brands websites 34

Store Browsing 39Social Media 44

30

44

40

40

48

34 35

44

26

37

38

43

46

30

61

16

34

44

46

29

46

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roup

,

22

Brands websites

24

Invitations

TV & Movies

34

26

20

30

27

16

34

17

16

35

27

23

37

15

33

46

16

23

16

20

52

46

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20Celebrities

Events 20 18

12

13

13 11

11

24

32

42

27

25

12

33

30


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Note: multiple answer possible; 1. IT, FR, DE, UKSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Seen wore 13 13 21 7 12 10 17 9



3

Made In still rocks

The Advocacy era

d.


The Advocacy era

Inc.

All

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6



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Men over-proportionally contributing to future growth also expanding into woman categories

4

growth also expanding into woman categories

Total Emerging marketsMature markets

"Which was your last purchase for yourself 1? "

Total

% of man respondents1

Emerging marketsMature markets

d.

Today10 Years

ago

Inc.

All

right

s re

serv

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9077 80

67 69 72 80 Other

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Con

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917109

HandbagsJewelry3

11 67

5 475

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15 2111 10811917

P&Cg

57102

Total Jewelry2, Handbags, P&C

23% 20% 28%33% 20%31%10%


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1. Excluding gifts and purchases explicitly required by others; 2. Total of Jewelry, handbags and P&C 3. Watches excludedSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

+13 P.P.

Gift represents ~30% of core luxury spend:7 gifts out of 10 made by men

4

7 gifts out of 10 made by men

"Who was the recipient of your last purchase?"o as t e ec p e t o you ast pu c ase

Last purchase

% of total respondents on last purchase

Gift by typeGift by gender

of giver

d.

p y yp

Business19% Women

31%

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Self Purchase72%

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Best gentleman are in S. Korea, Russia and UK4

Best gentleman are in S. Korea, Russia and UKMen's gift by country1

Business

4%50

60

% men's gifts over last purchase1

Business gift sudden shrink in China due to

ti ti li i

LeisureBusiness

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50

2%

anti-corruption policies

A 36%

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9%3%

3%

4%

4%

8%

20

30

2%

49%

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32%26%

33%29%

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JapanChinaFranceBrazilUSItalyUKRussia


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1 Includes gift for personal and for business reasonsSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)



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50% of luxury spending made out of the home country

5

home country

"How much have you spent out of your home country in last 12 months?"

% of total luxury expenditure

d.Avg

Inc.

All

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39%43%51%52%54%43% 32%41%2

Avg. 45%

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(K€/Year1)(cars excluded)

4.1 4.06.8 2.32.1 5.7 3.5


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1. Average spend abroad of a single Consumer per year. Includes all respondents ; 2. Mainly within Europe Note: EU includes Italy, France, UK and GermanySource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Spend abroadSpend in home country

Opportunity driving spend abroad for emerging countries. EU & US citizen looking for experience

5

countries. EU & US citizen looking for experience

Emerging Avg EU

"What is your main reason for buying outside your home country?"

Emerging countries

L i th

% of respondents spending abroad 50% or more of total luxury expenditure

Avg. EU country1USJapan

d.

Broader selection(items & brands) 41%

Lower prices than home country 42%

23%

32%

24%

27%

26%

45%

Inc.

All

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Tax refunds advantage 21%

Prefer to buy in the country of origin of the brand 25%

( )

15%

20%

21%

22%24%

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M f ti h t lli 25%

It’s part of travelling experience 37%

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55%

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Enjoy superior customer experience 23%

More free time when travelling 25% 44%

16%19%

32%

15%

26%


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Note: 1. IT, FR, DE, UKSource:BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Opportunity driven reasons Experience driven reasons

Brands need to be known before to get on the shopping list of luxury globetrotters

5

shopping list of luxury globetrotters

Brazil South KoreaRussiaChina Japan

" When you are abroad, how do you select the brands to purchase? "

Brazil

% of respondents spending abroad 50% or more of total luxury expenditure

South KoreaRussiaChina Japan

Brands popular/ visible

d.

Brands I buy in m co ntr 35

Brands popular/ visible in my country 48

21

38

27

35

23

47

26

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Global Brands seen in medias 33

in my country

46 33 36 17

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Brands popular in visited countries 24

stores in visited countries

25 20 22 15


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1. Europe and US not included as significant part of their purchases abroad are on a regional baseSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Brand selected during travelBrand selected before traveling

Traditional hubs capture 70+% of luxury travelers but top European destinations losing share

5

but top European destinations losing share

"In which city have you bought in the past 12 months?"

"In which city do you plan to buy in the next 12 months?"past 12 months? next 12 months?

Excluding Consumers in their home country1Excluding Consumers in their home country1

d.

26%ParisSingapore72%

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24%Milan Moscow

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22%London

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17%Hong Kong

Paris, London & NY


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17%Hong-Kong

Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Milan



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DOS and Department Stores confirmed as key shopping destinations. Online already relevant

6

shopping destinations. Online already relevant "Where have you mainly purchased your luxury goods in the past 12 months?"

USTotal Japan BrazilRussia China S. KoreaEU 41

d.

Dep. store / Malls 27 22

% over respondents

36 33 26 32 35 21

Inc.

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D t f 15

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14

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6

18

15

25

17

25

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7Off-price

Online 15

8

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8

18

5

13

4

12

6

10

8

14

8

26


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Note: 1. IT, FR, DE, UKSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

7Off price outlet 8 8 5 4 6 8 8

DOS: one size does not fit all6

DOS: one size does not fit all

EmergingMature

"Which characteristics should your ideal store have?"

Small / Intimate Large

Emergingmarketsmarkets

d.

Specialized per category

Multiple categories

Inc.

All

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Located in most excl. areas

Up-coming trendy locations

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Limited digital in store

Immersive digital exp.

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From my International

Sales assistant

Full support

Light support

Sales assistant


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country International


Brandtemple

VIP Room

Mature markets recipe: intimate experience for senior, large flagship for younger generations

6

senior, large flagship for younger generations"Which characteristics should your ideal store have?"

Gen Y & Gen. Z

Silver & Baby Boomers Gen. X


d.


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Emerging markets recipe: high consistency on store preferences, but on sales staff support

6

store preferences, but on sales staff support"Which characteristics should your ideal store have?"

Gen Y & Gen. Z

Silver & Baby Boomers Gen. X


d.


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Use of digital as an information source different across generations

7

different across generationsWhy do you use digital beyond purchasing?

Price &

% of respondents2 Senior generations

d.15% 14%67% 60%

42% 35% 34%

Access to brand content

Price and products comparison

Products

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9% 11% 11%12%

17%19% 20%

11%9%

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Follow / influence trends

Interaction with brand (support, dialogue, recognition)

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G ti Z

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G ti Y

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Generation Y(21-35 years)

Generation X(36-50 years)

Baby boomer(51-67 years)

Silver(67+ years)

Younger generations


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Note: Respondents purchasing Online or Researching Online and Purchasing Offline 2. Up to 2 answers possible, index value representedSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

E-commerce key in US and Brazil with mobile commerce gaining share

7

commerce gaining share"Which device did you use to purchase online?"

15

% of respondents pure online buyers (purchasing online and researching online)1

d.

2%10 9%

11%11%

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5% 2%1%

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7%8%9%

Average 7%

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5% 4% 3% 4% 3% 2%

1% 2% 1%1%

1%

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Laptop

Smartphone & Tablet

3%4%

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Laptop

ChinaRussiaFranceItalyJapanSouth Korea

UKBrazilUS


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1. Does not include respondents purchasing online that went in a store to see the product before purchasing itSource: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

Channels are blurring with online influencing over 50% of total luxury purchases

7

over 50% of total luxury purchases"Where have you bought the last item purchased? Where have you researched it?"

53%% of last purchase for each respondent

100

d.

60

80 38

8

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100

20

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Purchased Offline StorePurchased Online


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Emerging markets the most into immersive digital experience, mature markets less interested in

7

experience, mature markets less interested in"Should your ideal store have limited or immersive in-store digital experience?"

18 24 28 2434 3531 Limited digital

% over respondents

d.

28 34 37 39 39 36 35

25

31 Limited digital in store

Inc.

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6955 53 46 4444

Indifferent

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, 46 44 37 35 33 29 2844

JapanUKFranceUSItalySouthBrazilRussiaChina

Immersive digital in store

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Augmented reality Digital sales supp.• Pick-up • Share• Archive• ....

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What's in for you?


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The genesis of segments: From the "crowded" world of luxury to 12 segments

Absolute Luxurer "Luxury is my commodity" Status Seeker "I show then I exist"

world of luxury to 12 segments

y

Megacitier "The world is my city" #LITTLEPRINCE "I am to cool for school"gm

ents

d.

Experiencer "Luxury is real only when shared"

SocialWearer "Green carpet"

loba

l seg

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Fashionista "In fashion I trust" Classpirational "I saw it on my boss"

G

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TimelessProper "Fashion passes, style remains"

OmniGifter "Oh darling"

Gen

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L I "Well I can but do Ri h U t t "Luxury I am

G spnt

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Luxe Immune Well, I can, but do I want?"

Rich Upstarter x ycoming"

Cou

nsp

ec

8 Global segments accounting for 80% of Core luxury market, 3 of them for 50%+luxury market, 3 of them for 50%

Country specific

Gender specificGlobal segments (gender / geography balanced)

d.

Absolute luxurer Megacitier Experien

cer Fashionista Status Seeker

# Little Prince

SocialWearer

Classpirational

TimelessProper

OmniGifter

LuxeImmune

RichUpstarter

2.1 2.3 2.7 2.7 2.2 1.5 0.7 3.1 2.5 2.0 1.5 1.3(M)nt

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ed2.1 2.3 2.7 2.7 2.2 1.5 0.7 3.1 2.5 2.0 1.5 1.3

8% 9% 11% 11% 9% 6% 3% 13% 10% 8% 6% 6%

(M)

(%)Segm

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29 17 12 8 8 10 14 3 8 10 4 4

61 38 33 21 16 15 10 10 21 19 6 5

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24% 15% 13% 8% 6% 6% 4% 4% 8% 8% 2% 2%

(Bn€)

(%)Cur

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e


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1.Does not include cars Source: BCG 2013 specific survey (10.000 core luxury Consumers in 10 countries)

counting for 50%+ of lux. market

Are you able to follow your Consumers across their lifecycle?their lifecycle?

• Luxury becomes like breathing, spend increase

Absolute Luxurer

Luxury Spend Megacitier

• Reduced materialism and

b eat g, spe d c ease• Exclusivity the key driver

d.E i

Reduced materialism and interest in personal luxury

• Sharing becomes the priority

Inc.

All

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AverageExperiencer

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Fashionista

#LITTLE PRINCE• Strong detachment and

low interest into luxury• Reduced spend

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Age20-30s 30-40s 40-50s

LuxeImmune

educed spe d


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g

Most likely Less likely


In the US, most relevant segments are the Experiencer and the Luxe-ImmuneExperiencer and the Luxe Immune

Experiencer 16%How to reach them

TimelessProper 13%

Luxe-Immune 15%

Experiencer 16%

19

45Magazines

TV & Movies

% of respondents Avg

50%

24%

d.

Fashionista 10%

OmniGifter 13%

45

43

25

Store

WoM &Social media

Celebs & Events 34%

44%

39%

Inc.

All

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Status Seeker 7%

Classpirational 7%

Absolute luxurer 8% 22Special events

What they buy

22%

ton

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#LITTLEPRINCE 4%

Megacitier 5%

Status Seeker 7%% of respondents

82

68Clothing

Accessories

Avg

68%

84%

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Rich Upstarter 0%

SocialWearer 2%

58

64

55

82Accessories

Food & Wine

Hard luxury

P&C

%

54%

61%

45%


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70

58

Vacations

Food & Wine

48%

45%

In the EU, most relevant segments are the Absolute Luxurer and the ExperiencerAbsolute Luxurer and the Experiencer

Absolute luxurer 16%How to reach them

Fashionista 12%

Experiencer 15%

Absolute luxurer 16%

26

51

TV & Movies

Magazines


50%

24%

d.

TimelessProper 11%

OmniGifter 11%

36

46

38

Store

WoM &Social media

Celebs & Events 34%

44%

39%

Inc.

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Megacitier 6%

Status Seeker 7%

Classpirational 9% 30Special events

What they buy

22%

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#LITTLEPRINCE 5%

Luxe-Immune 6%

Megacitier 6%% of respondents

94

87

Accessories

Clothing

Avg

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84%

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Rich Upstarter 0

SocialWearer 3%

70

80

71

94

Food & Wine

Hard luxury

P&C

Accessories %

54%

61%

45%


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48%87

70Food & Wine

Vacations

45%

In China, most relevant segments are the Fashionista and the Rich UpstarterFashionista and the Rich Upstarter

Fashionista 18%How to reach them

Megacitier 15%

Rich Upstarter

Fashionista 18%

17%

27

59

TV & Movies

Magazines


50%

24%

d.

Classpirational 10%

Status Seeker 11%

38

46

45

Store

WoM &Social media

Celebs & Events 34%

44%

39%

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#LITTLEPRINCE 4%

SocialWearer 5%

TimelessProper 7% 22Special events

What they buy

22%

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Experiencer 4%

OmniGifter 4%

#LITTLEPRINCE 4%

68%

% of respondents

85

71

Accessories

Clothing

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Luxe-Immune 0

Absolute luxurer 3%

40

59

59

85

Food & Wine

Hard luxury

P&C

Accessories 84%

54%

61%

45%


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42

40

Vacations

Food & Wine

48%

45%


Why now?




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What's in for you?


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So what's in for you?So what s in for you?

• 2 / 3 of the next decade growth will be organic (today markets, today stores)

Key take-

aways

• Consumer discontinuities will impact 100 €Bn industry investments.

• 380 M luxury Consumers to become 440; total market to increase by 150 €Bn of which 78 €Bn made by additional 10 million core luxury Consumers

d.

aways y y• Socio demos no longer predictive of core luxury Consumer behaviors: 12 unique

segments entering your stores with different expectations

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• Growth is there but there will be winners and losers. Actions required include a

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set of commercial lever– Retail: country and generation customization– Quality and Exclusivity as Brand life insurance

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action – Advocacy a key pillar of an effective Omni-media strategy– Digital: from brick to digital and back again

• "Made In Italy" an asset to build on for the long term growth


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• "Amazonization" of Brand assets: consumer knowledge will make the difference


Antonio AchillePartner and Managing Director - MilanPartner and Managing Director - Milan

Antonio Achille is a Partner and Managing Director in the Milan office. He is a leader of theConsumer & Retail practice of the firm, with a particular focus on Luxury Good and Fashion.

For 20 years, he has been advising National and International Groups on issues that includecorporate strategy, growth acceleration, clients strategic segmentation, organization redesignand Post Merger Integration. In the Luxury and Fashion sector his experience includes apparel,accessories, selective fragrances, jewelry/hard luxury and experiential luxury. The geographicalscope of his work includes most of the developed and emerging key luxury markets (Europe,North America, Greater China, Turkey, Korea, Middle East ….).

He has developed an extensive knowledge on the Global Luxury Consumer and he is responsiblefor the database that provides a comprehensive view on over 40.000 consumers from 20countries, developed in cooperation with Altagamma, the trade association for the Italian luxuryindustry. The actionable insights based on the depth analysis of this database are presented aty g p y pthe event “True-Luxury Global Consumer Insight”.

In addition he chairs the annual Luxury Summit, one of the most valued discussion forum for thesector He is also member of the Scientific Committee of one the first Italian master on Luxurysector. He is also member of the Scientific Committee of one the first Italian master on Luxury.Antonio is extensively quoted, as Luxury and Consumer expert, in Italian and Internationalmedia, such as "Il sole 24 ore", "La Repubblica", "Il Corriere della Sera", CNBC,FashionIllustrated,…

62Antonio Achille altagamma.pptx

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.

About BCG and its Luxury Fashion & Beauty practiceAbout BCG and its Luxury Fashion & Beauty practice

The Boston Consulting Group (BCG) is a global management consulting firm and the world’sl di d i b i t t W t ith li t f th i t bli d tleading 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 mostcritical challenges, and transform their enterprises.

O t i d h bi d i i ht i t th d i f i d k t

d.

Our customized approach combines deep insight into the dynamics of companies and marketswith close collaboration at all levels of the client organization. This ensures that our clientsachieve sustainable competitive advantage, build more capable organizations, and securelasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries.

Inc.

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n C

onsu

lting

Gro

up,

Within the Firm, The Luxury, Fashion and Beauty practice, with more that 200 expertsworldwide, advises Brands and Retail bringing together the experience of its centres ofcompetence located in all key must be geographies for the sector: Milan, Ney York, Paris,Shanghai, Hong Kong and Tokyo.

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BCG Luxury, Fashion and Beauty team has a deep and relevant experience driving profitablegrowth with leading Brands and Retail companies, from strategy to marketing and operations,and a unique point of view on consumer segmentation.

20140124 Public Slides SENT.pptx

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BCG contactsBCG contacts

For a copy of BCG "True-Luxury Global Consumer Insight" or to schedule an interview with Antonio

Achille, please contact:

d.INTERNATIONAL PRESS:

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ITALIAN PRESS:

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• Francesco Guidara email: [email protected] or +39.02.65599704• Marco Micheli email: [email protected] or +39.02.65599216

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the luxury global consumer lnsight

Business

luxury segments

hard luxury

consumer discontinuities

pptxcopyrigh1organic

decade growthorganic

personal luxury apparel

study unique

yearindustry investments