The situation in the luxury world today, as in the past several months, is governed by economic uncertainty. This involves the currently unstable U.S. dollar, the euro zone debt crisis, and subsequent fears of a considerable slowdown in the Chinese market growth considered as one of the most rapidly developing and promising world markets.
Hence, strengthening the existing positions and holding stronger international sway across major markets is viewed as a sort of cure-all remedy by luxury manufacturers in the current difficult time.
“It becomes obvious that the major luxury brands with the most established presence in Asia (China, South Korea, Vietnam) and South America (Brazil, Argentina) are likely to be less prone to the effects of this second and continued wave of the international crisis and these are a handful of brands: Louis Vuitton, Gucci, Ermenegildo Zegna, Salvatore Ferragamo, Burberry and Prada,” www.cpp-luxury.com says.
Despite the recent shocks, incredible movement is observed on the Japanese market. Japan’s luxury market is set to grow for the first time in four years. Japan’s luxury market will reach about 18.5 billion euro ($24.8 billion), www.bloomberg.com points out.
Online sales of luxury goods are expected to grow at a staggering rate of 20% a year, reaching 11 billion euros by 2015. These are the main findings of the Digital Luxury Experience - Altagamma Observatory.
According to the Bain & Co report, the Luxury Goods Worldwide Market Study, authored by Claudia D’Arpizio, watches and jewellery sales in 2011 are forecast to grow by 18% as more and more consumers are migrating from unbranded luxury purchases to branded purchases.
The report also noted a shift in the retail distribution of luxury goods from wholesale channels to own-store boutiques. It forecasts a 14% growth for brand-owned stores, which is 50% higher than the growth forecast for third-party retailers, and estimates that own-store boutiques now represent 30% of luxury sales worldwide.
According to the Global Wealth Report 2011, the world's wealth will grow by 50% in 4 years; the United States will retain their top spot with $81,000 billion in 2016, while China will have to leave the second position with assets of 39,000 billion dollars.
For many luxury companies October is the time to draw up regular quarterly reports. Almost all major brands posted good results and expressed strong confidence in a positive momentum for their activity until the end of the year.
LVMH, the French luxury giant, reported a 15 percent rise in like-for-like sales which reached 6.01 billion euros ($8.27 billion) in the three months ending on September 30, beating the average estimate in a Reuters poll of 10 analysts of 5.8 billion euros.
CM-CIC analyst Merav Atlani wrote in a note that the sales figures beat his expectations thanks in part to Louis Vuitton's growth and the strength of watch brands Tag Heuer and Hublot.
The LVMH activity during the quarter was quite eventful. One of the highlights was the September launch of a trading house in Singapore. In October, the company arranged Les Journees Particulieres, which was a two-day open-house event, for the first time ever, giving public access to 25 of its most prestigious heritage sites and workshops, including the haute couture salons of Christian Dior at 30 avenue Montaigne in Paris, wine cellars Moët & Chandon in Bordeaux and Champagne and 231-year-old jewellery brand Chaumet situated on Place Vendôme.
The other leader, PPR Group, has reported sales fetching $3.9 billion euros in the third quarter, up 7% versus 2010 in all geographic areas.
Gucci indicated there was demand growth in Western Europe going up by 16%, and by 9% in Japan; Asia-Pacific accounted for a 22% rise that finally reached 37% of the total revenue netted by Gucci in the third quarter. China demonstrated the highest level of growth reaching 37%.
François-Henri Pinault, Chairman and CEO of PPR, noted: "We are confident in the strength of our brands and the significant long-term potential of their markets."
Record sales
A fancy vivid yellow diamond, weighing in approximately 32.77 carats, was sold at Christie’s New York auction held in October. The price reached $201,000 per carat, while the Gemological Institute of America (GIA) ranked this pear-shaped diamond as one of the rarest gemstones in its class.
Virginia Salem, New York director of jewellery at Bonhams commented the latest sales run by this auctioneer: “Jade, sapphire and diamond lots were star performers and we also witnessed a growing appreciation for unusual signed pieces that resulted in competitive bidding that doubled and even tripled the pre-sale estimates.” The auction secured proceeds of more than $3.5 million.
Swatch Group expects record sales in 2011 coming close to $7.9 billion. Exports of Swiss watches rose 21 percent in September to $2 billion, according to the Swiss Federal Customs Association.
Vacheron Constantin, a watch-making unit of Richemont Group, plans to invest 100 million Swiss francs ($110 million) in its Swiss manufacturing over the next four to five years and double the number of employees globally between now and 2020 to about 1,300 workers, Le Temps reported in an interview with Juan-Carlos Torres, the head of the brand. Annually, production of mechanical timepieces will increase compared with 17,000 to 18,000 this year to 30,000 in the future.
Swiss luxury watchmaker Jaeger-LeCoultre has decided to set up its own subsidiary - Richemont India Pvt Ltd, as a precursor to opening more exclusive stores in India. Currently, the Jaeger-LeCoultre goods are sold through 10 authorized dealers in India.
In turn, French luxury jeweler and watch manufacturer Cartier also plans to expand the niche on the Indian market by launching more 15 watches in the super luxury segment priced onwards €50,000. “India is a strategic market for us and we are looking to expand in many cities here. Our current focus is to have a better penetration in Mumbai, Chennai, Hyderabad, Chandigarh and Kolkata,” said Louis Ferla, brand manager for the Middle East and South Asia. “We make watches from a jeweler’s perspective. What makes us different is that we blend boldness with innovation and attention to details.”
New boutiques confirm the growth of demand
Swiss Chopard opened its first boutique in Bahrain designed by famous French architect Thierry Despont.
Vacheron Constantin presented its first store in New York, where the exclusive watchmaker will display its timepieces.
Swatch Group's Breguet brand and family-owned Patek Philippe recently opened stores in Bahnhofstrasse in Zurich. The Richemont's Piaget, Jaeger-LeCoultre, LVMH's Hublot and TAG Heuer brands are also looking for a shop and will follow soon.
Van Cleef & Arpels opened its third boutique in the Prince's Building, in Hong Kong, following the successful launch of new shops in Paris and New York.
Jewelry, unexpected art
German carmaker Maybach in collaboration with the Swiss brand of fine jewelry and watches, De Grisogono presented a special version of the 62S sedan with the rear center armrest refined by precious stones. De Grisogono and Maybach are working to propose new solutions to customize the car with diamonds and other precious stones, for example, on the steering wheel, gearshift and seats.
Computer Choppers has bid final farewell to Steve Jobs, the legendary founder of Apple, releasing a luxury version of MacBook Pro. The body of this notebook is entirely made of 24 carat gold, while its Apple logo is inlaid with diamonds. The golden MacBook will be available in three sizes with prices starting at $20,000.
L’Ulivo Bianco (White Olive Tree), a marble, platinum and diamond sculpture, estimated at several million euros by its insurance only is a masterpiece really and truly unprecedented in the history of art. Created by artist and theologian Agatino Cappella, World Diamond Group’s Artistic Director, in his search for purity, “L’Ulivo Bianco” consists of a hand-sculptured Carrara marble block representing a tree trunk, while its branches and leaves are made of 3 333 grams of platinum, the fruits of 3003 diamonds, 2503 marquise-cut (333 carats) and 500 Dluce cut (82 facet round cut to 33 carats). The diamond total weight is 366 carats.
This piece of art made by Italian masters will set off on a world tour as a symbol of peace and friendship between peoples.
Veronica Novoselova, Rough&Polished correspondent, from Italy
