“The varying impact of the financial turbulence on the consumption of luxury goods in 2012 is expected to be greatest in Western Europe, milder in North America, and irrelevant in South America and Asia,” says Armando Branchini, Executive Director of the Altagamma Foundation.
According to the chief executive officer of PPR Group, Francois-Henri Pinault, there's structural growth in Asian markets, and it's a certainty that for the next 10 years it will grow.
Yet the rising tide isn't limited to China. Luxury-goods groups also are casting an eye towards the next big countries such as Brazil and Indonesia, with their huge potential as consumers of high-end items.
Under a recent survey by the fashion brand Escada, Chinese consumer willingness to buy fakes has plummeted in recent years, from 31 percent in 2008 to only 12 percent in 2010. This means that Chinese consumers are turning more finicky.
But with China becoming such an important part of the global luxury market, as European consumption may slow this year, it pays to consider which luxury brands will benefit from a more brand-savvy, quality-minded Chinese consumer in 2012, noted Financial Times.
To find the clue which brands may benefit this year, it’s generally best to look at what’s happening in top-tier cities, since what happens there tends to spread inland after a few years.
Already, we’re seeing signs that top-tier consumers are losing some interest in rushing to Hong Kong to wait in line and fight with other tourist-shoppers for inventory that is often sold out. An ever increasing number of wealthier Chinese consumers are turning to less visible but still very much luxurious brands. They probably won’t cut back on their beloved Chanel or Gucci completely, but they’ll definitely broaden their horizons.
China’s booming luxury e-commerce market surpassed 10 billion yuan (US$1.59 billion) last year, a nearly 70 percent leap over 2010, according to a new study by iResearch.
Analyst Ding Jiaqi of iResearch told China News Weekly: “Current online luxury purchasing was confined to top-class brands such as Hermes, Gucci and Louis Vuitton. Many second- and third-tier brands are not yet being sold in China. The online selling would be the best channel for them.”
Despite reports that luxury e-commerce sites in China are finding it more difficult to attract venture capital, China Daily notes that one very positive statistic about the market is its young core demographic. According to iResearch, 80 percent of luxury online shoppers are under the age of 35, with those under the age of 24 accounting for 40 percent of purchases.
China’s retail market as a whole in 2012 and 2013 will grow at a rate of 14 percent, and luxury retail will continue to grow at an even higher rate of 20 percent over the same period, says Isabel Cavill, a senior retail analyst of Planet Retail.
And Irene Yu, a business analyst at China Market Research considers, that income from the sale of luxury goods shifting away from first-tier cities like Shanghai to second-tier and third-tier cities, like Chengdu, where incomes are rising and there is massive pent-up demand.
The men’s luxury goods market is also arousing concern. In recent time, there is a growing number of masculine buyers of luxury goods mostly in developing markets and manufacturers are trying to adapt to their requirements by opening boutiques focused only on the men’s world.
No wonder the latest moves on the field were made by such two major players as LVMH and PPR. The first one invested in Berluti, the existing luxury brand of men's shoes, whereas PPR acquired Brioni, a famous Italian tailor. However, men's watches occupy a major position.
At least judging by recent moves from two of fashion’s biggest players, PPR and LVMH. The first one has invested to the acting brand of the elite men's shoes Berluti, PPR acquired Italian tailor Brioni. However, the men's watches hold the first of leading position.
Nearly all major producers of luxury have demonstrated good results in the fourth quarter. LVMH posts a great vintage in 2011, revenue in the fourth quarter climbed 20 percent, annual group sales climbed 16 percent to 23.7 billion euros recorded 16% increase in revenue reaching €23.7 bn (this includes the integration of Bulgari). All businesses falling under the LVMH banner saw excellent growth in Europe, Asia and the United States. By division, growth was steady across the board. Just Louis Vuitton, the biggest brand of the group, brings in ?6 billion ($7.88 billion) a year in sales, according to analysts’ estimate.
PPR Annual Results shows an excellent year in 2011. Compared to the same period of 2010, total consolidated sales in the fourth quarter of 2011 grew by 11.2%. PPR is seeking 54 percent of revenue from retail by 2020 and will raise luxury prices this year without specifying by how much.
Despite Gucci’s Q4 12-percent gain, which disappointed analysts, the biggest PPR luxury division’s revenue in 2011 was a record-breaking $4.16 billion (up 19%) on a comparable basis. Gucci gets less than 50 percent of sales from tourists in Europe. The label will open 45 stores in 2012, of which about 20 will be in the Asia Pacific region, excluding Japan.
The Italian jewelry sector experienced a significant slowdown in late 2011 and 2012 promises to be a difficult year, especially on the domestic market because of weak sales. The country’s exports produced signs of greater optimism having increased from January to October by 12.8% mainly due to Switzerland, China, Germany and Turkey.
Spain's luxury market is kept afloat thanks to the huge influx of Chinese, Japanese and Russian tourists. Sales of local luxury brands rose by 25% last year totally netting 4.5 billion euros.
The continued political unrest and deepening financial crisis plunged Hungary's luxury market into chaos. Roberto Cavalli, Emporio Armani, Fidji (Christian Dior) are among the luxury stores which closed in 2011. Hungary has been the worst performing luxury market for Louis Vuitton, Gucci and Burberry in Central Europe for the past 2 years.
The Federation of the Swiss Watch Industry has presented a detailed report for 2011. In 12 months, 29.8 million watches were exported from Switzerland, which is the highest level since 1999 and well above the average figure of 25 million units a year over the past 10 years. Wristwatches accounted for the major share of exports, generating 94% of total sales. In value terms, gold watches recorded the highest increase at an uplift of 26.5%.
The top of three leaders among Swiss watch buyers in 2011 were Hong Kong (up 28.3%), U.S. (up 18.4%) and China (up 48.7%). European markets all registered below-average performances. The Federation said that it is confident about the prospects for 2012.
In honor of its 175th anniversary, Tiffany & Co unveils Rubedo metal, a new jeweler’s metal, the first such creation in Tiffany’s history. This unique alloy is lightweight yet strong, polishes to a smooth luster and is exceptionally flattering to the skin. Rubedo takes its place among the most beautiful metals in the world.
Morellato, the manufacturer of high-end jewelry, believes that East Asia holds the key into the future. With this, the jeweler started its expansionist plan. The company’s new flagship store was opened in Macao joining the other 40 stores in China already.
Roberto Coin, the pace-setting Italian jewelry designer, has opened his first-ever Canadian boutique in Vancouver, British Columbia. This will be his 9th boutique in North America. The boutique will feature some of the iconic collections of Roberto Coin, including the Cento Collection, featuring a unique 100 facet cut, almost doubling the traditional 57 facets of the brilliant cut.
Damiani wants to expand well in Asia and is preparing to open ten stores in China in the next two years. Speaking of the Asian markets Guido Damiani said: “The Asian markets today are the most effervescent.”
Diamond interior investment
At Baselworld, Hulchi Belluni and Claeys Verlichting presented ’Marilyn,’ a modern interpretation of the classical model of the bag chandelier. Chains of beads run in three tiers from the top of the lamp, down to the ring on which the bag shape is mounted. The outer strings are composed of black Swarovski® crystal, the middle layer consists of silvered Swarovski® crystal and the heart is formed by diamonds with a brilliant cut.
The entire chandelier is covered with 18.40 running metres of cut-diamonds. In total, it contains more than 257 600 diamonds 0.7 mm to 1.19 mm in size supplied by Barsamian Diamonds of Antwerp.
The price for diamond interior is about 2 200 000 Euro, part of it will be paid to the Charity Make-A-Wish Foundation, the largest wish-fulfilling organization in the world.
Veronica Novoselova, Rough&Polished correspondent in Italy
