2014 - Boston Consulting Group
True-Luxury Global Consumer Insight Antonio Achille, Partner & Managing Director Milan, January 22nd, 2015 True-Luxury Global Consumer Insight: 6 "W" questions addressed today Why now? What makes our study unique? Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Where will growth come from? What are the consumer trends shaping the industry? Which segments will drive growth? What will it take to capture growth in key categories? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 1 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Why now? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 2 Organic growth: 2 / 3 of next decade growth Last decade growth by component2 Upcoming decade growth by component2 20% 30% 20% 100% 40% 100% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 35% 10% 25% Traditional Emerging Markets1 markets 20% Price - Mix Volume Retail expansion Organic growth (LFL) 60% 40% Total growth Traditional Emerging markets1 markets Price - Mix Volume Total growth Retail expansion Organic growth . (LFL) 30% 70% 1. Europe (Italy, France, UK, Germany, Spain, Nordics), US and Japan; 2. Referrers to personal luxury (apparel, accessories, hard luxury, Perfume & Cosmetics) Note: Last decade Personal Luxury market CAGR growth ~5%; upcoming decade Personal Luxury market CAGR growth ~4% Source: Bernstein / BCG analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 3 - traffic + rent = decreasing store return 2005 2013 Traffic (#) ~ 57 K ~48 K Conversion rate (%) ~ 13% ~ 13% Clients (#) ~8K ~7 K Average ticket (€) ~500 € ~700 € Sales / store (M€) ~4.3 M€ ~4.9 M€ 21 K€ / sqm 25 K€ / sqm Sales / sqm x 3,8 Rent / sqm ~5,5 K€ / sqm Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Example of a 200 sqm luxury apparel store in Milan, via Montenapoleone x 2,9 ~8,5 K€ / sqm Note: Analysis performed on a subset of Personal Luxury Brands Source: Public data, Interviews with experts, Cushman & Wakefield Valuation report, BCG analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 4 The CONSUMER era +Brand +Retail '80s '90s '00s • Style & Design for elites • Temple of Desire P-Altagamma-317971-01-22Jan15-AAc-mil.pptx • The rise of Global Brands • Retail as part of Brand experience • "Real estate rush" +Consumer Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Design 2015 next decade • Consumer: engine of top line and margin growth 5 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. What makes our study unique? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 6 2015 Edition: What's new? 10.000+Top Luxury Consumers analyzed 10 luxury markets deep dived All luxury categories in scope Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Doubled sample yearly average spending: 10K€ 20K€ • 2K€ 5K€ yearly spend as entry point • 3.000+ luxury consumers spending yearly on avg. 44K€ in P&E luxury Consumer Segments as key lens to read market dynamics Category breakdowns P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 7 All luxury categories in scope Luxury market (€B,2014 retail value) Personal luxury (290 €B) Experiential luxury (465 €B) Cars & Yachts (350€B) Others (280 €B) 1,500 154 54 1,385 Arts Other2 Total 350 P&E 1 Market: 755 €B 1,000 72 500 121 67 41 49 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 354 62 61 0 Accessories Apparel Watches Perfumes Furnit& & ures Jewelry Cosmetics Food Hotel & Cars & Techno& Wine Exclusive Yachts logy vacations Covered by True-Luxury Global Consumer Insight 1.Personal and Experiential luxury 2. Including Private Jets, Art de la table, etc Note: Some numbers are rounded. Source: BCG 2014 specific survey, BCG-IPSOS market research P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 8 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Sounding board of WW leading Brands to ensure robustness and actionability of the insight 2015 additions P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 9 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Where will growth come from? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 10 Short term: Luxury Barometer® indicates rebound of confidence in 2015 vs. 2014 Short term "Do you expect to spend more or less on luxury products in the next 12 months?" % of respondents More (+20%) 33% 23% 37% Luxury Barometer®1 Same 43% Less (-20%) 24% 29% 24% 2013 2014 2015 9pp -5pp 13pp Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 48% 39% 1. Index calculated as percentage of customers who see growth in spend less the percentage who foresee a decrease in spend (Positive – Negative) . The index represents a proxy of the expected growth of spend in Luxury by Top Luxury consumers Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 11 Chinese, Brazilian and Americans luxury Consumers expecting brighter shopping days Short term 2015 Luxury Barometer®1 by Nationality (pp) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Spend More (+20%) Spend Less (-20%) 1. Index calculated percentage of customers who see growth in spend and subtract the percentage who foresee a decrease in spend. The numbers in the graph are in percentage points Note: Split in the graphic calculated as answer to question "Do you expect to spend more or less on luxury products in the next 12 months?" Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 12 Mid term Mid term: 390M Luxury Consumers... Cluster 2014 # (M) 20 k€ 10 k€ 5 k€ Beyond money 2 Ultra 4 Very high 9 Total Top Luxury 15 Top Aspirational 19 Aspirational 356 Total Luxury Consumers1 ~390 2021 Bn(€)1 # (M) Bn(€)1 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2 k€ 13 Mid term ...to become 465M in 2021 Cluster 2014 # (M) 20 k€ 10 k€ 5 k€ 2021 Bn(€)1 # (M) Beyond money 2 2 Ultra 4 5 Very high 9 11 Total Top Luxury 15 18 Top Aspirational 19 25 Aspirational 356 422 Total Luxury Consumers1 ~390 ~465 Bn(€)1 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2 k€ +75 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 14 Personal and Experiential luxury market today worth 755 Bn€... Cluster 20 k€ 10 k€ 5 k€ 2014 Mid term 2021 # (M) Bn(€)1 # (M) Beyond money 2 42 2 Ultra 4 84 5 Very high 9 94 11 Total Top Luxury 15 220 18 Top Aspirational 19 54 25 Aspirational 356 481 422 Total Luxury Consumers1 ~390 ~755 ~465 Bn(€)1 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2 k€ 15 Mid term ...to grow from today 755 to 1015 Bn€ in 2021 Cluster 20 k€ 10 k€ 5 k€ 2014 2021 # (M) Bn(€)1 # (M) Bn(€)1 Beyond money 2 42 2 73 Ultra 4 84 5 122 Very high 9 94 11 135 Total Top Luxury 15 220 18 330 Top Aspirational 19 54 25 76 Aspirational 356 481 422 609 Total Luxury Consumers1 ~390 ~755 ~465 ~1015 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2 k€ +260 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 16 18M Top Luxury consumers (4% of total) making 40% of total growth Cluster 10 k€ 5 k€ 2021 # (M) Bn(€)1 # (M) Bn(€)1 Beyond money 2 42 2 73 Ultra 4 84 5 122 Very high 9 94 11 135 Total Top Luxury 15 220 18 330 2 k€ +110 Top Aspirational 19 54 25 76 Aspirational 356 481 422 609 Total Luxury Consumers1 ~390 ~755 ~465 ~1015 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 20 k€ 2014 Mid term +260 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 17 ~450M Top Aspirational and Aspirational Lux. consumers generating remaining 150Bn€ Cluster 10 k€ 5 k€ 2021 # (M) Bn(€)1 # (M) Bn(€)1 Beyond money 2 42 2 73 Ultra 4 84 5 122 Very high 9 94 11 135 Total Top Luxury 15 220 18 330 2 k€ +110 Top Aspirational 19 54 25 76 Aspirational 356 481 422 609 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 20 k€ 2014 Mid term +150 Total Luxury Consumers1 ~390 ~755 ~465 ~1015 +260 1. Including Experiential and Personal luxury, excluding cars and Yachts Note: rounded numbers Source: BCG Analysis P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 18 US consumers confirmed as the main contributor to future growth Mid term P&E1 Luxury market growth by Nationality (€Bn) Top Luxury 450 +110€B 220 29 20 7 330 Others3 2021 6 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 300 49 ~55% 150 0 2014 Americans Chinese European2 Middle Eastern 1. Personal & Experiential Luxury market; 2. Italian, French, German, English 3. Including Japanese, S. Korean, Russian, Brazilian and RoW Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 19 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. What are the consumer trends shaping the industry? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 20 Global trends confirming their importance Confirmations Changes in Trajectory New Trends "Made in" still rocks: 80% of consumers actively check where products are "Made-In" Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. "Made in Italy" still rules: 1st preferred manufacturing country – Leadership in all categories but cars (1st Germany) and watches (1st Switzerland) Advocacy era continuing: 80% of consumers willing to become brand ambassador 53% of Luxury consumers spend made out of the home country – Drivers: convenience key for Emerging Markets; part of the journey experience for Mature Markets Exclusivity key for long term creation and not granted: 25% of luxury brands at risk of loosing exclusivity based on consumer declarations P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 21 Changes in trajectory Confirmations Changes in Trajectory New Trends Intro values still roaring with selective extro values rebound (from 27% to 34%) Digital growing importance with online influencing 62% vs. 53% of total luxury purchases Store windows losing relevance vs. online (from 39% to 32%): is store role changing? Omnichannel getting momentum, 75% of consumers asking for it Brands website preferred e-commerce channel: websites quality and customer care more important than price P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 22 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Word of Mouth becoming 1st influence lever and increasingly digitally enhanced Values Intro values still roaring "What is luxury to you?" % of respondents1 24% 29% 30% 34% 38% 39% 40% 41% 44% 2014: 66% • Adorned aesthetics • Brand visibility • Customization • Being Cool/Sexy Intro values 76% 2013 Intro Value Avg. 73% 76% 73% 71% 83% 70% 83% 66% 62% 61% 60% 59% 56% 72% 69% 69% 61% 75% 69% • • • • Quality Exclusivity Craftsmanship Timeless 1. Respondents were asked to rank the top 3 values: the graph represent the value ranked as the most important Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 23 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 24% Extro values Intro values still roaring Selective rebound of Extro values? Values "What is luxury to you?" % of respondents1 24% 29% 30% 34% 38% 39% 40% 41% 44% 2014: 66% • Adorned aesthetics • Brand visibility • Customization • Being Cool/Sexy Intro values 76% 2013 Intro Value Avg. 73% 76% 73% 71% 83% 70% 83% 66% 62% 61% 60% 59% 56% 72% 69% 69% 61% 75% 69% • • • • Quality Exclusivity Craftsmanship Timeless 1. Respondents were asked to rank the top 3 values: the graph represent the value ranked as the most important Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 24 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 24% Extro values Extro values rebound stronger for younger generations Values "What is luxury to you?" 40% 60% Gen. Z & Y (18-35 yr.) % of respondents1 29% 71% Gen. X (36-50 yr.) 17% 11% Overall Avg. 34% 38% 83% 62% Baby B. & Silver (51+ yr.) Gen. Z & Y (18-35 yr.) Overall Avg. 34% 25% 75% Gen. X (36-50 yr.) 89% Baby B. & Silver (51+ yr.) Extro Values 1. Respondents were asked to rank the top 3 values: the graph represent the value ranked as the most important Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Intro Values 25 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondents1 Values Are we at the edge of the next value shift? 60's 70's 80's 90's 00's 10's ? Pop, beatnick Disco, funky New wave R&B, Rap People Electronic Synth music ? Music Jazz, Pop Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Fashion New Emancipation Woodstock Eccentricity Eclectic Minimalism Outrageous Elegance Future P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 26 Word of Mouth: 1st influence lever, overcoming magazines WoM "Which of the following has an impact on your purchase decision?" % of respondents 2013 50% Magazines Different WoM influence across nationalities 2014 WoM Social Media & Blogs 29% 20% 49% Physical 58% Store windows Brand websites Magazines2 39% Events 32% 34% 32% 24% Tailored offers 31% Tailored offers 22% Brand websites 30% Events 20% TV & Movies Seen Worn 53% 52% 20% Celebrities 13% Seen Wore 52% 49% 17% 18% Store windows TV & Movies Celebrities 55% 39% 26% 33% 47% 46% 41% 21% 14% 24% 17% Avg. 49% 34% 19% 10% 41% 35% 26% 22% 26% 30% 33% 25% 30% 22% 23% 23% 19% 1 Includes WoM, Social Media and Other Social blogs 2. Editorials and Commercial in Magazines Note: multiple choices possible, out of top 3 ranks Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 27 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. WoM1 11% 43% 32% Social media and blogs the real engine of Word of Mouth growth WoM "Which of the following has an impact on your purchase decision?" Δpp '13-'14 +6pp 49% 8% Blogs +3pp 6% 12% Social Media +6pp 32% 29% Physical (3pp) 2013 2014 0.3 0.7 43% WoM digitalization index1 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 5% 1. WoM Digitalization index: calculated as Social Media & Blogs influence vs. WoM physical influence Note: multiple choices possible, out of top 3 ranks Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 28 WoM From "digital native" to "active digital native"? "Thinking to the communication opportunities offered by digital, which ones do you value the most?" % of respondents 48% 53% 53% 54% 60% 61% 63% 63% 74% • Gather product info • Access brand content • Price & Product comparison Two-ways Avg. 42% 52% 52% 47% 47% 46% 40% 39% 37% 37% 26% • Opinion sharing • Feedback sharing • Dialogue with brands • Influence trends Note: multiple choices possible Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 29 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 48% One way >50% sales digital influenced already in past year edition... Digital "Where have you bought the last item purchased? Where have you researched it?" % of last purchase for each respondent 53% 100 7 8 80 38 60 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 100 40 20 47 0 Pure in Store Researched Online Purchased Offline Showrooming Pure Online Total (viewed in store, purchased on line) Omnichannel Source: BCG 2013 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 30 ...channels are further blurring: 62% of sales digitally influenced in 2014 Digital "Where have you bought the last item purchased? Where have you researched it?" % of last purchase for each respondent 53% 62% 100 8 9 80 45 60 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 100 40 20 38 0 Pure in Store Researched Online Purchased Offline Showrooming Pure Online Total (viewed in store, purchased on line) Omnichannel Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 31 Digital "Pure store" no longer the first channel for sales "Where have you bought the last item purchased? Where have you researched it?" % of last purchase for each respondent 62% 100 7 8 89 80 38 45 60 40 20 47 38 0 Pure in Store Researched Online Purchased Offline Showrooming Pure Online Total (viewed in store, purchased on line) Omnichannel 2013 2014 Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 32 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 100 Store: from "temple of desire" to "logistic terminal"? "Do you research product online before buying them?" % of positive respondent Digital "Do Store Windows & in Store Browsing have impact on purchase decision?" % of positive respondent +7pp 45% 38% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. -7pp 39% 32% 2013 2014 2013 2014 Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 33 Digital 3 out of 4 consumers asking for omnichannel "How important is for you that a brand can be reached through different channels?" Omnichannel importance across nationalities % of respondents Somehow important 25% 90% 85% 81% 81% 78% 78% 75% Avg. 75% 71% 41% 44% 38% 43% 48% 34% 42% 57% 27% 33% 45% 75% 31% 49% Not negotiable/ Very Important 37% 41% 38% 43% 33% 33% 49% 36% 37% 26% 11% Total Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 34 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Not Important Is there a killer app for omnichannel? Delivery service and same promo & rewards key Digital "What do you expect when dealing with multiple channels?" Total EU 41 32 32 Integrated delivery service Americans Japanese S. Korean 30 32 31 Same promotions & rewards 24 25 24 16 24 Consistend brand image 21 22 25 21 27 Integrated CRM 13 13 12 14 8 Same product assortment 10 9 9 16 11 Chinese 31 25 Brazilians Russians 31 35 22 26 18 19 21 17 17 10 10 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondents 9 10 1. IT, FR, DE, UK Source: BCG 2014 specific survey (10.000 core luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 35 For online shoppers brands website 1st option; experience more important than price "Which kind of online store did you buy the product from?" "Which factors are more important when buying on line?" % of respondent Brand website Website navigability 37% 1.9x Online marketplace 20% Dept. store website 18% Luxury-specialized etailers 16% Online customer care quality Brand carried Payments accepted Free return Others kind of websites (travels, restaurant, ...) 8% 2% 31% Exclusive collections Price discount 29% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondent Flash sales sites Digital 25% 24% 22% 21% 20% Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 36 New trends Confirmations Changes in Trajectory New Trends Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Sustainability is happening, 13% importance as value – +5 pp vs. 2013 led by Europeans and Americans Are US and UK self legitimating as "Made" in countries for Luxury? Dynamism in fashion hubs: New York City growing, Milan fading – Dubai, Singapore and Los Angels legitimating as fashion hubs? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 37 Sustainability is happening: will declared values impact behaviors? Sustainability "What is luxury to you?" % over respondents 2013 18% +5pp 2014 15% 15% 13% 13% 10% 9% 8% Δ 2013-2014 (pp) 8% 6% 5% Total 10% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 13% 4% Europe Brazil US +13pp - +7pp +4pp Russia China +6pp -2pp Multiple answer possible Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 38 Sustainability Still a long way to go but gap is closing "What is luxury to you?" % of respondents Δ 2013-2014 48% Exclusivity 32% Crasftsmanship 26% Timeless 24% Brand visibility 21% Cool & Sexy +1pp 13% +5pp Sustainability (2013) - +1pp 15% Sustainability (2014) +2pp +3pp 16% Adorned Aesthetics - +4pp 17% Customization -4pp Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Craftsmanship/quality 8% +5pp Multiple answer possible Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 39 Are US and UK self legitimating as "Made in" countries? "Which country of manufacturing do you consider the best for Luxury?" % of respondents selecting US Made in Who is saying that? On which categories? ~33% Apparel ~25% ~17% Jewelry ~17% ~10% Handbags ~13% ~25% Apparel ~22% ~12% Handbags ~18% ~12% Jewelry ~16% +3pp 2013 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 10% 7% 2014 % of respondents selecting UK +3pp 4% 2013 7% 2014 Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 40 Spend Abroad Dynamism in fashion hubs with New York rising and Milan fading "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Paris 1 Paris 1 Paris 1 Milan 2 New-York 2 New-York 2 London 3 London 3 London 3 New-York 4 Hong-Kong 4 Milan 4 Hong-Kong 5 Milan 5 Hong-Kong 5 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 41 Spend Abroad Dynamism in fashion hubs with New York rising and Milan fading "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Paris 1 Paris 1 Paris 1 Milan 2 New-York 2 New-York 2 London 3 London 3 London 3 New-York 4 Hong-Kong 4 Milan 4 Hong-Kong 5 Milan 5 Hong-Kong 5 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 42 Spend Abroad Dynamism in fashion hubs with New York rising and Milan fading "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Paris 1 Paris 1 Paris 1 Milan 2 New-York 2 New-York 2 London 3 London 3 London 3 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 Expo effect? New-York 4 Hong-Kong 4 Milan 4 Hong-Kong 5 Milan 5 Hong-Kong 5 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 43 Among the group of followers Dubai, Singapore and Los Angels gaining momentum... Spend Abroad "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Rome 6 Dubai 6 Dubai 6 Dubai 7 Los Angeles 7 Los Angeles 7 Miami 8 Rome 8 Rome 8 Los Angeles 9 Singapore 9 Singapore 9 Singapore 10 Miami 10 Miami 10 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 44 Among the group of followers Dubai, Singapore and Los Angels gaining momentum... Spend Abroad "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Rome 6 Dubai 6 Dubai 6 Dubai 7 Los Angeles 7 Los Angeles 7 Miami 8 Rome 8 Rome 8 Los Angeles 9 Singapore 9 Singapore 9 Singapore 10 Miami 10 Miami 10 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 45 Spend Abroad ... Rome and Miami losing grip? "In which cities have you bought luxury products in the past 12 months? In which ones do you plan to buy in the next 12 months1?" 2014 2015 Rome 6 Dubai 6 Dubai 6 Dubai 7 Los Angeles 7 Los Angeles 7 Miami 8 Rome 8 Rome 8 Los Angeles 9 Singapore 9 Singapore 9 Singapore 10 Miami 10 Miami 10 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 2013 1. The calculations excludes consumers in their home country Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 46 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Which Segments will drive growth? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 47 8 Global segments, 3 of them counting for ~50% Current value Avg. Segment 1 Spend size Absolute Luxurer Mega citier Experien cer Fashioni sta #Little Prince Social Wearer Status Seeker Classpira Timeless tional Proper Omni Gifter Country specific Luxe Rich Immune Upstarter (M) 2.2 2.5 2.8 2.8 1.6 1.8 2.1 3.0 2.3 2.2 1.5 1.2 (%) 9% 10% 11% 11% 6% 7% 8% 11% 9% 8% 6% 5% (K€) 30 17 13 8 10 10 7 3 9 10 4 4 (Bn€) 67 41 35 22 17 17 14 8 21 21 6 5 24% 15% 13% 8% 6% 6% 5% 3% 8% 8% 2% 2% (%) counting for ~50% of lux. market Note: This table represent Luxury Consumer of Beyond Money, Very High, High and a projection proxy of Top Aspirational consumers 1. Not including Cars & Yachts Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 48 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Gender specific Global segments (gender / geography balanced) Social Wearer more than doubled. Status Seeker and Classpirational slightly shrinking Absolute Luxurer Mega citier Experien cer Fashioni sta #Little Prince Social Wearer Status Seeker 2013 2.1 2.3 2.7 2.7 1.5 0.7 2.2 3.1 2014 2.2 2.5 2.8 2.8 1.6 1.8 2.1 + 0.2 +0.1 +0.1 + 0.1 +1.1 9% 4% 4% 7% 157% Δ13-14 +0.1 Δ% 5% Country specific Gender specific Classpira Timeless tional Proper Omni Gifter Luxe Rich Immune Upstarter 2.5 2.0 1.5 1.3 3.0 2.3 2.2 1.5 1.2 -0.1 -0.1 -0.2 +0.2 - -0.1 -5% -3% -8% 10% - -8% Note: This table represent Luxury Consumer of Beyond Money, Very High, High and a projection proxy of Top Aspirational consumers. Rounded numbers Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 49 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Segment size Global segments (gender / geography balanced) Megacitier, Absolute Luxurer and #Little Prince expecting brighter shopping days 2015 Luxury Barometer®1 by Consumer Segment (pp) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Spend More (+20%) Spend Less (-20%) Luxury Market (%) Mega Absolute #Little Luxe Fashioni Status Rich ExperienTimeless Social citier Luxurer Prince Immune sta Seeker Upstarter cer Proper Wearer Omni Classpira Gifter tional 15% 8% 24% 6% 2% 8% 5% 2% 13% 8% 6% 3% 1. Index calculated as percentage of customers who see growth in spend and subtract the percentage who foresee a decrease in spend. The numbers in the graph are in percentage points Note: Split in the segments calculated as answer to question "Do you expect to spend more or less on luxury products in the next 12 months?" Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 50 Absolute Luxurer, Megacitier and Experiencer driving ~65% of future value growth P&E1 Luxury market growth by Consumer Segment (€Bn) Top Luxury 450 +110B€ 300 220 31 26 16 10 Expe riencer #Little Prince 5.9% 8.4% 6 21 330 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. ~65% 150 0 2014 Absolute Mega Luxurer citier 2014-2021 P&E Market CAGR (%) 8.0% 8.9% Fashio Others1 nista 4.6% 3.3% 2021 4.3% 1. Personal & Experiential Luxury market; 2. All other consumer segments: Social Wearer, Status Seeker, Rich Upstarter, Luxe-Immune, Classpirational, OmniGifter, Timeless Proper Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 51 Megacitier driving the transition from a luxury world made of nations to one made of cities Weight of Megacities on total luxury market (%) Established Mature • • • • New York Tokyo London .... • • • • Shanghai Rio de Janeiro Mumbai ... Established Emerging ~20 Rising Stars ~100 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. ~10 +4pp • • • • • Chengdu (China) Hangzhou (China) Jakarta (Indonesia) Busan (S.Korea) ... 26% 30% 2014 2021 # of cities Source: BCG data, BCG expertise P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 52 Different Segments driving growth by market: Absolute Luxurer in US, Megacitier in China Americans Top Luxury market future growth by Consumer segment €B 120 Chinese Top Luxury market future growth by Consumer segment €B 120 +29B€ 52 6 4 5 81 3 +20B€ 80 9 48 40 5 2 2 68 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 11 80 2 40 60% 55% 0 0 Others1 2021 2014 Absolute Experien Timeless Fashioni Luxurer cer Proper sta Others2 2021 2014 Mega citier Fashioni Absolute #Little sta Luxurer Prince 1. All other consumer segments: Megacitier, Social Wearer, Status Seeker, Rich Upstarter, Classpirational, OmniGifter, Timeless Proper, #Littleprince 2. All other consumer segments: Experiencer, Social Wearer, Absolute Luxurer, #Littleprince, Luxe Immune, Classpirational, Omnigifter, Timeless Proper Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 53 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. What will it take to capture growth in key categories? P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 54 Absolute Luxurer • 22% of 2014 Leather Goods market • First contributor to long term growth (+3B€) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Megacitier • 16% of 2014 Apparel market • First contributor to long term growth (+1.2B€) Omni Gifter & Timeless Proper • 15% of 2014 Hard Luxury market • First contributors to long term growth (+2.2B€) #Little Prince Experiencer • 11% of 2014 P&C Luxury Market • Fast growing segment (CAGR +6.1%) • 17% of 2014 Experiential Luxury Market • 46% share of wallet (1st category) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Product category insight through the eyes of most relevant consumer segment 55 Absolute Luxurer • 22% of 2014 Leather Goods market • First contributor to long term growth (+3B€) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Megacitier • 16% of 2014 Apparel market • First contributor to long term growth (+1.2B€) Omni Gifter & Timeless Proper • 15% of 2014 Hard Luxury market • First contributors to long term growth (+2.2B€) #Little Prince Experiencer • 11% of 2014 P&C Luxury Market • Fast growing segment (CAGR +6.1%) • 17% of 2014 Experiential Luxury Market • 46% share of wallet (1st category) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Leather Goods Absolute Luxurer 56 Leather Goods: Absolute Luxurer 1st contributor to long term growth Absolute Luxurer Total size #: 2.2M Spend/head: 30K€ Total spend: 67B€ Leather Goods Top luxury market growth by Segment Life stage: 35-45 yr. Gender: 55% W €B 40 3 29 #Little Prince Others1 2021 9% 5% 49% 5.9% 8.1% 3.5% 2 1 1 Absolute luxurer Mega citier Fashioni sta 2014 Market (%) 22% 15% 14-21 CAGR (%) 7.4% 7.7% 20 20 3 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. +9B€ 0 2014 Rounded numbers Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 57 Quality and exclusivity not negotiable, off price and low entry price disaffection triggers Disaffection triggers 26 Craftsmanship/quality Too much off-price Exclusivity 23 Low entry price Customization 23 Fake copies 30 27 25 Shopping experience 22 Poor distribution Value for money 21 Owned by majority of friends 19 Brand visibility (logo) 21 Too many categories 18 Stores too Large 18 Customer care Adorned aesthetics 20 18 Production outside home country Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Purchase Enablers 22 17 Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 58 Handbags: 67% of Absolute Luxurer researching online "Where did you buy handbags? Where did you researched them?" "Why did you researched online for handbags?" % of respondents Gathering information on product Interaction with brand 32% 27% Opinion & Feedback Sharing Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 23% 42% 100% 67% Access to brand content Price and product comparison 7% Total Overall Avg. Pure in store 2% Follow/influence trends 23% 17% 14% Researched Show Pure online 1 Online rooming Purchased Offline 38% 45% 9% 8% 1. viewed in store, purchased on line Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 59 Brand polarization: 70-80% of Absolute Luxurer prefers specialist brands "Which type of brand do you prefer?" % of respondents % of respondents 22% 100% 80% Core Leather Goods brands Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 25% 100% 71% Lifestyle brands Total Handgabs Core Leather Goods brands Lifestyle brands Total Shoes Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 60 Absolute Luxurer • 22% of 2014 Leather Goods market • First contributor to long term growth (+3B€) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Megacitier • 16% of 2014 Apparel market • First contributor to long term growth (+1.2B€) Omni Gifter & Timeless Proper • 15% of 2014 Hard Luxury market • First contributors to long term growth (+2.2B€) #Little Prince Experiencer • 11% of 2014 P&C Luxury Market • Fast growing segment (CAGR +6.1%) • 17% of 2014 Experiential Luxury Market • 46% share of wallet (1st category) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Apparel Megacitier 61 Apparel: Megacitier 1st contributor to long term growth Megacitier Total size #: 2.5M Spend/head: 17K€ Total spend: 41B€ Apparel Top luxury market growth by Segment Life stage: 25-35 yr. Gender: 55% W €B 40 +6B€ 18 1 2014 Mega citier 1 1 3 24 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 20 1 0 Absolute Timeless Fashioni Others1 Luxurer Proper sta 14-21 CAGR (%) 5.1% 3.8% 5.1% 5.1% 4.5% 2014 Market (%) 16% 21% 9% 9% 45% 2021 Rounded numbers Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 62 Megacitier belief: "suits are boring, casualwear is fun" Formal Wear Casual Wear Megacitier Women Men 2.9x Spend Split / head (%) 1.9x 1.8x 74% 2.3x 70% 35% 64% 36% 34% 26% 30% Formal wear 66% 65% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 1.8x Casual wear Mature Market is the average of Italy, Germany, France, UK , US and Japan Emerging Markets is the average of Brazil, South Korea, China and Russia Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 63 Megacitier, especially women, looking for playful and colorful style Adorned Aesthetic importance in Apparel % of respondents % of Megacitier respondents +6pp +12pp 28% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 31% 25% 16% Other Megacitier Segments Men Women Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 64 Megacitier shops mainly in Shopping Malls and Dept. Stores; brand selection key "Where have you mainly purchased Apparel in the past 12 months?" "What is relevant for you when choosing where to shop?" % of respondents 23 Shopping malls 21 High end department store 13 Mono-brand 11 Downtown duty free 10 Travel Retail duty free Right brands in store 20% Relaxed Environment 14% Knoledgeable sales staff 13% Signature collection 10% Great deals 8% 8% Multi-brand 8 Focus on clothing Online websites 8 Product Customization 7% Store appearance 7% Off-price and factory outlet 5 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondents Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 65 Absolute Luxurer • 22% of 2014 Leather Goods market • First contributor to long term growth (+3B€) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Megacitier • 16% of 2014 Apparel market • First contributor to long term growth (+1.2B€) Omni Gifter & Timeless Proper • 15% of 2014 Hard Luxury market • First contributors to long term growth (+2.2B€) #Little Prince Experiencer • 11% of 2014 P&C Luxury Market • Fast growing segment (CAGR +6.1%) • 17% of 2014 Experiential Luxury Market • 46% share of wallet (1st category) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Hard Luxury Omni Gifter and Timeless Proper 66 Hard Luxury: Omni Gifter and Timeless Proper 1st contributor to long term growth Omni Gifter Total size #: 2.2M Spend/head: 10K€ Total spend: 21B€ Hard Luxury Top luxury market growth by Segment Life stage: 45-55 yr. Gender: 85% M €B +13B€ Timeless Proper Total size #: 2.3M Spend/head: 9K€ Total spend: 21B€ Life stage: 40-45 yr. 40 35 2 2 2 Absolute luxurer Mega citier 2 4 48 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 60 20 Gender: 90% W 0 2014 Experien Others1 cer 14-21 CAGR (%) 4.9% 4.3% 4.5% 4.5% 4.0% 2014 Market (%) 15% 18% 15% 15% 37% 2021 Rounded numbers Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 67 Omni Gifter: 2 out of 3 looking for craftsmanship and quality when gifting "Who was the recipient of your last jewelry purchase?" % of respondents 4% Myselft 77% 96% Craftsmanship/quality Value for money 29% Intrinsic Value 29% Customer care Exclusivity Others Gift Customization 23% Brand Visibility Other Segments 64% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondents "Which are the key elements that you value the most when gifting jewelry?" 26% 22% 20% 18% Omni Gifter Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 68 Omni Gifter: looking for pure jewelry brands focused on core business "Which brand do you prefer?" % of respondents "What will stop you from buying a jewelry brand?" % of respondents Fake copies 39% 24% 33% Sold too often off-price Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Poor distribution 32% 100% Extended into too many categories 76% Low entry prices Core Jewelry brands Not core Jewelry brands Total Jewelry Owned by celebrities that do not embody brand spirits 23% 20% 19% Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 69 Timeless Proper: 89% self-purchase in watches, growing along consumer life "Who was the recipient of your last watches purchase?" % of female respondents 71% % of respondents 73% 89% Others Gift 29% 100% 100% 6% 0% 0% 27% 11% Other Segments 94% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Myselft "Which are the key elements that you value the most when gifting watches?" Timeless Proper Gen. Z & Y (18-35 yr.) Gen. X Baby Boom. (36-50 yr.) (51-67 yr.) Silver (67+ yr.) Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 70 Timeless Proper: online not a channel for sale but for research; "pure store" the first "Where did you buy watches? Where did you researched them?" "In which type of physical retail store did you buy it?" % of respondents 45% Dept. store 38% Mono-brand 38% 13% 100% 38% 44% 9% Total Overall Avg. 2% Pure Store Researched Show Pure Online 1 online rooming Purchesed in store 38% 45% 9% Shop. Mall 13% Multi-brand 13% 6% 44% 8% 1. viewed in store, purchased on line Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 71 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. % of respondents Absolute Luxurer • 22% of 2014 Leather Goods market • First contributor to long term growth (+3B€) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx Megacitier • 16% of 2014 Apparel market • First contributor to long term growth (+1.2B€) Omni Gifter & Timeless Proper • 15% of 2014 Hard Luxury market • First contributors to long term growth (+2.2B€) #Little Prince Experiencer • 11% of 2014 P&C Luxury Market • Fast growing segment (CAGR +6.1%) • 17% of 2014 Experiential Luxury Market • 46% share of wallet (1st category) Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Perfumes & Cosmetics #Little Prince 72 Perfumes & Cosmetics: #Little Prince 2nd contributor to long term growth #Little Prince Total size #: 1.6M Spend/head: 10K€ Total spend: 17B€ Life stage: 18-25 yr. Gender: 60% M Perfumes & Cosmetics Top luxury market growth by Segment €B 30 12 1 1 1 0 1 16 Others1 2021 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. +4B€ 0 2014 Absolute #Little Megacitier Omni luxurer Prince Gifter 14-21 CAGR (%) 4.8% 6.1% 3.5% 4.0% 3.4% 2014 Market (%) 24% 11% 15% 8% 43% Rounded numbers Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 73 30% of #Little Prince buying P&C online; willingness to buy online 2x actual purchases "Which online store did you buy P&C from? Which is your willingness to buy P&C online?" 2.2x % of respondents Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 40 74% 11% 7% 33% 12% Brand website Online marketplace Others Total online Willingness to buy online Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 74 Brand websites 1st e-commerce choice; navigability of websites key driver "Which kind of online store did you buy P&C from?" " Which factors would you consider more important when buying on line?" % of respondent % of respondents 41% Online marketplace 23% Flash sales sites 14% Luxury-specialized etailers 14% Dept. store website 9% 32% Same day delivery 23% Quality of online customer care 23% Payments accepted 23% Price discount 18% Free shipping 18% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Brand website Navigability of website Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 75 #Little Prince strongly influenced by both physical and digital Word of Mouth Relevance of Physical and Digital Word of Mouth % of respondents 34% Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. 22% 56% 16% 6% Overall Avg. Physical & Digital WoM Physical Social Media Blogs 49% 29% 12% 8% Source: BCG 2014 specific survey (10.000 Top luxury Consumers in 10 countries) P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 76 The CONSUMER era: key takeaways (I) 2 / 3 of the next decade's growth will be organic Growth to continue...: ....but at multiple speeds: – Consumers: Top Luxury (4% of total) making 40% of growth alone – Geographies: US, China, EU and ME accounting for 55% of total growth – Sectors: Experiential luxury growing faster than Personal luxury – Categories: Jewelry & Watches and Leather 1st contributors to growth in Personal P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 77 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. – Short term (2015): rebound in luxury confidence already in 2015 – Mid term (2021): 390M consumers to become 465; market to increase by 260€Bn The CONSUMER era: key takeaways (II) Consumer: Confirmations and new realities – Made in still rules, but not granted – Digital influence reaching new heights – Omnichannel from buzzword to reality – Sustainability is happening 12 unique segments entering your stores with different expectations Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. – Absolute Luxurer, Megacitier and Experiencer representing 65% of future growth Consumer lens the only way to capture future growth – Leather: Absolute Luxurer looking for craftsmanship and brand specialization... – Apparel: Casualization led by Megacitier,.. – Jewelry: Omni Gifter picking pure jewelry brands only,... – ... Consumer Insight next competitive advantage: there will be winners and losers P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 78 Antonio Achille Partner and Managing Director - Milan Antonio Achille is a Partner and Managing Director in the Milan office. He is a senior leader of the Consumer & Retail team and he co-leads globally Luxury practice for the firm. For 20 years, he has been advising National and International Groups on issues that include corporate strategy, growth acceleration, clients strategic segmentation, organization redesign and Post Merger Integration. In the Luxury and Fashion sector his experience includes apparel, eyewear, accessories, selective fragrances, jewelry/hard luxury and experiential luxury. The geographical scope of his work includes most of the developed and emerging luxury markets (EU, North America, China, Turkey, Korea, Middle East ….). Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. He has developed an extensive knowledge on the Global Luxury Consumer and he is responsible for the database that includes a comprehensive view on over 40.000 consumers from 20 countries, developed in cooperation with Altagamma, the trade association for the Italian luxury industry. The actionable insights of the study are presented at the yearly event “True-Luxury Global Consumer Insight”. In addition he contributes to the annual Luxury Summit, one of the most valued discussion forum for the sector. He is also member of the Scientific Committee of one the first Italian master on Luxury. He is author and co-author of most of the recent BCG publication on Luxury such as "Luxury ecosystem advantage", "Shock of the New chic", ... Antonio is extensively quoted, as Luxury and Consumer expert, in Italian and International media, such as FT, WWAD, Bloomberg, CNBC, FashionIllustrated, Il sole 24 ore, Il Corriere della Sera,... 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. P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 79 About BCG and its Luxury practice The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and notfor-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. Within the Firm, The Luxury practice, with more that 200 experts worldwide, advises Brands and Retail bringing together the experience of its centres of competence located in all key must be geographies for the sector: Milan, Ney York, Paris, Shanghai, Hong Kong and Tokyo. BCG Luxury team has a deep and relevant experience driving profitable growth with leading Brands and Retail companies, from strategy to marketing and operations, and a unique point of view on consumer segmentation. P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 80 BCG contacts For a copy of BCG "True-Luxury Global Consumer Insight" or to schedule an interview with Antonio Achille, please contact: • Lisa Trunfio email: Trunfio.Lisa@bcg.com or +39.02.65599242 email: Guidara.Francesco@bcg.com email: Prosperi.Francesca@bcg.com or +39.02.65599704 or +39.02.65599328 Copyright © 2015 by The Boston Consulting Group, Inc. All rights reserved. INTERNATIONAL PRESS: ITALIAN PRESS: • Francesco Guidara • Francesca Prosperi P-Altagamma-317971-01-22Jan15-AAc-mil.pptx 81 Thank you bcg.com | bcgperspectives.com
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