The Companies in the Luxury Sector 2020 Sector Report What Are the Real Estate Trends of the Luxury Goods Industry? SUMMARY

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The Companies in the Luxury Sector 2020 Sector Report What Are the Real Estate Trends of the Luxury Goods Industry? SUMMARY The companies in the Luxury sector 2020 Sector report What are the real estate trends of the luxury goods industry? SUMMARY Study scope France remains the leader of the • Activities, companies and range globalised luxury goods market. Although levels ..................................................... 05 • Global market: a few key figures ... 06 supported by strong expansion, notably throughout Asia, the sector’s companies • Sector challenges are still affected by a number of • Changing clientèle ............................. 08 demographic, ecological and numeric • More responsible consumption, mutations, each with its own challenges. a desire for longer-lasting goods .... 12 Regardless of their range (premium, luxury or ultra-luxury), the brands must Real estate trends • Company locations............................. 14 contend with changes in their clientèle • Focus on transactions concerning and consumption methods, forcing them more than 5,000m2 ............................. 18 to innovate while remaining true to their • Focus on the interior design DNA. of service areas ................................... 22 In terms of real estate, luxury company locations must reflect their brand image Case study: Luxury brands • Maintaining the head office ............ 26 through emblematic locations and • Transferring the head office .............27 buildings. • Site grouping ....................................... 28 • Extension of the head office ........... 29 Find out more about the latest trends in the luxury industry, in terms of Colliers International & you movements, service site locations and Our response to your challenges work environments, in this study based • A full service offer to meet your needs ........................................... 30 on a number of case studies. • Our references .................................... 32 • Contacts ................................................ 34 2 | The luxury sector The luxury sector | 3 4 | The luxury sector Activities, companies and range levels Study scope Luxury* sphere Personal luxury goods Other luxury goods (clothing, watches and jewellery, beauty, accessories, other) (outside scope) + ULTRA-LUXURY Luxury Wines and cars spirits LUXURY Luxury boats Luxury restaurants and aircraft and food Sales price Luxury Luxury real PREMIUM LUXURY hotels estate - Other luxury Art, - Production volumes + services collectibles * Luxury goods are defined as being non-basic consumer goods with a large element of creativity and handcrafting. The luxury sector | 5 Global market: a few key figures A market Leading exhibiting strong growth French players Global turnover in the personal luxury Among the top 100 global corporations in the goods segment represented €281 billion luxury sector on the list published by Deloitte in 2019. (Global Powers of Luxury Goods, 2018), France With +62% growth since 2010, this positive remains a leader of the luxury industry with trend is expected to continue over the next 9 players listed, including LVMH (1), Kering (4), three years, with a 4-5% annual increase, L’Oréal (7) and Hermès (11), known as "KHOL" according to the study by Bain & Company. on the international stage, the equivalent of Tech Giants of the digital sector. Turnover for personal luxury goods 21% 23% Beauty Clothing (€ billion) Source: Bain & Company - 2018 281 262 Turnover 254 245 244 distribution 212 219 by sector 2018 207 Source: Bain & Company - 2018 200 186 167 22% 34% Watches Accessories Jewellery 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Estimation 6 | The luxury sector The top ten global corporations Classed according to 2017 turnover in USD $ billion Source: Deloitte - 2019 2017 RANKING COMPANY COUNTRY 2017 TURNOVER 1 LVMH France 27.99 2 The Estée Lauder Cie Inc. USA 13.68 3 Cie Financière Richemont Switzerland 12.81 4 Kering France 12.16 5 Luxottica Group Italy 10.32 6 Chanel Limited* UK 9.62 7 L’Oréal Luxe France 9.55 8 The Swatch Group Switzerland 7.82 9 Chow Tai Fook Jewellery Group Limited China (H-K) 7.57 10 PVH Corp. USA 7.35 * Chanel Limited entered the top ten following simplification and rationalization of the group’s structure into a single entity. The luxury sector | 7 Changing Sector clientèle challenges Demographic Growth Brand evolution in Asia diversification The luxury market has By 2025, Chinese customers The commercial strategy reached the mature stage are expected to represent of luxury professionals is in France and Europe. 85% of new consumers, evolving to become more The proportion of new owing to the emergence of offensive. The goal is to Y (millennials) and Z a middle class with rising diversify their offer to attract generation customers income, and its own age- new customers without is increasing, and they related consumer habits. diluting the brand’s essence are operating a profound to ensure the loyalty of their transformation of These Asian millennials core market. consumption habits in differ from their Western this market. counterparts in their The brands are implementing consumption of luxury integrated development Their new expectations goods. More loyal to brands, policies, notably by concern the concept of they are looking for quality purchasing service providers "experience" and are less above all else. In spite of (external growth) or related to actual possession being highly connected, extending towards new of the goods. Above all, they remain deeply attached derived products. they are seeking "singularity" to physical stores. through luxury and want recognition for their preferences, whether these are cultural or morphological. 8 | The luxury sector Challenges • Being in phase with customer expectations: immediacy, experience, quality, singularity. • Diversifying their activities and proposing new products. Evolution of annual turnover between 2018 and 2019 by major • Gaining new customers. geographic region Source: Bain & Company - 2019 +30% Impacts 30% • “Product” luxury is turning 20% into “experience” luxury. +11% • Cultures and sub-cultures will 10% +9% be replacing consumption +5% trends. +2% • Luxury is becoming more 0% "casual" and turning towards streetwear. Japan China Europe • The leading luxury brands are Americas Other Asia developing outside Europe, for example, by manufacturing in China for the Chinese market. The luxury sector | 9 Challenges • Developing CRM and customer relations strategies. • Diversifying communication and consumption channels.. Impacts • Recruiting web marketing, innovation and data management professionals: Innovation Director, Digital Brand Heritage, Customer Experience. • Developing partnerships between on-line and physical boutiques: from “point of sale” to "point of contact" with customers. 10 | The luxury sector Changing strategy Towards the digital Birth of a digital transformation: strategy bricks & clicks On-line sales increase by more The luxury brands communicate than 20% each year to win new on-line customers and are expected to account for and gain their loyalty by 40% of growth in this market in deploying a personalised the coming years. Customers are approach, processing data tending to seek information first and using social networks and and digital technology offers a way influencers. around the barriers, which can be intimidating, of making a purchase Luxury goods companies are in a luxury store. entering the era of Digital Customer Relations, which The boundaries between on-line consists in proposing "high and physical stores are becoming end” service quality via their increasingly blurred, to the on-line platforms (product point of proposing partnership personalisation, fast delivery, operations with major retailers to verification of in-store availability, sell part of a collection exclusively geolocation of delivery services, for a limited period of time. in-store appointment scheduling, or teams of advisers and stylists). The luxury sector | 11 More responsible consumption, a desire for longer-lasting goods A new driver Emergence of Turning old of excellence a second-hand into new goods market According to the study New businesses and services Among the giants of the conducted in 2018 by Bain & are being developed to luxury industry, upcycling, or Company, 94% of customers extend the life of luxury recycling into higher quality believe that luxury brands goods, notably via rental products, is attracting the should be more committed services or second-hand attention of brands such as to environmental issues; this sales. Guerlain, where handbags demand is even stronger and other accessories than for other industries. In 2018, the second-hand are manufactured from luxury goods market tarpaulins and advertising The brands have understood boomed, thanks to major banners. this growing demand from growth in Europe, and the their consumers. Sustainable strong growth of specialised However, upcycling also development concerns are on-line platforms. Jewellery involves reusing ordinary thus altering an entire eco- and watches are the top goods (plastic bags, wire system, from suppliers to categories of this second- coat hangers). final consumers, in terms hand market. of R&D as well as product "Turning old into new" could impact. be a lever of future growth for luxury brands seeking to attract new generations of proactive consumers. 12 | The luxury sector Challenges • Winning new markets. • Responding to the environmental concerns of the Y and Z generations. • Manufacturing differently, locally, ethically. Impacts • Appearance of new businesses and segments in the luxury
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