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The world's top 10 luxury companies generate more than half of all global luxury sales

By Don-Alvin Adegeest

23 Nov 2020

A new report assessing the global powers of luxury sees just 10 companies take more than half of all global luxury sales of the total top 100 companies it analysed. In a report by Deloitte, Global Powers of Luxury Goods 2020, the world’s top 100 luxury goods companies generated revenues of 281 billion dollars in 2019. The top 10 companies, which include LVMH, Kering, Estee Lauder, Richemont, Chanel and PVH, netted over 51 percent of all sales valued at 144 billion dollars. The average size of a luxury company is valued at 2.8 billion dollars, with a minimum turnover over 238 million dollars needed to made Deloitte’s top 100 list.

For the third year in a row, LVMH (37.5 billions dollars) Kering (17.8 billion dollars) and Estee Lauder (14.9 billion dollars) secured the top three places, collectively grossing over 70 billion dollars, equivalent to a quarter of all luxury sales.

The report states the luxury goods market has increased its overall value, but registered a lower growth rate. Among the causes impacting growth in 2019, the effect of protectionist policies and trade restrictions might be the most important, with big luxury goods markets such as China and the United States both registering lower year-on-year growth.

Patrizia Arienti, Deloitte Global EMEA Fashion & Luxury Leader, said in a statement: “The financial impact of the pandemic is yet to be assessed, and whether the concentration of the luxury industry will continue its trajectory is also an unknown question. This prolonged disruptive situation is creating profound changes in consumer behavior and how companies are responding to these changes—prompting a debate about the future of the fashion and luxury industry. There is a general feeling of rethinking luxury and driving it in new directions, considering which business models will be feasible and more relevant in the new normal.”

The New Age of Fashion and Luxury

Luxury goods manufacturers have been hit hard by the Covid-19 pandemic, the report iterates. For several months, people have faced restrictions on traveling abroad and there is still uncertainty about when it will be possible to travel more easily between countries. There has been a collapse in inbound tourism across the globe during the lockdown, causing massive falls in traditional retail sales.

Duty-free shops that generate sales mainly at airports have been hit badly by the collapse in global travel.1 In August, the world’s biggest travel retailer, Dufry, announced a negative 60.6 percent year-on-year organic decline.2 Retailers’ performance was negative across most locations, but the summer provided a small uplift for Europe, Asia Pacific and the United States. While the Covid-19 pandemic has disrupted global travel, Chinese shoppers’ appetite for luxury imported products has not changed. Therefore, policymakers plan to expand access to duty-free shopping by creating ad hoc tax-fee new locations, in the hope of revamping tourist flows in the country.

Almost all of the most important events and runway shows scheduled for 2020 were cancelled or rescheduled to later in the year and many of them were changed into a virtual format. With consumers forced to stay home, online retail sales increased during the first half of the year, reaching a peak in April of +209 percent globally compared to the previous year, prompting many brands to accelerate digitization and provide digital e-commerce solutions including “see now, buy now” live streaming.

The pandemic crisis could act as an accelerator for brands to adopt new paradigms of value creation

Now more than ever, luxury goods companies are seeking new ways to connect with their customers. They are reinventing and re-imagining themselves in ways that were previously unimaginable. Sustainability will be one of the main areas that fashion and luxury goods companies will rely on for their recovery. Global luxury brands have been investing significantly in ‘green’ technologies and other measures to reduce emissions from their factories. They are using carbon offsetting to contribute to the fight against climate change—compensating for emissions arising from their own industrial activities by participating in other schemes to make equivalent reductions. But being sustainable is not limited to innovations in the supply chain, it also means embracing new values and perspectives in response to the evolving needs of consumers and the planet.

To read the full report visit the Deloitte website.

Image and article source: Deloitte “Global Powers of Luxury Goods 2020”