What Are The Six Realms Of Purchasing Luxury Goods?

Last Thursday, Italy

Altagamma Foundation organized a seminar on Luxury Retailing and consumers, and announced two heavyweight research reports, which were made by Exane BNP Paribas (Paris bank) and Boston Consulting Group (Boston consulting, hereinafter referred to as BCG).

The report points out that there are many luxuries at present.

All began to shift the focus of development to multi-channel strategy. In this environment, the importance of single brand stores has declined, but it is still a key component of the brand strategy.

In addition, the association also said that in order to effectively implement multi-channel sales strategy, brands must have a deep understanding of their customer groups and are willing to invest large amounts of resources in the construction of digital channels.

The BCG Research Report conducted a survey of 12000 luxury consumers from 10 different countries around the world, including more than 1000 respondents from China and the United States.

The average annual luxury consumption of respondents was 36 thousand euros.

The reporter selected a group of core data and charts to show you.

According to the world clothing and shoe net, in 2016, the total number of luxury consumers reached 415 million, and the total consumption amount reached 860 billion euros.

By 2023, the number of luxury consumers will increase to 4.9 billion, and the total consumption will reach 11850 billion euros, with an expected increase of 37.8%.

The BCG report divides all luxury consumer groups into 6 different levels, namely:

1) Beyond Money (arbitrary), the annual consumption of luxury goods exceeds 50 thousand euros, the total number of people in 2016 is about 400 thousand, and the total consumption amount is 20 billion euros.

By 2023, it is estimated that the number of consumers will increase to 500 thousand, and the total consumption will reach 40 billion euros.

2) Top Absolute (absolute luxury top), the annual consumption of luxury goods is between 20 thousand and 50 thousand euros, the total number is 1 million 300 thousand in 2016, and the total consumption amount is 30 billion euros.

By 2023, the number is expected to increase to 2 million, with a total consumption of 53 billion euros.

3) Absolute (absolute luxury), the annual consumption of luxury goods is between 10 thousand and 20 thousand euros, the total number of people in 2016 is 4 million 500 thousand, and the total consumption amount is 93 billion euros.

By 2023, the number is expected to increase to 6 million, with a total consumption of 141 billion euros.

4) Entry Absolute (absolute luxury entry), the annual consumption of luxury goods is between 5000 and 10 thousand euros, the total number of people in 2016 is 11 million, the total consumption amount is 107 billion euros.

By 2023, the number is expected to increase to 14 million, with a total consumption of 147 billion euros.

5) Top Aspirational (most eager for luxury), the annual consumption of luxury goods is between 2000 and 5000 euros, the total number of people in 2016 is 21 million, and the total consumption amount is 61 billion euros.

By 2023, the total number is expected to be 22 million, with a total consumption of 92 billion euros.

6) Other Aspirational (other eager to be extravagant), the annual consumption of luxury goods is less than 2000 euros, the total number of people in 2016 is 375 million, and the total consumption amount is 549 billion euros.

By 2023, the number is expected to increase to 440 million, and the total consumption will be 715 billion euros.

Among them, BCG will Beyond Money, Top Absolute, Absolute and Entry Absolute, four annual luxury goods consumption of more than 5000 euros into a large group, called "True-Luxury" (real luxury), the group in 2016 the total number of 17 million people, accounting for 4.1% of the total number of luxury consumer groups, but the consumption of luxury goods amounted to 250 billion euros, accounting for the total amount of luxury goods consumption 29.1%.

By 2023, the total number of "True-Luxury" will reach 22 million, which will rise to 4.4%, and the consumption of luxury goods will reach 381 billion euros, an increase of 52.4%, which is higher than the overall growth of luxury goods consumption, and the proportion of total consumption of luxury goods will rise to 32.2%.

The luxury market is expected to continue to grow, but the growth rate will slow down compared with before.

Between 2009 and 2013, the annual growth rate of retail sales in the luxury market averaged 9.3%, while the annual growth rate dropped to 5.6% during the 2013 to 2016 period.

BCG predicts that during the period from 2017 to 2023, the average growth rate of luxury goods market will be around 4% to 5%.

Nevertheless, if the brand wants to ensure that the growth rate reaches the market average level, they must invest more and innovate.

Among them, personal luxury items (including accessories).

Watches and jewellery grow at a slower pace than experience luxury goods.

BCG predicts that between 2016 and 2023, the growth rate of personal luxury goods will be between 2% and 3%, while the growth rate of luxury goods will be 5% to 6%.

In addition, in the next few years, the "Net Appetite" (net desire) growth rate of the "luxury group" (luxury consumption amount of more than 5000 euros per year) is 24% among the global luxury consumers. The fastest growing regions are China and the United States, with the growth rate of 46% and 41% respectively, while the high consumption group in Japan is expected to decline, which is the only market in the world that the high consumption group is expected to reduce.

In the first half of 2017, China, the United States and Europe will be the three largest luxury goods markets in the world, accounting for 30%, 23% and 19% respectively, while Japan and the Middle East ranked fourth and fifth respectively.

Among them, China and the Middle East market showed a rapid growth in the first half of the year, while the US growth rate was relatively slow, and the overall trend of the European and Japanese markets was mild.

As the sixth largest luxury market in the world, Russia accounts for only 4%, but the growth rate of the Russian market is higher than that of other regions due to the stimulating effect of rising oil prices.

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According to the luxury goods category, the "Net Appetite" change rate of the "really luxury" crowd is expected to be as follows:

Footwear products will grow at the fastest rate in the future, reaching 40%. The growth rates of beauty, beauty and watch jewelry are second and third, respectively, 33% and 21%; the growth rate of handbags and fashion is 15% and 10% respectively; sunglasses are basically flat; and small pieces of leather and silk products will be reduced by 7% and 10% respectively.

In the past few years, the attractiveness of traditional luxury stores has been declining.

According to the research report, the main reason for this phenomenon is that the shopping experience of traditional luxury stores is very standardized.

Apart from appearance, there is almost no difference in shopping experience among different stores, and there is no imaginative shopping experience.

In addition, there are natural restrictions on the types of goods and services offered by traditional luxury stores.

Therefore, if we want to re attract the attention of customers, luxury brands must pform their stores accordingly, and add specific design elements according to the different characteristics of their customers.

For example, the US jewellery brand, Tiffany, has pformed its store in Harrods (Harold department store) and set up two separate store stores to deal with high-end jewellery and entry-level jewellery.

This move helped its stores to achieve rapid growth in sales.

Another example is Italy luxury brand Fendi.

They have rebuilt the flagship store in Rome. Customers can see the process of making tailors by a huge observation window on the first floor.

At the same time, the importance of online channels is increasing both in terms of sales and influence.

Luca Solca, author of Exane BNP Paribas's survey report, said: "at the same time, the proportion of consumers shopping online and physical stores is 45% higher than that of physical stores only, and for many slow growing markets, multi-channel strategy is an important development opportunity."

In addition, online retailing can help brands reduce costs greatly, especially in logistics, because there is no need to pay rent and a small number of employees.

According to the world clothing and shoe net, 47% of the people who purchased luxury goods in 2013 were directly purchased in physical stores. 38% would search online for relevant information, then buy online, 8% would choose to watch products online, then buy online, and 7% of the whole purchase process was completed through online channels.

In 2016, the proportion of people buying directly in physical stores dropped to 39%, while online searches for information increased to 42%. The proportion of online purchases increased to 9% while the proportion of online purchases increased to 9%.

On the whole, the proportion of purchases through multi-channel increased from 46% to 51%, while the proportion affected by digital channels during the purchase process increased from 53% to 61%.

Therefore, for luxury industry executives, how to integrate physical stores and online channels is a very important and urgent problem.

The report of Exane BNP Paribas said that if the online channel is perfect, the scale of the physical store can be smaller and the function will change. It is mainly responsible for providing consumers with suggestions for their observation of physical goods and personalized adjustment.

But for most brands, this model is hard to achieve.

The report indicates that Ralph Lauren, Bergdorf Goodman, Burberry and Louis Vuitton have excellent performance in In-Store Digital Proficiency (Digital efficiency in the store), while the Bottega, ",", ",", "," & ",", "," and "brand" are not satisfactory.

"The performance of many brands has begun to improve, but many brands are unable to respond to changes in consumer demand in a timely manner and are in a predicament."

BCG's Nicola Pianon.

He also mentioned the huge influence of social media on the luxury industry.

According to BCG's survey, 70% of the respondents first interact with luxury brands when they go to social media, and interact more than once a day.

According to the world clothing and shoe net, 72% of the surveyed people will use social media to interact with luxury brands, and 57% of them interact more frequently.

The proportion of X generation and millennial generation was higher in different age groups, reaching 77% and 72% respectively, while the proportion of baby boomers was only 53%.

Among consumers in various countries, luxury consumers in China and the US are most interested in interacting with luxury brands in social media, with a ratio of 82% and 78%, while Japanese consumers have the lowest proportion of 49%.

More interesting reports, please pay attention to the world clothing shoes and hats net.