Competitor Strategies in Luxury Goods

May 2021

Competitor strategies across the luxury goods landscape have been evolving in recent years under the impact of digitalisation and changing consumer values. The impact of the global coronavirus pandemic however has weighed heavily on luxury corporates and the lack of certainty accompanied by a recessionary consumer mindset threatens to delay any glimpse of full recovery in the short ti medium term. This report analyses business strategies and explores key opportunities in the luxury goods space.

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Key findings

Competitive environment remains hugely challenged by COVID-19

The COVID-19 pandemic continues to have an unprecedented impact on the competitive landscape in luxury goods. The main challenge for many remains the lack of certainty regarding the length of lockdowns across different markets, and the social distancing measures that have been imposed, accompanied by a recessionary luxury consumer mindset, which will delay any glimpse of full recovery well beyond 2021.

Asia Pacific continues to drive corporate sales

Latest company results show that Asia Pacific continues to drive sales for key players in luxury goods and remains the most important region overall making up almost half of all spending. Much of this revenue has been driven by China’s growing wealthy populations.

Digital innovation accelerates and sparks corporate partnerships

Digitalisation will benefit from social distancing. and further e-commerce penetration, virtual catwalks and customer engagement are likely to become mainstream. Backed by innovations and rising access to technology, COVID-19 has changed the way luxury businesses deliver products and services, and how consumers live, work, shop and play for life. Both physical and digital players will need to go above and beyond to create new bonds and partnerships, and build loyalty with customers who will be looking to be entertained, rewarded and valued.

Local shopping drives repatriated spending as revenues shift East

The pandemic has driven luxury customers to shop locally. With international travel having ground to a halt, much of consumer spending on luxury goods is now taking place at home as opposed to abroad, and is giving rise to repatriated spending and the birth of the new “locavore” luxury consumers. Luxury companies are now investing in their “glocals”.

Purpose-driven luxury more important than ever

Luxury companies and brands are being forced to look beyond revenue and can no longer perceive good business purely as profit-driven entities. Protecting the health and interest of society and the planet is the new expectation in order to build back but above all to build back better, while also turning the tide on social inequity and environmental damage.

 

Introduction

Scope
Key findings

State of Play in Luxury Goods

COVID-19 poses huge threat to competitors across the luxury landscape
Luxury sales take a tumble in key markets impacting competitor sales
Luxury goods players among hardest hit across all FMCG markets
Prolonged uncertainty creates fear as consumers are saving not spending
Players in experiential luxury witnessed the deepest contraction
Makers of luxury cars navigate through a tough period of change
Personal luxury adversely impacted by discretionary spending decline
Luxury drinks companies shielded marginally by niche consumer base
Asia Pacific leads in sales with China at the helm
North America’s luxury spending contracts by nearly a fifth
Western Europe in the eye of the COVID-19 storm
Brighter outlook expected for 2021 led by Asia Pacific
China first major economy to show signs of full recovery in luxury goods
China’s economic activity and consumer spending shows full recovery
Corporate response to COVID-19

Competitor Landscape Overview

Leading luxury companies at a glance
Competitive environment remains highly concentrated
Leading competitors fight for share of wallet due to high concentration
Top 10 luxury companies clear determinants of 2021 outlook
Future business strategies challenged further by market-driven approach
Luxury car manufacturers continue to dominate total luxury sales
Daimler Group remains optimistic for a better 2021
Powerhouses in personal luxury pivot to digital channels amid pandemic
LVMH’s latest results signpost Asia-led recovery trend
LVMH exceeds pre-pandemic sales with strong Q1 2021 results
LVMH finally completes acquisition of Tiffany & Co in biggest deal ever
LVMH shows off its muscle as a leading contender in all categories
Encouraging sales momentum from Kering and Richemont
Pandemic woes in luxury hospitality continue to constrain recovery
Consolidation and restructuring take place across luxury hotels
Premiumisation and a desire for indulgence help luxury drinks players
Luxury drinks adapt to the rise of e-commerce and hometainment
High-value acquisitions and diversification in luxury drinks category

Key Trends Impacting Competitors

COVID-19 a catalyst for change across the competitive luxury landscape
Key strategic themes impacting competitive luxury landscape (1)
Key strategic themes impacting competitive luxury landscape (2)
Key strategic themes impacting competitive luxury landscape (3)

Competitor Response to Key Trends

Competitors forced to future-proof their businesses and mitigate risks
Gucci partners with Wanna to introduce its first NFT virtual sneakers
Competitors forced to review outlook for long-term shopping trends
LVMH praises its e-commerce capabilities in upbeat Q1 2021 reporting
Competition intensifies as more global luxury brands flood into Asia Pacific
Domestic “revenge shopping” helps Hermès offset revenue losses
Purpose-driven luxury and ESG gains momentum in the boardroom
Louis Vuitton Singapore offers a greener last-mile “white glove” service
Competitors meet the new “locavore” luxury consumers
Why Singles’ Day should matter to every luxury goods company
Redefining value and affordability without becoming ubiquitous
Gucci and Saint Laurent move to launch a luxury consignment boutique
Key trends and the long-term implications for leading luxury competitors

Appendix

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