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Competitor Strategies in Luxury Goods

January 2023

The luxury industry almost recovered fully to pre-pandemic levels in 2022, as pent-up demand and a return to travel prevailed. The outlook however remains challenging as inflation-driven rises in the cost of living is leading to a more measured consumption pattern. Consumers' value perception is shifting to quality, heritage, sustainability, and longevity. Brands are exploring digitalisation and phygital reality technologies to create stronger experiences and to maintain customer loyalty.

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This report comes in PPT.

Key Findings

Leading multinationals continue to reign, capitalising on the heightened consumer appetite for luxury goods

With the global top 10 luxury goods companies accounting for over half of all sales in 2021, the competitive landscape overall remains highly concentrated. However, competition at the top is increasing, with leading players looking to further expand their geographical coverage, portfolio segmentation and cross-industry diversification.

Supply chain resilience a linchpin to competitiveness

Supply-demand imbalances, worsened by global events such as the war in Ukraine and China’s restrictions under its zero-COVID policy, continue to weigh on luxury businesses’ supply chains and balance sheets. This is leading to increased investment in supply chain resilience, especially through manufacturing localisation, supplier diversification and automation.

Luxury companies pushed to emphasise and communicate both functional and symbolic value of goods

Inflationary pressures are eating into consumers’ discretionary and luxury spending, but the desire for luxury and experiences remains unabated. However, as consumers take a more conscious approach to luxury, companies are increasingly focusing on value creation by harnessing the power of tangible functional benefits, such as brand heritage, craftsmanship and longevity, as well as enhancing brand communications, storytelling and experience.

Operations are being improved to meet consumers in the digital and physical spaces

With the world entering a new phase of digital reality, the rise of the “metaverse” has created a new territory to explore for the luxury industry. Companies are shifting more to digital marketing and e-commerce, implementing digital components in the in-store shopping experience, and beginning to meet consumers in the metaverse.

Sustainability initiatives delivering tangible results are top of the agenda

Growing consumer demand for purposeful living and environmental stewardship will continue shaping competitive strategies. While pre-pandemic, the focus was more on environmental problems, social momentum is now accelerating fast, with key players and consumers alike defining sustainability as supporting local communities and addressing diversity, inequality and equity.

Key findings
Market leader board at a glance
Global top 10 continue to control over half of the luxury goods industry
Leading luxury companies maintain share amid unprecedented disruption
Further M&A activity since the COVID-19 outbreak leads to further market concentration
Portfolio diversification helps leading players maintain their market leadership
Expansion into developing world continues to drive leading players’ long-term strategies
Inflation and supply chain issues remain competitive strategy considerations for luxury
Key players in luxury goods to increase investments in global supply chain
Impact of the invasion of Ukraine on Russia’s luxury goods industries
Russia’s luxury shoppers left out in the cold as market is dominated by international players
Will Russia’s invasion of Ukraine put luxury’s impressive recovery at risk?
Sustainability remains a multi-faceted journey across luxury brands
The dilemma of affordability versus sustainability more acute at times of financial crisis
Inflation surge leaves luxury businesses with the dilemma whether to raise or absorb prices
Luxury travel companies under pressure to add value as rising costs start to deter consumers
Sweeping changes to company working policies ushers in the dawn of “bleisure” travel
Working from home shifts to working from the Four Seasons, St Regis and Hyatt
Severe macroeconomic pressures present a risk to luxury drinks recovery
Will drinks players see a shift to conspicuous consumption and a polarised market place?
Luxury tequila brands lead the way, driven by premiumisation and celebrity endorsement
The rise of Won Soju thanks to celebrity endorsement, story telling and new drinking habits
Rémy Martin targets the nomadic affluent Gen Z’s with its new miniature Louis XIII The Drop
Shifts in geographical makeup of global wealth expansion key to luxury car manufactures
Leading luxury car manufacturers heavily exposed to Russian sanctions
Impressive growth trajectory in luxury EVs set stall as consumers shy away from high prices?
VW Group changes corporate strategy to focus on its luxury lines, such as Audi and Porsche
Volvo joins luxury jewellery brands by adding blockchain technology to track metal origins
Value creation at the forefront of innovation as consumers balance frugality and indulgence
Expectations for simplicity, quality and purpose underpins value creation strategy
Could NFTs become the new battleground for luxury fashion brands?
Luxury brands feel growing pressure from consumers to put “purpose before business”
The great “relocation revolution” drives more spend on home and lifestyle products
Fashion brands diversify and expand their exposure to luxury “home” and lifestyle
More luxury companies bring resale in-house thanks to its rise as an alternative asset class
Ralph Lauren launches The Lauren Look as resale and rental gains pace
Key takeaways

Luxury Goods

This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.

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