The Future of Luxury
Highlights from consumer insights studies
Two main sources of data
Annual BCG - Altagamma
Annual survey of 10,000 luxury Consumers
across 10 countries
• US, UK, France, Italy, Germany, Spain, China,
Japan, Korea and Brazil
Category breakdowns
Consumer Segments as key lens to read
market dynamics
Sounding board of leading global luxury
brands
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
BCG FIT Global Luxury Customer Survey
Survey fielded in early 2015 across 3 countries,
with ~3000 respondents
• US, China and India
Deep dives conducted in 3 main categories
• Beauty
• Accessories
• Travel
Income parameters were also set by country, in
annual net (after tax) household terms:
• Low income: <$100K in US, <6.2M Rupees in
India, or <620K CNY in China
• High income: >$100K in US, >6.2M Rupees in
India, or >620K CNY in China
A number of key themes identified
1
Quality, exclusivity,
craftsmanship still
'winning'
2
3
Being
vs.
Owning
'Introverted luxury values (quality, exclusivity, craftsmanship) still
stronger than extroverted
Consumers increasingly preference experiences over luxury
purchases, particularly in developed countries
Online purchasing a
reality across all
markets
Online purchasing most prevalent in US but also in China and India, especially
for higher income consumers
'Word of Mouth' key
influencer for
purchases
Word of mouth/advocacy now the key influencer of luxury
purchases
Willingness for
alternate
distribution models
Rental & subscription models continue to see growth; greater
signs of interest in China, India
4
5
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Draft—for discussion only
What does luxury mean?
United States
Source: Question 22: What words best describe what luxury means to you?
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
1
India
China
Draft—for discussion only
Luxury for 'yourself' values roaring
22%
78%
25%
75%
26%
74%
23%
77%
1
Luxury 'for others'
extrovert
29%
43%
42%
37%
40%
57%
58%
63%
60%
71%
45%
•
•
•
•
Adorned aesthetics
Brand visibility
Customization
Being cool/sexy
Luxury 'for yourself'
introvert
55%
•
•
•
•
% of respondents1
1. Respondents were asked to rank the top 3 values: the graph represent the value ranked as the most important
Source: BCG 2013 and 2014 ad hoc study (10'000 respondents in 10 countries)
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Draft—for discussion only
Quality
Exclusivity
Craftsmanship
Timeless
Shift to "experience" culture most prominent in
US, whereas personal goods favored in India, China
Experiences
Personal
Goods
Source: BCG FIT Global Luxury Customer Survey
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
US
India
China
Weekend
away
#1
#1
#1
Night out
#2
#4
#6
Spa
experience
#5
#6
#4
New clothes
#3
#3
#3
New piece of
technology
#4
#2
#2
Luxury
accessory
#6
#5
#5
2
As consumers age, travel takes on an increasing proportion of luxury spend
2
Consumers who have purchased the following
goods/services in the past 12 months (%)
(%)
100
75
17%
26%
22%
26%
34%
44%
30%
34%
50
51%
49%
36%
17%
25
53%
40%
0
Global (all
three markets)
18-24
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
25-34
Luxury Beauty Products
24%
27%
30%
35-44
45-54
55-64
Luxury Accessories
38%
65+
Luxury Travel Services
3 out of 4 consumers asking for omnichannel
3
Omnichannel importance across nationalities
90%
85%
Not
Important
25%
81%
81%
78%
78%
Avg.
75%
75%
71%
41%
Somehow
important
43%
48%
34%
42%
27%
33%
57%
38%
45%
75%
49%
Not negotiable/
Very Important
44%
41%
38%
33%
43%
36%
49%
31%
33%
26%
11%
37%
37%
Total
Question: "How important is for you that a brand can be reached through different channels?"
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
Copyright © 2014 by The Boston Consulting
Group, Inc. All rights reserved.
Capstone_DataSlides_v15.pptx
% of respondents
Draft—for discussion only
Globally, millennials direct a greater share of their
luxury spend online relative to older generations
Channel: millennials direct more of their
luxury spend online than 35+
Specific sites: millennials more likely to
purchase through online marketplace than 35+
Breakdown of online luxury purchase channels
Breakdown of average luxury purchase channels
%
100
5%
5%
3%
3%
Other
By Phone
80
%
100
8
13
Other
21
17
Dept. store
multi brand site
22
Online
marketplace
47
Brand
website
80
53%
66%
In store
60
60
40
40
20
3
37%
0
Millennials
(18-34)
Note: n = 3045 for left hand side, n=1196 for right hand side
28%
Online
20
31
39
Non-Millennials
(35+)
Millennials
(18-35)
Source: Question 10 (What % of your luxury purchases are made through the following channels), Question 32 (for online buyers, what website did you buy it through)
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Draft—for discussion only
Non-Millenials
(35+)
Marketplaces see greatest share of online beauty &
accessories sales in India
Question: If you made the purchase online,
on which website did you buy it?
%
39%
24%
44%
21%
Beauty
23%
26%
12
40%
Accessories
N=1,196:
Source: Question 32, BCG FIT Global Luxury Customer Survey
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
3
21%
28%
50%
26%
4
Department store or
multibrand site
2
Online marketplace
30%
56%
22%
28%
46%
11
2
US
Brand website
India
Other
29%
14%
2
China
Draft—for discussion only
Word of Mouth: 1st influence lever, outpacing magazines
4
2013
Magazines
WoM1
Store
windows
Brand
websites
TV &
Movies
Tailored
offers
Events
WoM
50%
43%
Magazines2
39%
Events
Store
windows
Tailored
offers
Brand
websites
TV &
Movies
Celebrities
Seen
Wore
34%
24%
22%
20%
Celebrities 20%
Seen
13%
Worn
Different WoM influence across nationalities
2014
39%
58%
55%
32%
32%
17%
33%
53%
18%
52%
26%
52%
21%
49%
24%
Physical
47%
Avg.
49%
46%
41%
14%
17%
31%
30%
34%
19%
10%
22%
23%
26%
23%
19%
% of respondents
1 Includes WoM, Social Media and Other Social blogs 2. Editorials and Commercial in Magazines
Note: multiple choices possible, out of top 3 ranks
Source: BCG 2014 ad hoc study (10'000 respondents in 10 countries)
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Social Media & Blogs
49%
29%
41%
22%
35%
26%
30%
25%
33%
30%
Rental models more attractive to Chinese and
Indian consumers than US
5
Question: Which of the following would you prefer to rent vs. own?
% Preference for rental
13
Wedding Dress
7
Car
10
Luggage
Jewelry / Watches
Clothing
Furniture
2
2
4
14
8
6
5
30
High proportion of Chinese consumers have a
preference for renting wedding dresses
6
2
2
Accessories
3
3
16
US
7
India
7
China
5
4
Note: n = 3045
1. For example, 93% of surveyed consumers answered "Yes" when asked if they would consider renting jewelry, despite the fact that only 8% would "prefer" this to ownership
Source: Question 26: Which would you prefer to rent rather than own? Categories excluded: vacation places, office space, and home
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Draft—for discussion only
Subscription offerings most appealing to millennials
~25+% of Millennials willing to subscribe across multiple categories
5
Millennials more interested in subscription model than Non-Millennials
% willing to subscribe to receive monthly goods
Millennial
50
40
Non-Millennial
Food and skincare
subscriptions garner
most interest
39
33
31
30
26
26
25
23
21
20
20
15
17
15
12
13
10
0
Food
Skincare
Cosmetics
Wine
Clothes
Jewelry
Note: n = 3045
Source: Question 27: Which would you be willing to pay a subscription for to receive each month?
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Draft—for discussion only
None of the
above
Subscription models most appealing to consumers
in India and China; less interest from US consumers
5
In all categories except cosmetics, consumers in India and China
expressed greater interest in subscription than US consumers
% willing to subscribe to receive monthly goods
47
50
US
India
China
38
40
34
32
30
30
29
27
25
20
20
19
30
19
26
22
21
16
13
13
10
7
10 11
0
Food
Skincare
Cosmetics
Note: n = 3045
Source: Question 27: Which would you be willing to pay a subscription for to receive each month?
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.
Wine
Clothes
Jewelry
Draft—for discussion only
None of the
above
What does this mean for luxury players?
1
Quality, exclusivity,
craftsmanship still
'winning'
2
3
4
5
Being
vs.
Owning
Continue to invest and communicate around elements of in
quality, craftsmanship and exclusivity
Invest in experiential luxury - at a minimum bring more
experience into the purchase pathway
Online purchases a
reality across all
markets
Invest in eCommerce; determine role and assortment for each
eCommerce channel (own brand versus eretail versus marketplaces) –
especially in emerging economies
'Word of Mouth' key
influencer for
purchases
Build or accelerate advocacy marketing; generate positive word of mouth
by systematically developing relationships with influencers
Willingness for
alternate
distribution models
Invest in alternate distribution model tests – especially in emerging
economies
Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.