January 16 th , 2019 True-Luxury Global Consumer Insight - PowerPoint Presentation

1. January 16th, 2019True-Luxury Global Consumer InsightLuxury FirstLook

2. AbsoluteTop AbsoluteEntry Absolute4.91.411.36.52.213.9Total True-Luxury1823Cluster2017# (M)Bn(€)Bn(€) # (M)2024Aspirational-Luxury2128Acessible-Luxury375445 ~913~1.260Total LuxuryConsumers +128+192+3472 k€5 k€20 k€10 k€150 k€Beyond money0.40.64-5% of Luxury Consumers generate ~30% of global market; 10% generates 39%98331151455415526739522416593580772Note: Including personal and experiential luxury, excluding cars and yachts Source: BCG Luxury Market Model 29%31% ~414 ~496

3. 2 most relevant avenues of growth for the Personal Luxury market

4. Luxury spend increasingly local/regional; even more so for US True-Luxury consumers61%39%True-Luxury Consumers 201471%Local51%201549%29%41%59%20162024E29%71%201720-25%75-80%Abroad20%80%Millen.Gen. X Baby BoomersSilverWhere did you buy your last luxury product?By GenerationBy CountryNote: referred to last purchaseSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)

5. Luxury casualwear confirmed as a major trend, especially for 'Forever Young' generations73% vs 66% last year moving toward casual luxuryForever YoungMillennials71%33%72%67%Gen. Z29%28%SilverGen. X22%78%Baby Boomers13%87%34%73%27%66%

6. By generationBaby BoomerGen. XGen. ZSilverMillennialsShift towards Luxury casualwear 20%34%24%43%30%Now suitable / accepted in more occasions, even at workReasons why…I wear casual during my free time Formalwear saturationMore comfortableRepresents my personal branding and I feel cooler23%46%21%28%38%43%24%30%38%22%16%33%43%34%39%13%49%43%27%49%67%71%72%78%87%All25%31%48%37%27%73%Luxury casualwear the "new normal": driven by formal saturation & comfort for older, by coolness for young1"Thinking about formalwear / casualwear which of the following statements best apply to you?" Global market trends Source: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Luxury Casualwear

7. Among Top 5 future luxury spending categories,3 are casual orientedSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Index: % People expecting to increase spending - % of people expecting to decrease spending in that category1Overall True-Luxury consumersexpected spending increase+39%+37%+35%+38%Pants & SkirtsShirtsSneakersT-Shirt+34%JeansTop 5 categoriesIn which categories will your spending on luxury goods be affected the most and in which direction?Global market trendsLuxury Casualwear

8. Traditional luxury values still predominant; however,new values emerging among Chinese & Millennials77%23%Traditional luxury valuesQualityTaste / styleConfidence / arrivalEnduringDiscerningPowerDesire...New luxury valuesExtravagant & funUpbeat / positiveCreativeDaring & bold2Luxury product values71%29%22%78%21%79%73%27%MillennialsOverall True-Luxury ConsumersExtravagant & fun An identity statementExclusivityAdorned aestheticsCraftsmanshipHeritage Brand iconic patternsExtravagant & funTimelessCraftsmanshipAdorned aestheticsExclusivityCool & sexy InnovationCraftsmanshipSuperior qualityHighest positive difference vs. overallHighest negative difference vs overall Global market trendsSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)

9. New luxury values growing in the US and emerging globally at about 15% of market spend2Luxury product valuesBelonging and understandingBody positivity / acceptanceFun and playfulEnergetic and outgoingPlay / escape / create / intrigueResilient idealismInspired and excitedDaring and boldSource: BCG

10. Luxury product valuesRespondents preference on made-in1 (%) 30%22%7%11%10%5%3%…12340-4-2-1Δ (pp)20172014-2 pp20142017+18 pp20142017+17 pp20142017+15 pp20142017+2 pp20142017+3 pp20172014+1 pp20142017+2 pp20142017+2 pp1. Excluding cars, luxury boats, design and lightingSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Made-in US still lagging leaders, but slowly moving upClothingHandbags & shoesCosmetics & perfumesOverall Global market trendsWhich country of manufacturing do you consider the best for luxury products?2

11. Collaborations with streetwear & artists have a positive impact on young generations, and no impact on older onesIndifferent 

12. Trading down attains ~54% for True-Luxury Millennials47% of respondents have shifted from top luxury brands 45%48%52%54%23%46%77%55%Not shifted59%41%47%53%ShiftedBy GenerationGen. Z MillennialsGen. X Baby BoomersSilver+6 pp4Mix & MatchMillennialsSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)"Thinking about your spending of 2/3 years ago and that of the last 12 months, do you have the feeling that you have partially shifted your spending from luxury brands to premium / fast fashion / niche or sports brands?

13. ~54% of Millennials shift from luxury brands; they trade down or mix styles buying niche brands Sneakers, Backpacks, T-shirtsRelevant categories~54% of Millennials shift from top luxury brands Formal shoes, Sunglasses, Perfumes T-Shirts, Shirts, Jeans Handbags, Perfumes, WatchesNo54%Yes46%1. e.g. Lululemon or Sweaty Betty 2. e.g. Acne Studios, Mr & Mrs Italy, Aquazurra eccSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Luxury sports niche1 Luxury niche2 Fast fashionPremiumMillennialsShifting niche Trading down22%23%26%29%4Mix & MatchMillennials

14. Although they mix & match, Millennials report most loyalty across luxury brand categories 36%64%31%Unloyal69%LoyalTrue-Luxury Consumers5Brand loyaltyIs there a brand on which you will increase your luxury spending?39%21%28%39%44%41%MillennialsSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Gen. X MillennialsBaby BoomersGen. ZSilver

15. Instagram gaining space vs. Facebook and Youtube in the West; Wechat, Weibo and QQ leading among Chinese Chinese world Developed world1 Tencent - WechatWeiboTencent - QQ12365%53%48%70%55%40%2017Vs. 20162017Vs. 2016How would you rank the social media you use when interacting with luxury brands, fashion bloggers?1. Includes: US, UK, Italy, France, GermanySource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Global market trends6Social Media

16. Influencers now top trusted source of information ofTrue-Luxury Consumers, +29 pp vs. 2013 and flat vs. 2016Note: Multiple options answer (ranking of three levers)1. Includes Social Media, Online blogs & Influencers; 2. Editorials and Commercial in Magazines. Includes both traditional & digital magazines; 3. Includes also Brand's App Source: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)201320162017EventsMagazinesStore windowsBrand websitesWord of MouthSeen WornTV & MoviesCelebritiesSocial Media & Influencers50%20%39%34%24%20%13%11%MagazinesSocial Media & Influencers12%Events38%Brand websitesStore windowsCelebritiesTV & MoviesWord of MouthSeen Worn39%33%26%23%19%17%16%29%TV & MoviesStore windows10%Word of MouthSocial Media & Influencers20%MagazinesBrand websitesEventsSeen WornCelebrities39%37%31%27%14%14%13%1237InfluencersGlobal market trendsInfluencersSocial media"Which of the following online sources of information / channels impact how you develop opinions or make decisions about luxury purchases?"

17. Stores stabilizing, driven by US; online only growing due also to US8%39%7%47%38%201310%42%2016Online onlyShowroomingROPOStore soloTotalOnlineonlyStore-soloROPOShowrooming40%39%9%12%100%Last purchase channel evolutionOmnichannel48%Omnichannel51%46%Signs of Store-solo stabilization driven by US (up 12 pp) True Luxury Consumers & younger generationsOmnichannel stabilizing for the 1st year; however, future growth expected to come from Millennials 'omni' attitudeOnline only continues to grow driven mainly by older generations in mature countries (i.e., promotional activity in US) 12abcabcOmnichannelGlobal market trends1. Researched Online, Purchased Offline2. Researched Offline, Purchased Online Note: referred to last purchaseSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)8

18. 3 channels dominate True-Luxury online ecosystem, counting for ~90%Luxury online ecosystem dominated by Mono-brand online, Full-price multi-brand & Generalist marketplaces (~90% of the last purchases online)Mono-brand online preferred in mature markets & by older generations, Generalist strong in China, and Multi-brand amongst MillennialsOnline ecosystem varies broadly across luxury categories and geographies, notably ChinaFull-price multi-brand (e.g. NAP, Farfetch)Generalist marketplaces(e.g. Amazon, T-mall, Alibaba, JD)Online flash sales(e.g. Vente-privee, VIP)Social Media linked sales(e.g. WeChat, C2C) Note: referred to last purchaseSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)Online ecosystemGlobal market trends32%23%Mono-brand website(e.g. Brand.com)Off-price e-tailers(e.g Yoox)33%6%4%2%9

19. Breadth and customization key to mono-brand online, while department store about range and exposure Mono-brand onlineFull-price multi-brandGeneralist marketplace40%30%26%Wide range of products of preferred brandHome deliveryOpportunity to customize the products34%34%24%Wide range of brandsWide range of products of preferred brandOpportunity to find niche brands & products39%38%34%Home deliveryWide range of brandsLower prices vs. physical storeOnline ecosystemGlobal market trendsWhich are the most important reasons to you to shop in the following online channels?Source: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)9

20. Purchases perceived to be additional to physical retail flattening at 60%; more perceived cannabilization in USSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)True-Luxury Global ConsumersBy nationalityCannibalization42%In addition to physical48%41%50%45%43%47%55%51%44%30%27%Global market trends"Do you have the feeling that your spending online is in addition to or cannibalizing your luxury spending in physical stores?"9Online ecosystem

21. Mobile prevailing over PC for online shopping, driven by Chinese and youth; further increases expectedDevice (smartphone, tablet)Personal computer (laptop)… to Chinese23%77%All True-Luxury Consumers2014201755%45%80-90%10-20%2024EGlobal market trendsNote: Referred to last purchase; % of people using device vs. personal computer / people buying onlineSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)"Which device did you use to buy this item online?"9Online ecosystemFrom Generation Z … to Silver66%34%75%45%25%MillennialsGen. Z55%Gen. X27%73%Baby Boomers19%81%Silver

22. Mono-brand still the most used channel by True-Luxury Consumers, gaining back some ground vs. Dep't StoresNote: Referred to last purchaseSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)True-Luxury Global Consumers27%19%7%High-end dept store16%35%20%6%17%19%32%Other Physical StoresShopping mallMulti-brandMono-brand22%19%7%6%20%16%6%Online6%Reasons to purchase in mono-brand storesConvenient location, easy reachTry & touch the productIntimate and relaxed environmentOffer range of the brandPersonal relationship with sales associate or personal shopper#1#3#2#4#510Mono-brand store"Which kind of store did you buy the product from?"Global market trends

23. Consumers suggest in-store experiences and services,vs. product, would drive increased store traffic21%20%27%21%20%19%Latest products including special editionsSales associate gives me advice on latest trendsProducts I cannot find onlineOffers experiences in storeUnique event in store to which I am invitedTrue-Luxury Global ConsumersStore has different product assortments in each city I visit% of respondentsranking#1#3#2#4#5#6Reasons related to experiences, special productsOther reasons10Mono-brand storeWhich are the reasons for which you are and would purchase more frequently in a mono-brand physical store? Global market trendsSource: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)

24. 10 trends relevant for the True-Luxury Consumers1. Luxury casualwear: keeps increasing vs formal with 73% appeal, +7pp YoY, also driven by "forever young" behaviors2. Luxury product values: traditional values as quality hold but new values as "extravagance & fun" key to success 3. Collaborations: cover demand for newness, give a cool edge, strengthen brand awareness & willingness to buy 4. Mix and match: ~55% Millennials partially shift from luxury brands to trade down or mix styles buying niche brands5. Brand loyalty: Millennials the generation with highest brand loyalty across categories - 36% are loyal vs. 30% overallProduct & Branding"What they want""Where they buy"Sales Channels8. Omnichannel: achieved ~50%. Online-solo keeps growing with older consumers. Store-solo shows signs of recovery9. Online ecosystem: evolving with regional differences (brand.com vs multi-brand vs generalist marketplaces shares) 10. Mono-brand stores: stabilizing due to luxury brands' efforts –"Special product" offer, in-store experience improvementCommunication& Media6. Social media: social media keep booming - from 9th in 2013 to 1st lever in 2017 on True-Luxury consumers 7. Influencers: within social media, influencer power booming because of perceived authenticity"How to reach them"Source: BCG-Altagamma True-Luxury Global Consumer Insight Survey (12K + respondents in 10 countries)

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