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Luxury spending trends 2017: Japan second largest luxury market in the world

Tight-fisted shoppers, unsteady economic growth and a shrinking population: Japan doesn’t exactly fit the image of a spending powerhouse these days. But you would never know it in Ginza — Tokyo’s answer to the Champs-Elysees or Fifth Avenue — where a new 13-storey upscale mall is proving that Japan is still a whale in the luxury business.

The country logs some $22.7 billion in annual spending on top-end goods made by brands including Chanel, Dior, and Prada, ranking it as the world’s number two luxury market behind the United States. “Luxury products may be more expensive, but they are very well-made,” said 79-year-old Toshiko Obu, carrying her longtime Fendi bag outside the Ginza Six building, which has been drawing big crowds since last week’s opening.

Japan is renowned among the world’s priciest retailers for its discriminating clientele—Chanel tries to keep local customers physically separated from tourists packing more cash than class. “You shouldn’t forget that a big portion of the luxury clientele is here in Japan,” Sidney Toledano, chairman and CEO of Christian Dior Couture, told AFP at the opening of the 241-store building. “It remains a strategic market for luxury and, I’d say, true luxury.”

‘Biting their fingernails’

Dior is counting on Japan’s luxury market to rise this year, while rival Chanel is also expecting an upbeat 2017 after global sales of personal luxury goods barely grew last year. “We did not lose our character,” said Richard Collasse, head of Chanel in Japan. “There are brands that are suffering—the ones that at some stage stopped investing in Japan because China was the new El Dorado. And today they are biting their fingernails.”

Few brands predicted that deep-pocketed Chinese shoppers visiting Japan would support its luxury market—tourists account for about one-third of top-end spending.

Japan is hoping to land 40 million visitors in 2020, the year that Tokyo hosts the Olympics. Last year, some six million Chinese visited, compared with 2.4 million in 2014. “Historically, (Japan has) been a very insular luxury market where 90 to 95 percent of the spending was by locals,” said Joëlle de Montgolfier, Paris-based director of consumer and luxury product research at consultancy Bain & Company. But now some 30 percent of sales are generated by foreign visitors owing to tourism, she added.

A stronger yen dented visitors’ purchasing power last year, with luxury sales down one percent, after a nine percent rise in 2015. Dior’s Toledano said it is an opportunity to refocus on Japanese clientele. “We don’t ignore tourists, of course, but we’re not a duty-free shop,” he added.

‘Touching everything’

Some other Chanel shops in Tokyo have a separate cosmetics and perfume section reserved for top Japanese customers, in a bid to keep them away from the nouveau riche crowd. It also tips off local clientele about the expected arrival time of tourist buses so they can avoid them.”The loyal Japanese clients tend to run away from customers who were not very well raised and are wearing whatever or lying all over the sofa, touching everything,” said Chanel’s Collasse.

Dior’s haute couture show at the new mall’s opening featured Japanese-inspired dresses, underscoring a focus on the local market. But warning signs lurk behind smiling clerks and glitzy interiors at the new property on one of the world’s priciest shopping streets. Japan has struggled to reverse a decades-long economic slump while a falling population continues to shrink its labour force—and the pool of future luxury consumers.

Younger people, many on tenuous work contracts, don’t have the money or the same interest in luxury brands anymore, especially since top-end goods can now be rented online instead, said Naoko Kuga, a consumer lifestyle analyst at Tokyo’s NLI Research Institute. “When you look at consumer purchasing behaviour, younger people put less value on luxury brand products” than previous generations, she said.

Hermes in Shanghai

China luxury market shrank in 2014

Hermes in Shanghai

China’s luxury market shrank last year, a global consultancy said, attributing the decline to a national anti-corruption campaign, slowing economic growth and changing consumer tastes.

Sales of luxury goods in mainland China fell`1% to 115 billion yuan ($18.5 billion) in 2014 compared to a year earlier, Bain & Company said.

The consulting firm, which has been surveying the market since 2000, said it was the first time the industry had contracted.

China has become an ever more important destination for luxury goods manufacturers as the ranks of its wealthy have been swelled by a decades-long boom.

Swiss giant Richemont, the world’s second-largest maker of luxury products, said in November that its 2014/2015 first half net profit dropped 23 percent due to weaker demand in China.

The overall decline last year was because of the “continued impact of anti-corruption and frugality campaigns undermining ‘luxury gifting'”.

Slowing sales of high-end watches, menswear and leather goods contributed the most to the decline, the consultancy added.

Chinese Communist Party chief Xi Jinping has overseen a much-publicised anti-corruption drive since taking power in late 2012, targeting high-level “tigers” and low-level “flies”.

A parallel austerity campaign has also has sought to curtail extravagant gift-giving, banquets and other excesses in the ruling party and government.

Bain added that China’s slowing economic growth was “exacerbating the issue”.

China’s economy expanded 7.4 percent in 2014, its weakest pace in 24 years, official data showed Tuesday, and authorities are emphasising a “new normal” as they retool the country’s growth model to one they hope will be more sustainable.

The consulting firm also stressed that China’s luxury market is becoming more diverse.

“The field of luxury brands in China is breaking wide open,” Bruno Lannes, the Bain partner who wrote the report, said in a statement.

“Brands’ future positioning and popularity within the luxury market hinges on their willingness to revamp concepts to serve the needs of the increasingly sophisticated and well informed Chinese consumers, while managing the growing diversity of sales channels, such as daigou.”

Daigou is a Chinese word for personal shoppers abroad who purchase luxury goods and send them to customers in China.

Bain said that the daigou market increased in 2014 to an estimated 55 to 75 billion yuan, led by cosmetics, leather goods, watches and jewellery.

The consultancy said that Chinese now purchase 70 percent of luxury brands either overseas or through daigou agencies.

exhibition of counterfeit goods

LVMH, Google unite against fake online luxury goods

 exhibition of counterfeit goods

French luxury products group  and Internet search engine Google have agreed to work together to fight the sale of counterfeit goods online.

The agreement ends nearly 10 years of litigation over complaints by LVMH that the Google Adwords key words service helped counterfeiters sell their products on the back of LVMH brands.

DON’T MISS: US CELEBRITY CHEF SUED FOR COUNTERFEIT WINE

LVMH is a leading group in the growing, global market for luxury products, but faces the mounting problem of copycat products sold at huge discounts.

The companies said in a joint statement that they would work together “to develop new ways of engaging consumers online whilst preserving the value of trusted brands and enhancing creativity…”

They said they would use their considerable resources “to tackle the advertising and sale of counterfeit goods online”.

Google was found guilty in a French court in 2005 of counterfeit activities, unfair competition and providing misleading advertising.

The Internet giant lost an appeal the following year and a superior court then referred the matter to the EU European Court.

SEE ALSO: FRENCH LUXURY BRANDS FIGHT BACK AGAINST FAKES

In 2010, the European Court of Justice gave a judgement in favour of Google, holding that the search engine did not itself undermine protected brands and trademarks when it allowed them to be used as keywords to trigger the presentation on screen of advertisements.

However, Google could be held responsible once it realised that an advertiser was involved in illicit activities, and if it did not act immediately to withdraw or block the advertiser’s content, the court ruled.

The case was then sent to the Court of Appeal in Paris, but has now been settled by the agreement announced on Thursday.

instant luxe

Second-hand luxury goods market booms in France

A decade ago, French lovers of high-end fashion would not have dreamed of buying a pre-owned luxury fashion accessory. Now the second-hand market for luxury goods is booming, thanks to the internet.

The global second-hand luxury market is worth an estimated 3 billion euros (and that’s a lot of bags! Even when they’re Chanel).

SEE ALSO: HONG KONG FIRM TO PAWN LUXURY HANDBAGS

China May Start Taxing More Luxury Goods

burberry accessories China

China may start levying taxes on an increasing number of luxury goods as part of the country’s efforts to push forward economic reform.

More products might be taxed, as part of the country’s tax reform plans for this year, said Kong Jingyuan, a director-general at the National Development and Reform Commission.

The guidelines for tax reforms were published by the Central Government on Friday.

In the guideline, the NDRC pledged to “properly modify the rate and scope of consumption taxes”. According to Kong, the changes will be carried out both in terms of rates and structures.

Taking into consideration the increasing national income levels, some products that used to be regarded as luxury goods are now seen as daily necessities and thus will not be taxed as luxury products, he said.

In addition, he said, some goods that have become more common in recent years, such as luxury cars and yachts, will be subject to luxury taxes.

Heavier consumption taxes will also be levied on “heavy-polluting and excessive-energy consuming products”, according to the guideline.

An earlier report by China National Radio said that a 20 percent extra tax will be levied on cars priced at more than 1.7 million yuan ($277,440).

China’s luxury-goods market is likely to grow by a world-leading 20 percent this year, accounting for more than a quarter of global luxury sales.

Source chinadaily

Dior Store China

Chinese buying more luxury goods at home

Dior Store China

Chinese shoppers are increasingly buying luxury goods in mainland China, turning away from high-end stores abroad and in Hong Kong, a survey indicated Thursday.

The poll by market research firm Ipsos found that Chinese buyers preferred to shop on the mainland for luxury goods in five of its seven categories — watches, cosmetics, clothes, shoes, and wines and cigars.
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Chinese tourist Louis Vuitton store

Chinese consumers first in luxury line by 2015

Chinese tourist Louis Vuitton store

Chinese consumers will be the leading buyers of luxury goods brands by 2015, snapping up pricy items at home and abroad, according to a study published Tuesday by the Boston Consulting Group.

“We predict that by 2020, more than 330 cities in China will have the same level of disposable income that Shanghai had in 2010, and that by 2015, China will become the world’s largest luxury market,” the BCG said.
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counterfeit products

French luxury brands fight back against fakes

counterfeit products

French luxury brands from Chanel to Vuitton on Wednesday launch a campaign with several European countries to fight back against the increasingly lucrative and damaging flood of counterfeit goods.

The global market for luxury fakes has exploded, fed by Asia where 85 percent of articles seized in Europe are produced and the increasing popularity of on-line shops that give the buyer a sense of anonymity and impunity.
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weibo

Top online resources for China’s luxury shoppers

weibo

Mainland luxury Chinese consumers are becoming increasingly open to shopping for, and finding information about, luxury brands online with news portals.

Weibo is one of the most popular sources for information, according to the results of a survey released November 28 by PR group Ruder Finn Asia.

The survey was conducted among 1057 Mainland Chinese luxury shoppers by Ruder Finn Asia as part of its China Luxury Forecast.
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billboard luxury diamond watches

Chinese demand fuels Swiss watch success

billboard luxury diamond watches

The Swiss watch industry is in rude health with exports leaping once again last month and watchmakers set to notch up a record year thanks to Chinese consumers

Despite the the effect of the global debt crisis, the demand for Swiss watches hit a peak in October, putting smiles on the faces of the country’s 600 watchmakers.

Data from the Federation of the Swiss Watch Industry (FH) showed exports rose to 1.9 billion Swiss francs ($2.0 billion), up 18.6 percent on the same month last year.
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luxury watch boutique Mumbai

Brand-addicted Indians propel luxury sector

luxury watch boutique Mumbai

India’s luxury sales are expected to expand by a scorching 20 percent annually until 2015, as brand-smitten consumers snap up big names to flaunt their wealth.

Luxury sales were slow to take off in India a decade ago, disappointing retailers who had rushed into what they hoped would be the next China — a vast market of over a billion people with an eye for status symbols.

But now Indian consumers “are quickly catching up with global trends”, according to Neelesh Hundekari, author of the recent “Indian Luxury Review” report.
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Tiffany shop Hong Kong

Luxury goods sales set for 10% growth: study

Tiffany shop Hong Kong

The luxury sector is set to post double-digit growth this year to 191 billion euros driven by the appetite of Chinese consumers for top-quality goods, according to a study by Bain & Company released on Monday.

While “the global economic situation is difficult” the luxury sector “is in good health and is growing above all in Asian markets,” said Santo Versace, head of the Italian fashion house and the Altagamma Foundation of Italian luxury companies.

The growth forecast was revised up to 10 percent from 8 percent, but still falls short of the 13-percent growth the sector recorded last year.
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Front row fashion show

Fashion bloggers to spur online luxury sales

Front row fashion show

Fashion bloggers will help propel online sales of designer clothes, jewels and luxury cars to more than 11 billion euros ($15 billion) in 2015.

The exclusive fashion world has embraced the Internet later than other industries but is catching up quickly.

Brands such as Burberry, Tiffany and Gucci are increasing exposure to social media to connect with a new generation born when mobiles and Internet were already there.
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Vipstore

Luxury shopping websites in China

Vipstore

You don’t have to tell the people at Prada how valuable the Chinese market for luxury goods has become — the Italian fashion icon is so keen to set up a base out East that it is about to be listed on the Hong Kong stock exchange.

In fact, such has been the rush by the world’s luxury brands to get a foothold in China that there are, apparently, little to no spaces left for them in the malls of the country’s largest cities.

Bad news for the brands themselves — keen to get a slice of a market estimated to be now worth 84 billion yuan (nine billion euros) a year — but it is good news for China’s fast-growing number of online luxury-only shopping portals.
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mainland Chinese luxury consumers

China’s luxury consumers get their information online

mainland Chinese luxury consumers

As the buying power of China’s masses continues to spiral upwards, more and more information is being gathered focusing not only on what they like to spend their money on but how they go about spending it.

This week it has been the turn of the international audit and advisory services firm KPMG to release its report into the spending habits of mainland Chinese.

It found that 70 percent of the country’s consumers of luxury brands search the internet each month before making their purchases. What’s more, 30 percent claimed they searched online for information on luxury items each week.
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Louis Vuitton store shanghai

World luxury market to grow 8%: study

Louis Vuitton store shanghai

Global luxury sales should grow eight percent this year to 185 billion dollars (124 billion euros) but Japan‘s market will contract.

The forecast was raised from an earlier estimate of growth of between three and five percent but would still be lower than last year’s result of 12-percent growth in the luxury market, as the world recovered from the economic crisis.

Growth would average five to six percent a year until 2014 according to a study by research group Bain&Company released Tuesday.
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China Luxury Customer

China gets the luxury goods – but maybe not the style

China Luxury Customer

A rise in the spending power of China‘s younger consumers is apparently not helping them when it comes to picking up a little style at the same time.

Mainland Chinese media have this week picked up on a report released by the Hong Kong Institute of Fashion Buying and given it a interesting spin, saying that while more and more younger Chinese are now able to spend lavishly on luxury goods, they have been unable to pick up the one thing money can’t buy — good taste.

That report showed that the age group for consumers of luxury goods and high-end fashion in China was between 20 and 50 years old — and compared that to the age group of 40 and 60 years old found for the same habits in Japan.
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giant suitcase LV store Shanghai

Beijing targets luxury ads amid wealth gap

giant suitcase LV store Shanghai

Beijing has banned outdoor advertising that promotes high-end lifestyles as the government seeks to ease public concerns about the country’s widening wealth gap.

Businesses Have been given an April 15 deadline to rectify such ads, along with any that excessively promote “foreign” things.

It gave no details on which “foreign” things were deemed objectionable. Such promotions help create a politically “unhealthy” climate, it said.
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Dubai Duty Free

Luxury goods lead rise in duty-free spending

Dubai Duty Free

The amount we spent on duty-free increased 13 percent last year with much of the growth coming from increased consumption of luxury products.

The global duty-free and travel retail market was up by $4.5 billion, reaching a whopping $39 billion in 2010.

The increase was particularly marked in luxury goods, suggested Generation Research, which saw a 16.7 percent boost in sales to more than $14 billion.
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