From design to fine wines, timepieces to digital technology, we interviewed the experts to find out what’s in store for the coming twelve months.
Despite the macabre sentiment regarding the world’s economies, forecasts concerning the luxury industry in 2012 appear reasonably optimistic. Altagamma expects all sectors to grow in 2012, reinforcing the organic growth of 2011. Leather goods, shoes and accessories, alongside jewellery and timepieces, are the sectors slated with the highest growth ratio, expected to improve up to ten per cent (Altagamma Consensus 2012).
“ Altagamma expects all sectors to grow in 2012, reinforcing the organic growth of 2011 ”
All geographical markets are also forecasted to grow steadily in 2012, led by over sixteen per cent in Asia and ten per cent in South America, driven primarily by China and Brazil respectively. Japan is forecasted to have higher growth in the first half of the year, driven by reconstruction efforts from the Tsunami, yet the forecast does not exceed two per cent.
But growth estimates aside, what is going to happen in China after a year of aggressive expansion by luxury goods brands? How will wealth be managed in emerging markets, as the next generation comes into power? And as precious metal prices reach all time highs, what can we expect to happen to the design of jewellery and timepieces?
We spoke with industry experts, to answer these very questions and many more.
A VIP Guest at Alexander McQueen’s Beijing Store (Maosuit)
China: Tier Time
“I think there will be a further lessening of conspicuous consumption in first-tier cities,” reflects Avery Booker, vice president new media at Jing Daily, “accompanied by greater opportunities for niche luxury brands.” Avery credits multibrand e-commerce sites like thecorner.com.cn, with bringing less well-known luxury brands and designers to the consciousness of wealthier first-tier consumers.
“In 2012, brands that have recently set up shop in cities like Beijing and Shanghai – such as Maison Martin Margiela and Alexander McQueen – should reap the benefits. Whilst more conspicuous brands like Louis Vuitton and Gucci could encounter greater indifference among more sophisticated shoppers in these cities. We can also expect to see smaller multi-brand retailers, which stock tightly curated collections by a select group of Asian and European designers, to do well in top-tier cities this year”.
“ Many of these second & third-tier cities remain largely untapped. Profitability potential is higher & serious pockets of wealth already exist ”
But for the big luxury brands, Avery expects they will be looking more and more to the second and third-tier cities of Mainland China, following a year of large-scale events and lavish flagships in Shanghai and Beijing. “Major brands tend to follow luxury automakers in the China market” he explains.
“Considering the likes of Rolls-Royce and Bentley opened dealerships in places like Zhengzhou, Xi’an and Chongqing in the second half of 2011, we should expect to see new flagships and boutiques following suit in 2012. Many of these cities remain largely untapped, profitability potential is higher and serious pockets of wealth already exist.”
Website: Jing Daily
Prada’s Spring Summer 2012 Campaign
Design: Fresh & Fantastical Optimism
“It’s the job of luxury to drive the future of desire and we are ready for a new start,” affirms Sophie Maxwell, insight director at Pearlfisher. “We are moving away from subtle luxury and the downturn ‘dour’ that has shadowed us for the last few years and towards a feeling of optimism, which brings with it the chance to truly focus on the future.”
Sophie is of the belief that luxury – just like fashion – sets the pace for aesthetic change, and that in 2012 this will be driven by a new fantasy, dream like art direction, currently emerging in the SSS12 campaigns for brands like Louis Vuitton, Prada and Mulberry.
“ We are moving away from subtle luxury & the downturn ‘dour’, towards a feeling of optimism, bringing with it the chance to truly focus on the future ”
“It has some retro references, which we are used to – Prada’s 50’s look for example – which gives the consumer a reference point and therefore perhaps a feeling of reassurance. However, there’s more of a fresh, fantastical and inspiring feel to the visions that brand’s are projecting than we have witnessed for sometime.”
And as the structural and geographical nature of the luxury industry changes, design and communications will begin to reflect its new diversity. “We are excited to see the influence of Luxury ateliers moving away from the domination of the west and bold, new powerhouses rising elsewhere. The effects will influence us all.”
Gucci’s Milan via Montenapoleone flagship, which includes 50 LCD video wall displays that will this year enable natural human-computer interaction
Digital: Continued Convergence
“2011 has undoubtedly been an exciting 12 months,” confirms Tamar Kolfman, social media strategist and contributor to Fashion’s Collective. “We’ve been tracking and covering the digital happenings in the fashion and luxury space over the past few years, but 2011 was particularly energetic.”
“We’ve seen the rise of social networks such as Tumblr and Instagram. We’ve seen a number of brands experiment with social commerce and augmented reality. And with the growing popularity of iPhones, iPads, Androids, and smartphones galore, we finally began to see a shift in attention towards mobile.”
“ With the growing popularity of iPhones, iPads, Androids, and smartphones galore, we finally began to see a shift in attention towards mobile ”
Tamar expects will continue to experiment with technologies and various social platforms, but that the onus won’t be as much on just continuing, as it will be on converging. “It won’t be about simply testing a new technology with a one-off approach,” Tamar elaborates. “It will be about building connections amongst and between the various online and offline communication channels that brands rely on.”
“From digitally integrated brick-and-mortar stores (as Sephora has done with its new Meatpacking location in NYC), to mobile-friendly print advertising (like brands such as Ralph Lauren and Dunhill have executed), we expect to see brands and companies blurring the boundaries of each channel and providing their customer base with an experience optimised to how real people live and interact.”
Website: Fashion’s Collective
Dolce & Gabbana’s Autumn Winter 2011 jewellery campaign
Fine Jewellery: Seasonality & Sustainability
The worlds of fine jewellery and luxury fashion will move closer together in 2012. Maria Doulton, founder of The Jewellery Editor.com, muses that the launches of high jewellery by Ferragamo and Dolce & Gabbana, may result in more seasonal products and direct influences from the houses’ design cues.
“It’s no surprise that big luxury brands are moving into jewellery, in a bid to expand into this largely unbranded and potentially profitable category. Both Dior and Chanel are expanding their offer and Vuitton – who only started making fine jewellery a few years ago – will open a jewellery boutique on Place Vendôme.”
“ Launches of high jewellery by luxury fashion brands may result in more seasonal products & influences from the houses’ design cues ”
But just as the big names flock to the proverbial ‘gold rush’, Maria expects more design to come from Asia, as designers such as Carnet, Gimel and Cindy Chao demonstrate that Asians are not just consumers of European jewels, but leaders in design of high end jewellery; “as shown by prices achieved for their pieces at auction.”
From an industry perspective, conversations surrounding ethics and sustainability in sourcing will continue. “With the arrival of FairTrade and FairMined gold in February 2011 and an increasing number of large luxury houses joining the Responsible Jewellery Council, sustainability and ethics are becoming an extremely important part of brand values.”
Website: The Jewellery Editor
Asian fine wine buyers are expected to look further than Bordeaux in 2012
Fine Wines: Beyond Bordeaux
When one talks about fine wine, it is difficult to have a conversation without referencing France’s famed Bordeaux region. Its auction price – particularly in China – has become somewhat of a climate gauge in the industry. Paul Liversedge, founder and director of Real Wines, is reasonably cautious about 2012.
“The serious economic recessions in Europe and the U.S., combined with the worrying effects of high inflation and falling property and share prices on the Chinese market, are likely to exert continued downward pressure on the prices of Bordeaux fine wines during the first half of 2012. Though this could result in opportunities to buy Bordeaux’s top wines at significant discounts to their prices pre June 2011, particularly in the second half of the year.”
“ As the Asian market matures, fine wine buyers will continue to look outside Bordeaux for great quality wines at more affordable prices ”
Paul also believes that the 2011 vintage – not considered to be of the exceptional quality of 2009 and 2010 – could be released at prices too high to create much customer interest, explaining that “historically the Bordeaux Chateaux are slow to react to poor global economic conditions”. He also muses that 2009 and 2010 en primeur purchases have so far proven to be poor investments, which could result in short-term investors selling, releasing significant quantities of stock onto the market and further pushing prices downwards.
As the Asian market matures, fine wine buyers will continue to look outside Bordeaux for great quality wines at more affordable prices. The focus could shift to the Northern and Southern Rhone as well as Burgundy, who experienced great vintages in 2009 and 2010. “The highest rated wines from these areas will probably see high demand and commensurate rises in price. Piedmont and Tuscany have also had a run of successful vintages between 2006-2009 which will add to the interest and demand for the best wines from these areas.”
Website: Real Wines
IWC’s classic designs, using innovative materials will set the scene in 2012
Timepieces: Innovative Independents
Speaking again with Maria Doulton, she reiterates that shifts in the jewellery and timepiece world are slow, so we are always looking at gradual evolutions rather than one big rupture. That said, she believes the past few years has seen a return to classic shapes and ‘safe’ design proposals. “The rise of the three hand round gentlemen’s watch and the demise of the diamond-encrusted sports chronograph show how the watch industry has pulled in its horns and relied on safe, well-trusted favourites”.
“Brands have focussed on their core designs and what they are best known. Rather that impress with new mechanical marvels and audacious design gambits, design has focussed on details such as the strap, as seen at IWC in 2011, with a whole new range of woven metal bracelets and fine leather straps. However, I expect to see more interesting designs this year as I think that the market is ready for some fresh new faces.”
“ As with all luxury goods, micro brands are on the rise as the international names become ever more ubiquitous. Think Bremont, Greubel Forsey & John Isaac ”
Maria is hoping for more mechanical innovations, suspecting that the majority will be focussed on “increased precision and reliability, rather than obscure mechanical feats.” Whilst tracking sidereal time or chiming minutes may fall foul of the zeitgeist, Rose gold is expected to remain the favourite precious metal, as it has done for the past five years. Though woman are thought to be moving more and more towards yellow gold.
The real changes may come in the form of the players. “As with all luxury goods, micro brands are on the rise as the international names become ever more ubiquitous. Think the likes of Bremont, Greubel Forsey and John Isaac”. With over 5000 visitors expected to attend this week’s Geneva Time exhibition – a showcase of fifty young brands and watch manufacturers – the interest is clearly beginning to mount, in collectors and consumers alike.
Website: The Jewellery Editor
2012 will be marked by the growing concern about the next generation of wealthy in emerging markets
Wealth: Generation Next
“The last 5-10 years have been about the meteoric growth of wealth in emerging markets,” suggests James Lawson, director of Ledbury Research. “2012 will be marked by the growing concern about the next generation of wealthy in these markets. As wealth is handed from first generation to second, we expect a number of challenges to arise leading to difficulties for both the parents and children.”
Research undertaken by Ledbury for Barclays Wealth, found that despite inheritance being associated with more developed economies, inheritance was the source of wealth for 29% of millionaires in emerging markets, as compared to 18% in developed markets.
“ 2012 will be marked by the growing concern about the next generation of wealthy in these markets. ”
“The newness of wealth there means that succession planning is not yet a feature. The implication is that this lack of planning could undermine the country in question’s ability to sustain its wealth levels going forward,” remarks James.
“Our Wealth Segment reports that look at wealthy segments across these fast growing countries, have uncovered this phenomenon in markets as diverse as China (where we found it was an acute issue for the Guanxi Connector segments), the UAE (affecting Founding Fathers) and Russia (Capital Heirs).”
Website: Ledbury Research
Published on 18 Jan 2012 under Data & Analytics
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