Last year, in partnership with Sofitel and Louis XIII, Luxury Society launched its first series of events, held in twelve cities over six weeks. Debuting in Munich, LS Locals visited Moscow, Milan, Dubai, Mumbai, Hong Kong, Shanghai, Los Angeles, São Paulo and New York, as well as Paris, London and Geneva.
Almost 500 members attended cocktail receptions, intimate dinners and spirited debates, where Luxury Society sought to better understand how the global luxury market is evolving – on a local level – and gather key insights and analysis for our regional market guides.
After drawing on the collective local wisdom of members and gathering valuable first hand market information and insights, we are pleased to announce the first launch in our series of Market Guides, looking at key continental European markets: France, Italy, Germany & Switzerland.
Our guides consist of wealth report data and statistics on the region, provided by LS Partner Ledbury Research, as well as comprehensive directories of all country-based service providers, to be contacted by brands wanting to develop their business locally. Below we have also included some key insights from LS members, sharing their analysis, visions and experiences
Three of Germany’s most iconic luxury car brands, Mercedes-Benz, Audi and BMW
Germany is traditionally a manufacturing and export market, dominated by the design and production of premium automobiles. Home to market leaders BMW, Audi, Porsche and Mercedes-Benz, Germany has state of the art R&D;, design and development facilities for the auto industry, and, despite a gradual spread to lower-cost labour markets, a significant capacity for production.
As a federation, Germany does not have a single economic centre. The capital, Berlin, is home to the strongest retail market for luxury goods, whilst the stock exchange is located in Frankfurt and Stuttgart and Munich serve as manufacturing hubs for automobiles. In terms of consumption, Germany is considered a mature market, where most major players have established their own retail channels.
“ In 2010, luxury consumption in Germany reached €11 billion. It is estimated to reach €24 billion by 2020. ”
Germany’s commitment to luxury became particularly evident in 2011, with the formation of MEISTERKREIS – Deutsches Forum für Luxus, in Berlin. The group brings together leading businesses in the German luxury segment, important individuals and institutions of cultural and scientific communities as well as international luxury brands that have established themselves permanently in Germany.
The move was particularly timely when one considers the results of a recently published survey by the opinion research institute TNS Emnid, according to which 76 per cent of all German people describe themselves as ‘hedonistic’; among 14-29 year olds the figure rises to 88 per cent (2Luxury2). A further recent study – by Roland Berger Strategy Consultants – values the German luxury goods market in 2010 at eleven billion euros. Should annual growth remain at its forecast nine per cent, this could mean a market worth 24 billion euros by 2020.
A Chanel boutique on Paris’ famed Avenue Montaigne. Home to Hôtel Plaza Athénée and Christian Dior’s original atelier
France is one of the wealthiest and most diverse economies in the world, home to market leaders in insurance, aviation, energy, environmental services, banking, advertising and retail, relying heavily on tourism, design and production. France is home to the 1st and 2nd largest luxury conglomerates, LVMH and PPR respectively, as well as the world’s biggest cosmetic company, L’Oreal.
Driven by a strong tourism market, France is also known for its hyper-luxury hotels, production of fine foods, wines and spirits. Paris is the official capital and financial centre, however, because of appellation control, manufacturing is spread across many regions. Luxury goods consumption is mature, aided by a healthy travel-retail economy, where luxury is retailed through brand owned stores.
“ Guests are not looking for a discount or a special price but more and added value included in their stays ”
“Customers are more and more demanding,” remarks Michel Jauslin, Area Vice President, Hyatt Hotels & Resorts – France. “When they visit a five-star hotel in Paris, they are excepting the best service quality in the French tradition. We have to offer them more than a mere night in a hotel; we have to offer them a dream come true. They are not looking for a discount or a special price but more and added value included in their stays (breakfast included, wifi, special amenities).”
“In France, especially in Paris, we have to face a very competitive market. Each Palace communicates a lot on all the aspects of the hotel (rooms, restaurants, spa, bar). The press remains today a very effective way to communicate on the local market. A list of ten newspapers / magazines can have an influence on the market. That is why we need to communicate on an uninterrupted flow all along the year to face the competition.”
Switzerland’s most iconic export – the timepiece – originating in the now famed regions of Neuchâtel and the Vallée de Joux
Switzerland is known as one of the most stable economies in the world, small in size and high in labour specialisation, timepiece production is the dominant industry. The roster of Swiss luxury Horlogerie brands is extensive: Rolex, Baume et Mercier, Omega, Hublot, Breitling, Corum, TAG Heuer, Patek Philippe, and Audemars Piguet just to name a few.
Whilst Berne is the official capital of Switzerland, financial and industrial activity is concentrated in Zurich and Geneva, the latter home to the 3rd largest luxury conglomerate in the world, Compagnie Financière Richemont. A conglomerate that controls brands such as Cartier IWC, Can Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, Panerai and Montblanc, alongside recent UK based acquisition, Net-a-Porter.
“ Swiss made is key in this industry – production, distribution and promotion take very much this into account ”
“Swiss made is key in this industry – production, distribution and promotion take very much this into account. The Swiss consumer is getting more sophisticated, and gives more value to image than to recognition,” remarks Guillaume Deglise, General Manager, Laurent-Perrier Switzerland.
“The purchasing power in Switzerland is higher than anywhere else in Europe, but the Swiss consumer does not seek out novelty, instead they explore authenticity. The watch industry has driven consumers to enjoy local brands and has somehow influenced the habits towards luxury goods in general.”
“Switzerland has been much affected recently by the exchange rate between the Swiss Franc and the Euro. The future depends on how this situation will evolve, and everyone is not likely to survive the downturn. Either you offer a quality that cannot be matched (Swiss watches or champagne are some of these products), or you will have to offer shoppers the best value they have ever seen.”
Rome’s iconic Via Condotti, home to native superbrands Prada, Bulgari & Salvatore Ferragamo
Italy is a market driven by automobiles and tourism, known in the luxury industry for a focus on design and artisan production. The industrialised country is home to some of the world’s most famous luxury brands, across a range of subsectors: supercars (Ferrari, Maserati, Lamborghini), fashion (Armani, Prada, Versace, Gucci, Dolce & Gabbana, Luxottica, Tod’s) and yachts (Aquariva, Perrini Navi, Ferretti & Azimut).
Rome, the official capital, is regarded as a major financial and political centre, as is Milan, where in both cities there is a significant presence of brand-owned retail channels. Production facilities are generally located the northern ‘industrial triangle’ of Milan-Turin-Genoa or the Tuscan triangle consisting of Florence-Prato-Pistoia.
“ Local Italian customers are extremely knowledgeable, with a deep knowledge of products, techniques and features ”
“Local Italian customers are extremely knowledgeable,” reflects Grazia Soresina, Italy’s brand manager for Christian Dior Couture. “Our customers have a deep knowledge of products, techniques and features – they particularly appreciate high quality and handcrafted details. In terms of service, they very much value to the one-to-one approach and tend to develop personal relationships in store. Our core customers are local women, aged 36-45.”
“In terms of distribution, retail is extremely well developed in the key cities of Milan and Rome, and also secondary cities like Florence, Venice, Naples and resort locations Forte dei Marmi, Capri and PortoCervo, where many key competitors are present. The only truly luxury department store is Rinascente, but Italy is filled with many high-end multibrand boutiques around the country.”