1. Market Status
01. Market Size
Due to the global economic environment and exchange rate fluctuations, the revenue of the three major luxury groups experienced a slight decline compared to the same period in 2023. On average, their revenue fell by 3% year-on-year. The revenue of LVMH Group and Richemont Group decreased by 1% year-on-year, while Kering Group's revenue fell by 11% to 9 billion euros.
02. Segment Performance
In the first half of 2024, LVMH Group experienced revenue growth in the Perfumes & Cosmetics and Selective Retailing segments, but saw declines in Wines & Spirits, Fashion & Leather Goods, and Watches & Jewelry. Sales in the Fashion & Leather Goods segment dropped by 2% year-on-year. Sephora continued to expand its market share, further consolidating its position as the world’s leading perfume and cosmetics retailer, and contributed to a 3% increase in Selective Retailing sales year-on-year.
Richemont's jewelry segment recorded a 0.5% increase in sales year-on-year for the first half of 2024, with a 4% increase in the second quarter. The watch segment saw a 10% drop in sales to 1.752 billion euros.
Kering's flagship brand, Gucci, experienced a 20% drop in revenue to 4.09 billion euros in the first half of 2024. Bottega Veneta's sales grew by 0.4% year-on-year to 836 million euros. The eyewear business performed well, with a 23% increase in revenue to 1.067 billion euros, and operating profit surged by 61% year-on-year.
03. Regional Performance
In the first half of 2024, the performance of major groups in different regional markets diverged significantly from previous years. Both LVMH and Kering showed slower growth in key markets in Asia-Pacific and the Americas compared to Japan and Europe.
LVMH’s revenue in Japan grew by 28% year-on-year, while in Europe, it increased by 3%. Revenue in the U.S. market dropped by 1% year-on-year.
Kering’s revenue in Western Europe was 2.555 billion euros, an 8% year-on-year decline, while in North America, it was 2.057 billion euros, a 12% decline.
Richemont recorded revenue growth across all markets except Asia-Pacific (excluding Japan). Revenue in Japan grew by 34% to 1.016 billion euros, while in the Americas, the Middle East, and Africa, revenue increased by 11% year-on-year.
Based on financial reports, the Asia-Pacific market still accounted for the largest share of overall group revenue, with an average revenue share of 40.3% for the three major groups in the first half of 2024, slightly down from 42.8% in the same period of 2023.
In the first half of 2024, growth slowed in most regions due to macroeconomic downward pressure, but Japan, affected by currency devaluation, attracted many foreign consumers. According to the Japan National Tourism Organization, Chinese mainland tourists to Japan increased fourfold compared to the same period last year. In its first-quarter report for 2024, LVMH stated that revenue growth in Europe, the U.S., and especially Japan was mainly driven by Chinese consumers. In other words, Chinese consumers reduced their spending in the domestic market but increased cross-border travel spending, boosting local markets.
According to estimates from Tencent Marketing Insight and Boston Consulting Group in the "2024 China Luxury Market Insights Survey," Chinese consumers have consistently contributed 20%-25% to the global luxury market for five consecutive years. PwC predicts that by 2030, the total size of China’s luxury market will reach $148 billion, potentially surpassing the U.S. as the world’s largest luxury market. Based on various estimates from different institutions, the Chinese market is expected to play a significant role in the global luxury industry in the long term.
2. Consumer Phenomena
With changes in macroeconomic conditions and generational shifts in consumer groups, the luxury industry has seen new consumption trends. This report aims to inspire Chinese companies by studying the development of the international luxury market, focusing mainly on Chinese consumers due to their importance in the luxury industry.
01. Changing Consumer Groups
In recent years, China’s luxury consumers have been undergoing a "generational shift." The post-90s generation, and even younger post-2000s, have become the main consumers. According to Maobo Research Institute, the post-90s group accounts for half of the existing market and nearly 60% of the growing market. Among post-90s consumers, self-indulgent consumption has gradually become the main demand, and white-collar workers are making more rational luxury purchases. According to Maobo Research Institute, 44.1% of working individuals purchase products within their financial means.
02. Changes in Consumer Preferences
The post-90s consumer group is highly price-sensitive. Individualistic young people prefer products that match their habits. Luxury brands are emphasizing product "practicality" in their designs, so that consumers can pursue high-quality luxury goods that also integrate with everyday life, focusing on pragmatism.
Meanwhile, luxury brands are becoming more inclusive by collaborating with celebrities from diverse fields. Many brands are engaging in deeper cooperation with KOLs from different areas, introducing a variety of product styles that give each brand its own unique color. Brands are also focusing more on innovation in product R&D and marketing strategies to adapt to popular trends and personality-driven fashion.
In market development, aligning with and integrating local culture has become a core goal, helping attract loyal customers. Cultural integration is reflected in brands' dedication to the local market and their depth in exploring brand value and cultural connections. According to Boston Consulting's "2024 China Luxury Market Insight Report," brand documentaries have become the second most popular type of brand content for consumers, after brand advertisements. This trend indicates a growing interest in deeper brand meanings and shows the increasing maturity of luxury consumption.
03. Changing Consumption Habits
(1) Online Channels
According to the "2024 China Luxury Market Insights Survey," 86% of consumers obtain luxury information through online brand content. Interest in brand content related to culture and celebrities is continuously rising. Online channels have become the most important "recommendation" channels for brands. Brands are more inclined to invest in online advertising, particularly on community websites, video platforms, and social media.
(2) Secondary Luxury Platforms
The current consumer group is placing more importance on sustainability and the circular economy. Young people embrace the minimalist "declutter" philosophy and also seek "calculated consumption" that takes future resale opportunities into account. As such, their consumption decisions are increasingly driven by whether items can be resold in the second-hand market. This change is further propelling the growth of the second-hand luxury industry.
3. Brand Inspiration
01. Affordable Collaborations, Pricey Classics
(1) Affordable Collaborations
To attract a younger audience, luxury brands have started cross-industry collaborations. These collaborations may draw in new consumers who could potentially become loyal customers as their purchasing power grows.
For example, Balenciaga collaborated with Nanxiang Steamed Bun Shop for a limited-time event in Shanghai, making Nanxiang buns a high-fashion experience.
(2) Pricey Classics
In addition to collaborations, many luxury brands maintain their high-end image through pricing strategies, emphasizing exclusivity and uniqueness. Younger consumers value the resale potential of luxury goods, and higher pricing sometimes drives demand for classic products in an economic downturn. Brands like Hermès, Chanel, and Louis Vuitton have announced price adjustments amid a new round of price hikes due to sluggish markets in the Asia-Pacific region.