The Business of Luxury

How it works – where it leads

Luxury as a Business

Luxury is a fascinating phenomenon, but also a specialized business and an important eco- nomic factor.

The global business of luxury has grown subs- tantially in recent de- cades, and it plays by its own rules, many of them contrary to the ones that govern the mass market.

Growing Markets

Despite a number of global economic downturns, overall growth rates for luxury goods have been quite impressive, especially in emerging markets such as Brazil, Russia, India, and China.

Growing Markets

While European countries and the Americas currently still account for more than 60 % of global luxury sales, the market share of Asia has doubled during the past six years and continues to grow rapidly.

Growing Markets

Chinese consumers alone account for 20 to 25 % of global luxury sales.

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Value of the Personal luxury Goods Market Worldwide from 1995 to 2013 (in Billion euro)

Figure 1: Bain & Company, Altagamma, © Statista 2014

Luxury Goods Market

Source: Bain & Company, Altagamma, © Statista 2014

Value of the Personal Luxury Goods MarketWorldwide from 1995 to 2013 (in Billion Euro)

Major Trends

While many wellknown luxury companies base their success on tradition, another important factor in longterm growth is innovation and responsiveness to changing circumstances.

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Major Trends 2A major trend that is having an impact on many luxury players is the shift from material to experiential luxury in maturing markets.

Major Trends 3Currently, more than half of all luxury purchases are nonmaterial in nature and the sector is growing fast.

Major Trends 4Another phenomenon changing the way luxury is perceived, sold, and purchased is the Internet. Driving forces behind this and other trends are changing demographics, consumption patterns, values, as well as the tastes and habits of Generation Y.

Luxury Goods OnlineLuxury brands are reluctant to use online platforms because luxury is considered an identity and a philosophy that evokes uniqueness and exclusivity.

However, online platforms can still permit direct interaction between consumers and luxury brands while creating emotional and social values.

Several luxury brands now use online platforms very success-fully for their communication activities.

As a result, a good number of authors argue that online chan-nels are not appropriate for luxury brands because of the absence of personal contact, an ability to have a brand expe- rience, and its wide accessibility.

In The Business of Luxury the contents of this presentation are further expanded.

http://vdf.ch/the-business-of-luxury.html

Would you like to know more?

What you will learn: 1. about the historical roots and the conceptual basis of luxury;2. how the global luxury market is structured in terms of

industries and countries;3. what major trends will shape the business of luxury in

future years;4. about luxury in the online world and the specifics of

computermediated communication;5. what the transition from product to service and experience

focus mean for luxury companies and what they can learn from small niche players.

© 2017, vdf Hochschulverlag AG an der ETH Zürich. All rights reserved.We’re looking forward to your feedback: verlag@vdf.ethz.ch

Fabio Duma, Christine Hallier Willi, Cary Steinmann

2014, 62 pages, ISBN 978-3-7281-3662-6

vdf Hochschulverlag AG an der ETH Zürich

02 The Business of LuxuryFabio Duma, M.A. HSG

Prof. Christine Hallier Willi, PhD

Prof. Cary Steinmann, PhD