The news that Burberry's same-store sales growth dropped in the first half of 2014 may have sent stock prices in a similar direction on Tuesday morning, but according to a new study from Bain & Company, the British brand is right in line with the rest of the luxury sector at the moment. In its annual luxury goods research for 2014 — conducted in collaboration with Italy's Fondazione Altagamma — the consulting firm reports that growth is slower than it has been before, but it's also on a sustainable upward trajectory. Not a bad thing.
Here's what else you need to know about the luxury market right now.
It's All About Tourism
According to Milan-based Bain partner Claudia D'Arpizio, luxury brands need to start thinking of their customers as global citizens. Looking at a sales report by geographic region only tells part of the story, since nearly every market (Japan, China and South America excepted) is driven in a big way by tourist dollars. Of course, luxury brands know that their shoppers are mobile — it's a rare quarterly report that doesn't mention some new airport store opening — but it also means that from a product standpoint, the concept of seasonal collections isn't as important as it once was.
So rather than looking at where customers are buying, brands need to pay attention to who's buying. For the most part, that would be Chinese shoppers, who are now spending over three times abroad what they do at home. While the Americas stand a lot to gain from Chinese tourism, Europe is especially reliant on that shopper base. In fact, the region is the most dependent on touristic spending globally.
Shoes Rule The Accessories Business
For the first time since 2007, shoes have displaced leather goods as the most sought-after item in the accessories category. One reason for that shift may be the fact that shoes are very noticeable but also significantly more affordable than bags, so the cost to look-at-me! ratio swings in their favor. (Footwear also happens to be a leading category in e-commerce.) Customers also seem to be increasingly interested in personalization when it comes to shoes.
Although accessories overall are the leaders for fashion brands, ready-to-wear is showing positive growth, Bain reports. Hard luxury items like watches and jewelry, on the other hand, are slowing down.
Monobrand Offline, Multi-Brand Online
When it comes to brick-and-mortar stores, monobrand shops appear to perform better than those carrying numerous designer brands. According to Bain, single-brand retailers currently account for more than half of the market —about 52 percent.
In the growing world of e-commerce, however, the reverse is true: Multi-brand sites dominate about 65 percent of the market. While this could be attributed to customers showing a greater proclivity to comparison shop online, there's also something to be said for the fact that sites like Net-a-Porter are significantly easier to navigate than most brand-owned sites.
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