Indian brands make a mark in the 100 luxury goods list: Deloitte Report

27 May,2016

By A Correspondent


The world’s 100 largest luxury goods companies generated sales of $222 billion in financial year 2014, 3.6 percent higher year-on-year. Three India brands Titan (#32), Gitanjali Gem (#40) and PC Jewellers (#44) were featured for the first time in top 100 according to the Global Powers of Luxury Goods 2016 report of Deloitte titled “Disciplined Innovation”.


Among the Top 10 companies globally, three are luxury conglomerates participating in multiple sectors of the luxury good market. The top three companies are Louis Vuitton SA (Louis Vuitton, Bulgari, Pucci, Donna Karan, TAG Heuer), Richemont (Cartier, Van Cleef & Arpels, Montblanc, Chloé) and Estée Lauder (Estée Lauder, M.A.C., Aramis, Clinique, Aveda, Jo Malone; Licensed fragrance brands). Swatch Group (Breguet, Longines, Omega, Rado; Licensed watch brands) lost the #1 position as the ‘highest net profit margin Top 10 Company’ that it had held for the previous two years to Louis Vuitton, but only because of the exceptional profit reported by the company for the Hermès shares.


Anil Talreja, Partner, Deloitte Haskins & Sells LLP said “We are on the verge of entering into the second half of ‘decade of change’ for Luxury Goods Sector with an expectation of remarkable changes by 2020. Due to economic challenges there is a possibility that the global luxury goods sector is likely to grow slow in 2016 in important markets such as China and Russia. However, we see India as a growing market for Luxury Goods due to key factors like improved purchasing power, better consumer buying behaviours, the merging of channels and business model, the growing importance of the millennial consumer; and the continued impact of the global economy.”


The luxury sector has not been immune to the rise of e-commerce. The original challenge for luxury brands was how to replicate the luxury shopping experience online, but increasingly the more valuable investment is how to use digital technology to enhance the luxury store experience. Many luxury brands have chosen to use mobile technology, but with m-commerce, there is the challenge of how to replicate the full luxury experience on a four inch screen. But it is the last mile, the final delivery to the home, where the true battleground exists. The luxury consumer now has a larger range of purchase and delivery options than ever before.


The number of all-round high performers has doubled: 15 companies achieved double-digit growth in luxury goods sales and a double-digit net profit margin in 2014, compared to last year’s report. For the 80 reporting companies, asset turnover (the ratio of sales to assets) was stable at 0.8 times, resulting in a composite return on assets of 9.0 per cent in 2014, compared to 8.6 per cent in 2013.The average luxury goods annual sale for a Top 100 company is now $2.2 billion.


M&A activities has reshaped the luxury goods market, premium and luxury goods companies are continuing to make deals in order to regain control of the design and distribution of existing brands. The sector is slowly but surely embracing the new digital reality and the opportunities it presents. Luxury goods companies’ have acquired cutting-edge technology firms in an effort to turn digital into a competitive advantage. Private equity firms continue to invest in the sector, with the objective of unlocking value in premium and luxury brands and capturing future growth opportunities.



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