June 25th, 2012
The Business of Luxury

“Luxury hasn’t been democratised, it’s been globalised”

Luxury brand leaders recently congregated in Marrakech to discuss the future of lifestyle brands. Paris based PPR owns leading brands Gucci, Bottega, Veneta, Yves St Laurent and Alexander McQueen, as well as Boucheron.

Founder’s son Francois-Henri Pinault, who runs the family fortunes which run into billions says the concept  of luxury has changed since the second half of the 20th century. “Lifestyle started in luxury, with brands claiming values that went beyond products. You don’t buy luxury to enter a community but to set yourself apart from others.”

The company made sales of 1.3 billion euros last year, while a sports brand notched up a further 345 million euros. Interestingly, digital sales are growing fasta. Worldwide online sales reached 6.2 billion euros in 2011, a threefold increase on the previous year, most of which come from Europe, Middle East and Africa.

Shoppers from China form about half of Europe’s luxury brand sales, according to leading analysts. They estimate that Chinese tourists spend around 11,000 euros on each shopping trip to Europe, as it’s about a third cheaper than in China. Items like Mont Blanc pens and Louis Vuitton bags helped record sales of around 200 billion euros last year. Architects are being hired to revamp stores in order to appeal to the specific tastes and buying patterns of the Asian tourist.

Nevertheless, luxury brands like Prada expect to open half of its 160 new stores in China this year and other ‘fast growing’ Asian markets. Meanwhile, the Qatar Investment Authority has taken a stake in Tiffany & Co, the US jeweller, in order to gain exposure to growth in the Asian market, seen as a ‘long term play’. QIA has already added Harrods, LVMH to its portfolio of retail interests.