LVMH came first on Deloitte’s annual list of the world’s largest luxury goods companies once more, followed by Estée Lauder and Richemont. Kering and Luxottica switched places, with the French conglomerate moving up to the fourth position while the Italian eyewear giant fell to the fifth. The report, titled Global Powers of Luxury Goods, covers the fiscal year 2017.

Combined, the top 100 luxury goods companies generated revenues of 247 billion US dollars, up from 217 billion in FY2016. Annual growth also jumped to 10.8 percent, on a currency-adjusted composite basis, much higher than the previous year’s one percent growth. Italy once again led the ranking in terms of the number of companies making the list, while France was the best-performing country in terms of sales growth.

The most expressive sector on the list is clothing and footwear, with 38 companies, followed by jewelry and watches, with 32 companies. However, clothing and footwear ranked the lowest among all sectors in terms of average revenue per company, at 1.1 billion US dollars.

This year’s list includes eight newcomers, namely: Chanel Limited (UK), Kosé Corporation (Japan), Revlon (US), Samsonite International (US), Vera Bradley Inc (US), Zadig & Voltaire (France), Van de Velde NV (Belgium) and Giuseppe Zanotti Spa, formerly Vicini Spa (Italy).

Top 100 luxury goods companies by sales:

1. LVMH (France)
2. Estée Lauder (USA)
3. Compagnie Financière Richemont SA (Switzerland)
4. Kering SA (France)
5. Luxottica Group (Italy)
6. Chanel Limited (UK)
7. L’Oréal Luxe (France)
8. The Swatch Group (Switzerland)
9. Chow Tai Fook Jewellery Group (Hong Kongl)
10. PVH Corp (USA)

Fastest-growing luxury companies:

1. Canada Goose (Canada)
2. Coty Luxury (USA)
3. Furla SpA (Italy)
4. Titan Company Limited (India)
5. Shiseido Prestige & Fragrance (Japan)
6. Richard Mille SA (Switzerland)
7. Chow Tai Seng Jewellery Co. (China)
8. Kering SA (France)
9. Pandora A/S (Denmark)
10. Moncler (Italy)

Keep an eye on the HENRYs

Deloitte’s report predicts a positive future for the luxury goods sector, despite the recent slowdown of economic growth in markets like China, Europe and the United States. The reason for such optimism? 76 percent of the 100 companies reported growth in their sales, with nearly half of them recording a double-digit year-on-year growth.

Future demand for luxury goods is expected to increase as more and more consumers around the world reach middle class status: by 2020 more than 50 percent of the world’s population will be considered middle class. But there’s a particular group within the middle class that Deloitte advises luxury companies to keep an eye on: the HENRYs (High Earners, Not Rich Yet). With an average age of 43, HENRYs currently earn between 100,000 US dollars and 250,000 US dollars a year. According to the report this group of consumers is digital savvy, loves online shopping and is not afraid of spending big bucks in luxury goods.

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Sustainability is key for luxury sector to continue growing

Once again, Deloitte advised luxury companies to distance themselves from concepts like excessive consumerism or elitism because a new kind of consumer, with different values, is taking over the market. Millennials and Gen Zers expect brands to align with their concerns about the environment, animal welfare, gender equality and labor practices.

Prominent players are already starting to change their ways accordingly. Last year, British luxury label Burberry announced it would stop destroying unsold goods after receiving intense backlash from consumers on social media. 2018 also saw Prada create a diversity and inclusion advisory council and Kering publish an official list of environmental and social requirements for its brands and suppliers, to name but two examples.

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From omni-channel to omni-personal

Much has been said about the importance of building an omni-channel strategy, as an increasing number of consumers make use of both online and physical stores -- so much so that omni-channel will soon no longer be a buzzword, but rather just standard practice. Luxury companies looking to stand out from competitors and ensure brand loyalty are investing in highly personalized services to give customers an even greater feeling of convenience and exclusivity.

Louis Vuitton launched a personalization program called “Now Yours” last year, allowing customers to customize a menswear capsule collection. Gucci did the same with its “Do It Yourself” service, through which shoppers can add their initials to sneakers and handbags. In 2017 Burberry released a customized perfume collection, following a successful campaign enabling customers to choose their trench coat's style, color, fabric and material.

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Building relationships based on data

Big data comes in handy in this new landscape where luxury brands are tasked with offering customers a highly personalized experience. Several labels, including Louis Vuitton, Dior and Tommy Hilfiger are already using AI-powered technologies to conduct consumer segmentation, behavior and sentiment analysis, as well as predictive analytics. Kering, for example, created a data science team in 2018 to work on “disruptive technologies” to further improve the client experience. From chatbots to targeted marketing, Deloitte expects luxury companies to come up with new digital strategies in which data takes center stage.

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Picture: Louis Vuitton Facebook