Personal Luxury Goods

Personal luxury goods include high-end apparel, leather goods, accessories, watches, jewelry, perfume, beauty products and other high-end goods for personal use. Today’s market size shows the total global sales of personal luxury goods for 2018 and projected for 2025.1 Top companies in this sector, ranked by 2018 sales, include LVMH ($53.66 billion), EssilorLuxottica ($18.57 billion), Richemont ($16.05 billion), Kering ($15.71 billion), Swatch ($8.71 billion), Chow Tai Fook ($8.71 billion), Hermés ($6.88 billion), Ralph Lauren ($6.42 billion), Tapestry ($5.96 billion), and Capri Holdings ($5.38 billion).2

Traditionally consumers who wanted to purchase personal luxury goods shopped at specialty boutiques or high-end department stores such as Nordstroms, Bergdorf Goodman, or Saks Fifth Avenue. But, just as other brick-and-mortar retail establishments have been affected negatively by online retailers, so too have personal luxury goods retailers. Several online sites such as Net-a-Porter offer multiple brands of high-end merchandise for sale, free shipping and the convenience of shopping from home. Overall, in-store traffic decreased by 30% from 2012 to 2018. Still, according to EY Advisory, although more than 70% of purchases are influenced by online channels, nearly 90% of purchases are made in store.

Increasingly, many shoppers in their 20s through 40s who can afford high-end merchandise do not want to pay full price for their purchases. In addition, while many Millennials and Generation Z consumers want to be seen in new styles often, they are also concerned about sustainability. They see clothing resale and reuse as a way to conserve resources while also satisfying their want of a new wardrobe. Overall, 26% of luxury shoppers also buy secondhand. While wealthy consumers are unlikely to shop at places such as Goodwill or other thrift stores, they are shopping online at sites such as Fashionphile and TheRealReal which allow consumers to buy, sell and consign used luxury clothing and accessories and at sites such as Rent the Runway which allows consumers to rent high-end clothing for a monthly fee. Millennial and Generation Z consumers made a third of luxury purchases worldwide in 2018 according to Bain & Co. Purchases made by consumers in these two generations combined contributed to nearly all of the growth in the luxury goods sector in 2018.

Some luxury brands such as Gucci and Louis Vuitton have been opening boutique stores and expanding their website offerings in order to control their exclusivity while at the same time their merchandise is discounted at resale sites. Some luxury retailers are focusing on experiences and services to compete with online retail, resale, and rental sites by offering customers champagne and hors d’oeurves while they shop, having cafés and beverage bars in store, and hiring style advisors to help customers. Nordstrom partnered with Rent the Runway to offer customers the ability to drop off their Rent the Runway fashion items at their store. After learning that half their customers also buy or sell used merchandise, Neiman Marcus invested in a minority share of Fashionphile, however, they do not plan to sell secondhand merchandise in their stores or on their website.3 They may want to rethink that strategy, however. In ThredUp’s 2019 Resale Report, GlobalData, a retail analytics firm, found that 33% of consumers would buy more from luxury retailers if they offered secondhand clothing.

1 For the projected 2025 data, the source mentions the “luxury goods market.” The article in which this appears reports only on personal luxury goods, therefore, our editors assumed that this figure was for personal luxury goods only.
2 The source reports sales figures in euros. Our editors used the December 31, 2018 conversion rate of 1 Euro = 1.1466 U.S. dollars given on the Market Insider website here to convert the sales figures to U.S. dollars. Rankings do not include cosmetics companies. If they did the following companies would be in the top 10: L’Oréal ($30.84 billion), Estée Lauder ($13.99 billion) and Beiersdorf ($8.26 billion). Cosmetics sales include products at all price points.
3 Through the partnership with Fashionphile, Neiman Marcus has designated a few of their stores as drop-off points for customers who want to sell their merchandise on Fashionphile. Sellers receive an immediate quote from Fashionphile for their merchandise and immediate payment if they choose to sell. Neiman Marcus is hoping that customers will then want to use that payment to buy merchandise in their stores.

Note: Any mention of brands or companies in this post does not constitute an endorsement.

Geographic reference: World
Year: 2018 and 2025
Market size: $286.53 billion and $445 billion, respectively
Sources: Anne D’Innocenzio, “Luxury Stores Adapt to Changing Shoppers,” The Denver Post, December 29, 2019, pp. 1K, 6K; Florine Eppe Beauloye, “The 15 Most Popular Luxury Brands Online in 2019,” Luxe Digital, April 20, 2019 available online here; “Tailoring the Luxury Experience: The Luxury and Cosmetics Financial Factbook 2019 Edition,” EY Advisory S.p.A., 2019 available online here; ThredUp 2019 Resale Report, March 2019 available online here; Tom Ryan, “Are Secondhand Sales the Right Branding Move for Neiman Marcus?” RetailWire, April 23, 2019 available online here.
Original source: Bain & Co.
Image source: FranckinJapan, “bag-luxury-accessories-japan-ginza-2060110,” Pixabay, February 13, 2017 available online here. Use of image does not constitute an endorsement.

Plus-Size Clothing

Plus-size clothing are generally found in specialty clothing stores or out-of-the-way places in mainstream clothing stores. In 2017, some retailers are experimenting with combining the non-plus-size clothing and the plus-size clothing on the same racks in the same section of their stores. According to Paco Underhill, author of Why We Buy: The Science of Shopping, “[p]art of what they’re trying to do is recognize we live more in a size 12 or 14 or 16 world than we do a size 4 (one)…In a hypermarket store…where you’re selling both clothing and groceries and furniture and electronics and liquor, they want to be very careful not to turn someone off… If you are making that woman feel awkward about shopping for clothing, maybe she won’t buy her dishwasher soap or wine there, also.”

Geographic reference: United States
Year: 2013 and 2016
Market size: $17.4 billion and $20.4 billion respectively
Source: Zlati Meyer, “Meijer to Mix Misses, Plus Sizes,” Lansing State Journal, November 6, 2016, page 26A.
Original source: NPD Group

Diamond Rings

An article about wedding jewelry caught our attention. In a New York Times article over the weekend the subject of how much is spent in the United States annually on diamond engagement and wedding rings was presented. According to the article, couples paid an average of $4,000 on engagement rings in 2012 and another $1,000 for her wedding band, $500 for his. Now, averages, as we know, can be deceptive. What we were unable to find are statistics on just how many of these rings were purchased, which would be nice to know since the range in price for a diamond ring can be quite large. What we can say, by way of putting today’s market size into some context, is that in each year between 2000 and 2011 the number of marriages in the United States was between 2 and 2.3 million.

Today’s market size is the total value of diamond engagement and wedding jewelry sold in the United States in 2012.

Geographic reference: United States
Year: 2012
Market size: $11 billion
Source: Tara Siegel Bernard, “With Engagement Rings, Love Meets Budget,” The New York Times, February 1, 2014, page B1, available online here.
Original source: Bain & Company
Posted on February 3, 2014

False Lashes

Everything old is new again, or so the saying goes. In the first decade of the century, false eyelashes have been one of the fastest growing of the cosmetic industry’s many categories. Today’s market size is the total estimated revenue brought in by the sale of false eyelashes in the United States in 2000 and again in 2010.

Geographic reference: United States
Year: 2001 and 2010
Market size: $15 million and $44 million respectively
Source: “Look No Further: Frequently Asked Questions,” Novalash Eyelash Extensions, website posting is available here. Brendan I. Koerner, “The Goods; Fake Lashes: Not Just For Tammy Faye,” The New York Times, April 25, 2004, and available online here.
Posted on June 17, 2013

Plain Glass Eyewear

What was once seen as a sign of nerdishness has become a fashion statement. When basketball stars like LeBron James and Dwayne Wade, Kevin Garnett and Kevin Durant are sporting big, black, chunky eyeglasses for the fun of it—meaning the eyeglasses are not prescription glasses at all but frames containing plain glass lenses—eyeglass frame makers must be pleased. Market analysts point to a number of high-profile persons—Meryl Streep and Demi Moore from the Hollywood scene, Sarah Palin and Rachael Maddow—who wear eyeglasses and whose eyewear styles are seen as part of the motivation behind this growing market for fashion based eyewear. Will it be a passing fad as so many fashion statements are or a longer lasting trend as those wearing plain glass eyewear get older and start needing to put prescription lenses into their statement accessories?

Today’s market size is based on calculations made with survey results from a Vision Council of America survey and U.S. Census Bureau population statistics. It shows the number of U.S. adult residents who report having worn plain glass eyewear as a fashion statement during the period 2008 and 2011.

Geographic reference: United States
Year: 2011
Market size: 16.3 million people aged 18 or over
Source: Adam Tschorn, “A New Essential?” The Republic, Columbus, Indiana, May 7, 2012, available online here. Picture comes thanks to this Warby Parker website.
Original source: Vision Council of America and the U.S. Census Bureau
Posted on June 1, 2012