Sky-Is-Rising-Luxury-Goods

OVERVIEWThis is the third in our Sky is Rising series of papers, looking at data on specific industries that are being impacted by the internet.As with the previous two papers, which focused on various creative industries, this third paper looks at some industrieswhere the stories being told about the economic impact of the internet have been quite mixed. Specifically, this paper looks at theimpact on the luxury goods market. While, at first glance, this may seem like a shift from the previous papers, it fits in with the basictheme that a variety of industries are being impacted by the internet, and the full story about the impact is often not being told.When it comes to the luxury goods market, we’ve certainly seen a fair amount of disruption in the market. The luxury goodsmarket was traditionally defined by a small number of very high end players, who had tremendous control over their supply chainsall the way down to the retail level. The internet has definitely shaken up that space and created new challenges for the luxurygoods market, whether it was in allowing new entrants into the space, or breaking down some of the control over the supply chainand building up viable secondary markets.The main goal of this paper is to look at the internet’s impact on the luxury goods market, and whether or not it’s been beneficialor harmful. What we found is that, even with the global economic problems of the past few years, the luxury goods marketis thriving — especially for brands who embraced the internet, digital marketing and innovation. Traditional players in the spacewho have adapted have seen tremendous success, and the opening of new opportunities and markets. Many new entrants havebeen able to jump-start their own offerings as well, and build up markets that were previously nearly impossible to enter.On the whole, the luxury goods market has been growing worldwide. Even during the worst global recession in decades, themarket grew from €153 billion (about $201 billion) in 2009 to almost €217 billion (about $285 billion) in 2013, a 42% increase, ata CAGR of 9%. While it’s still a small portion of the total, direct online sales of luxury goods more than doubled from €2.5 billion(about $3.3 billion) in 2007 to €9 billion (about $11.8 billion) in 2013 at a CAGR of 24%.LUXURY GOODS MARKET» GLOBAL TOTAL€225-billionONLINE LUXURY GOODS SALES» GLOBAL TOTAL€9-billion€200b€6b€175b€3b€150b2009€153b2010€173b2011€192b2012€212b2013€217b2007€2.5b2008€2b 2009€3.6b2010€4.5b 2011€5.6b2012€7b 2013€9bThe Sky Is Rising: Luxury MarketsFloor643