MEN: THE NEW LUXURY BIG SPENDERS?

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James Lawson, director of Ledbury Research, highlights the promise of luxury for men, but feels that Chinese trends may mask a global shift

Accounting for 40% of global sales, men’s spending on luxury also grew almost twice as fast as women’s in 2011, 14% compared with 8% respectively (Bain). This segment therefore remains heavily in focus by those in the luxury sector, with the likes of Burberry and Coach flagging it as an area of expansion and aiming to join the ranks of menswear veterans Giorgio Armani, Hugo Boss and Dunhill.

At Burberry, where menswear and men’s accessories currently represent 27% of sales, the brand is looking to “double sales over time”. Coach has developed a dedicated men’s space at its flagship on Madison Avenue, subsequently leading to a doubling of its men’s sales to 20%.

Luxury giants have also jumped onto the bandwagon: LVMH’s Berluti expanded its niche from luxury footwear to debut its first men’s ready-to-wear collection at Paris Fashion Week in January, while PPR bought Italian suitmaker Brioni in November last year and signalled its faith in the segment’s prospects by announcing an expanded offering as well as new flagship plans for Europe, America, China and the Middle East.


“ Accounting for 40% of global sales, men’s spending on luxury also grew almost twice as fast as women’s in 2011 ”


Alexander McQueen is another brand investing in menswear. The PPR owned house will open a 185sqm dedicated space on London’s Savile Row in September, showcasing both the ready-to-wear collection and Alexander McQueen by Huntsman, a bespoke service announced in January. Prices for the bespoke service will range from £4,500 – £5,000 and the pieces will take about 12 weeks to make.

Creative director, Sarah Burton, said bespoke was a natural progression for the brands menswear offering. “We already offer couture for women, and wanted to add it for men. And our clients were asking for it. With this service we want to give them beautiful, handcrafted clothes, and emphasize artisanal work,” she told WWD.

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Net-a-Porter’s menswear counterpart, Mr Porter, launched in February 2011.

 

Many attribute this growth to China, where men account for over two-thirds (70%) of all luxury sales. This is in part due to the popular gift-giving culture amongst businessmen and government officials. The question, however, is whether this has been overhyped, and if Chinese male appetites for luxury are sustainable in the long term.

Because while China may currently still be dominated by male spending, this appears to be changing: we are seeing Chinese women play an increasing role in wealth creation (see High Net Worth December 2011). The rise of self-purchasing women may soon come to overshadow male demand in China, and cause a shift in the balance of luxury demand between the genders (see Ledbury’s Modern Matriarch Chinese Wealth Segment).


“ Many attribute this growth to China, where men account for over two-thirds (70%) of all luxury sales ”


Despite this, brands are still targeting men, the new big luxury spenders. This is partly due to the globally shifting attitudes. Traditionally male spend has been impacted faster and harder by the downturn, but men are now becoming more discerning.

Net -a-Porter’s Mr. Porter (since February 2011), Gilt Groupe’s GiltMAN (October 2009) and the latter’s full-price men’s site Park & Bond (August 2011) have not only tapped into the relatively underpenetrated online space in menswear, they have also recognized the change in the shopping habits of today’s men and have invested heavily in their editorial content.

Park & Bond, a partnership with GQ magazine, offers advice and how-tos, buying guides, and even free personal shopper assistance on their website to “find your own personal style”. As a further sign of male demand, Gilt has invested in a full-price men’s site before that for women, indicating the large potential in online male luxury spend.


The above is based on a collection of insights taken from Ledbury Research’s flagship publication High Net Worth. For more information please visit this link.


Ledbury Research
is a research company specialising in the understanding and engaging of High Net Worth Individuals.

Bespoke consumer work spans all forms of quantitative and qualitative research, typically conducted on a multi-country basis, in wealth hubs around the world.

The analyst team delivers market information, trends and analysis through regular reports on the luxury and wealth markets.


© Luxury Society, Men: The New Luxury Big Spenders?, 10 April 2012, by James Lawson.


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MENSWEAR A/W ‘12: EXTREME LUXURY IN CLIMATIC AUSTERITY

“There are at least two ways in which you can deal with what’s going on in the world. You can confront it right up close, or you can escape into a dream world in your gold bullion embroidered Dolce & Gabbana cape.”

Whilst Tim Blanks may have been referencing Dolce & Gabbana’s Baroque inspired, chandelier lined catwalk, he also articulated the dichotomous mix of climatic austerity and extreme luxury that categorised the Autumn Winter 2012 menswear shows in Paris and Milan.

The creative and corporate alike seemed acutely aware of the storm clouds lingering over the European economy. A conversation difficult to avoid when menswear presentations were immediately preceded by Standard & Poor’s decision to downgrade the sovereign credit ratings of both Italy and France. Yet the mood did not suffer any collateral pessimism, nor did brands seek to hide from the luxuries they are best known for.


“ A dichotomous mix of climatic austerity and extreme luxury categorised the Autumn Winter 2012 menswear shows in Paris and Milan.”


Instead houses championed the hyper luxurious. Gold filigree threads on Baroque-inspired evening suits at Dolce & Gabbana, golden studs and tuxedos encrusted with crystals at Versace, gold on gloves and leather bags at Burberry Prorsum. Even at Calvin Klein, widely known for its minimalist approach to luxury, blazers could be found in ostentatious alligator.

“Luxury! That’s it, pure luxury,” quipped menswear director Kim Jones, when The Guardian pressed him on his overall mood toward his AW12 collection for Louis Vuitton.

“We were looking at lots of Japanese references, so we were also looking at lots of Japanese fabric companies. We came across this mill that could only make twenty centimetres a day – all done by hand – and I just thought that was the ultimate luxury in terms of suiting,” Jones reiterated to Style.com.

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(L – R) Gold filigree at Dolce & Gabbana, Alligator suiting at Calvin Klein and crystal tuxedos at Versace.

The combination of the expensive and hedonistic, in a time of general frugality and preservation, seems almost nonsensical. Yet these collections – for both their timing and accents of flamboyance – make nothing other than perfect business sense. Whilst the greater economy suffers, luxury has prospered, and few segments are prospering as hard and fast as menswear.

Consultancy Bain & Co estimates the luxury menswear market to be worth 180 billion euros ($240 billion) and growing at about fourteen per cent a year, nearly double that of luxury womenswear at eight per cent (Reuters).

Jean-Marc Bellaiche, consultant at Boston Consulting Group, believes that the market has traditionally been underserved, suggesting that menswear “remains very underdeveloped compared to the woman’s market, so there is a lot of catching up to do.”


“ The luxury menswear market is worth €180 billion euros and growing at about 14% a year, nearly double that of luxury womenswear.”


Whether chief creatives are taking note of such predictions, or simply basking in the glow of 2011’S revenues, design seems to be making some space for the commercially risky. Bread-and-butter casual wear and suiting remained, but far more houses seemed more at ease experimenting with colour, embellishment and shape, than previous seasons.

Dries Van Noten expressed some commercial trepidation in launching his ‘psychedelic elegance’ collection. “It’s a risk. I’m fully aware, I’m actually quite nervous now,” he shared with Tim Blanks. “I just said ’let’s go for that, lets bring in colour, lets bring in fun’. I’m fully aware that it’s a risk to go that way, but I just wanted to do that.”

One could also muse that the importance of new geographies, particularly China and India, will begin to pave the way for more experimental and extravagant menswear. After all, these are not cultures that have been built on carbon black, achingly slim Hedi Slimane suits.

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Some of the more experimental looks from Dries Van Noten’s ‘psychedelic elegance’ collection.

Not that such suits won’t have a place in the east, particularly as the regions modernise. But hopefully there will also be space for lavish embroidery, colourful silks and less-tested-in-the-west silhouettes, incorporating elements regional traditional dress. Hermès have embraced the production of the Sari, why not menswear next?

The segment is also blooming at a particularly fertile time for luxury goods – current economic woes don’t yet seem to carry the social connotations that accompanied 2008’s GFC. In short, shopping hasn’t yet seemed to have gone out of fashion.

“Everyone stopped shopping in 2008 because there was a crisis of confidence; everyone’s financial portfolio was hit,” remarked the Business of Fashion’s Imran Ahmed to CNN. “And, even if you did have money and weren’t that affected by everything, it was seen as a bit crass to go out spending on luxury goods. Now that a certain amount of time has elapsed, I think that hesitation to shop has dissipated somewhat and the big spenders are out spending again.”

With expected double-digit growth in 2012, as well as an expanding range of products to better serve segments and regions, Menswear looks to be the luxury category to beat in the coming twelve months. And if recent collections are anything to go by, they will best positioned to satiate many different palettes.


To further investigate Menswear and Fashion Week on Luxury Society, we invite your to explore the related materials as follows:


© Luxury Society, Menswear AW12: Extreme Luxury in Climatic Austerity, 23 January 2012, by Sophie Duran.


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THE MIXED PERFORMANCE OF LUXURY IN 2011

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James Lawson, director of Ledbury Research, shares the key market insights that characterised the luxury industry in 2011.

The Story So Far

Following strong performance in 2010, luxury momentum was sustained throughout the first half of 2011. Growth forecasts remain in double digits going into 2012 – Ledbury forecasts growth at 16% for 2011 and a 11% for next year. That said, greater caution is advised in the short-term, as certain segments still have some way to go, before demand fully recovers from the effects of the economic crisis.

Using the year-on-year quarterly figures of the key segments of the luxury industry, we can see that luxury has been in positive terrain since the start of 2010. Particularly strong results in 2010 made for more challenging comparables, however, performance has held up relatively well, with double-digit growth for the first two quarters of 2011.

Asia has been central to this growth, however other regions – such as South America – have also emerged this year as promising markets for luxury. Europe and the US, while still not fully recovered, are expanding again and the Middle East also showed positive movement over the period. Notably, Japan withstood the effects of the March earthquake better than expected and posted growth, following several consecutive years of contraction.


“ Going forward, luxury executives are upbeat about performance and it is anticipated that China will continue to drive this ”


Looking to the Future

Going forward, luxury executives are upbeat about performance and it is anticipated that China will continue to drive this. Separately , research undertaken by Bain & Co and Altagamma, suggests that the global luxury market will expand to €191 bn in 2011 – up from €173 bn in 2010 – and mark the second consecutive year of double-digit growth for the luxury industry.

Regionally, Europe currently accounts for the largest share overall (37%), however this will shrink due to rapid growth in Asia-Pacific, which currently holds 17% of the market. China (€9.6 bn) is now bigger than that in the UK (€9.0 bn) and is being driven by demand for luxury cars, hotels and, personal luxury. China will grow to €12.9 bn by the end of the year. Brazil meanwhile, is a small (€1.9 bn) market, and is forecast to increase to €2.3 bn by the end of the year. Luxury demand there will be characterised by demand for fine wines.

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A Star Performer: Swiss Timepieces

Demand for Swiss watches recorded strong growth (22%) in 2010, following significant declines in 2009 (-22%). The resurgence in watch consumption was driven by Asia, where luxury watches are frequently bought as gifts. In total, the region accounted for more than half (53%) of global demand, and registered a 35% uptick on demand in 2009 (FHS). In addition, the average Asian consumer purchased more expensive watches than their counterparts in Europe and the US (FHS).

Growth in Europe (10%) and America (15%) was positive, however, sales in Europe have not yet returned to pre-crisis levels. Further, 2009 saw a 36% contraction in American sales, thereby making for a relatively easier base for comparison in 2010. That said, luxury watches are expected to sustain this momentum in the near future and indeed pegged to be one of the star performers of 2011. Many luxury brands are expanding into this segment as a result.


“ The average Asian consumer purchased more expensive watches than their counterparts in Europe and the US ”


Challenges Ahead: Yachts

Sadly, the same levels of performance optimism cannot be seen in the case of Yachts, with sales expected to fall again this year – albeit to a much lesser extent than in 2010.

The declines of the past 2 years are largely attributable to a fall-off in demand from the US, which has historically been the biggest market in regional terms, and also Europe where there has long been a tradition of yachting. Demand is not expected to pick up in either market again until there is more economic certainty.

Another compounding factor in the yachting industry is that, unlike many other luxury segments, where Chinese demand has cushioned the fall in demand from the West, yachting in China is still in its infancy. Currently, there is no culture of yachting in China, and it is mainly the Hong Kong Chinese who enjoy the past time. This is expected to change, and the past two years has seen several Chinese yachting brands launch to cater to domestic demand.


The above is a collection of insights taken from Ledbury Research’s flagship publication High Net Worth. For more information please visit this link.

© Luxury Society, The Mixed Performance of Luxury in 2011 by James Lawson.


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