Which are the major trends shaping the definition of luxury and the management and marketing of luxury brands in the future? In this presentation we examine the phenomenon of luxury, its roots, and its economic impact. In http://vdf.ch/the-business-of-luxury.html the contents of this presentation are further expanded.

1. The Business
of Luxury
How it works –
where it leads

2. Luxury as a Business
Luxury is a fascinating
phenomenon, but also
a specialized business
and an important eco-
nomic factor.
The global business of
luxury has grown subs-
tantially in recent de-
cades, and it plays by
its own rules, many of
them contrary to the
ones that govern the
mass market.

3. Growing Markets
Despite a number of global economic
downturns, overall growth rates for luxury
goods have been quite impressive,
especially in emerging markets such as
Brazil, Russia, India, and China.

4. Growing Markets
While European countries and the
Americas currently still account for more
than 60 % of global luxury sales, the
market share of Asia has doubled during
the past six years and continues to
grow rapidly.

5. Growing Markets
Chinese consumers alone account for
20 to 25 % of global luxury sales.

6. 77
85 92 96
108
128 133 133 128
136
147
159
170 167
153
173
192
212 217
Market value
in billion euros
0
50
100
150
200
250
95Year 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Value of the Personal luxury Goods Market
Worldwide from 1995 to 2013 (in Billion euro)
Figure 1: Bain & Company, Altagamma, © Statista 2014
Luxury Goods Market
Source: Bain & Company, Altagamma, © Statista 2014
Value of the Personal Luxury Goods Market
Worldwide from 1995 to 2013 (in Billion Euro)

7. Major Trends
While many wellknown luxury
companies base their success on
tradition, another important factor
in longterm growth is innovation
and responsiveness to changing
circumstances.
1

8. Major Trends
2
A major trend that is having an impact
on many luxury players is the shift
from material to experiential luxury in
maturing markets.

9. Major Trends
3
Currently, more than half of all luxury
purchases are nonmaterial in nature
and the sector is growing fast.

10. Major Trends
4Another phenomenon changing
the way luxury is perceived, sold,
and purchased is the Internet.
Driving forces behind this and other
trends are changing demographics,
consumption patterns, values,
as well as the tastes and habits
of Generation Y.

11. Luxury Goods Online
Luxury brands are reluctant to
use online platforms because
luxury is considered an identity
and a philosophy that evokes
uniqueness and exclusivity.
However, online platforms can
still permit direct interaction
between consumers and luxury
brands while creating emotional
and social values.
Several luxury brands now use
online platforms very success-
fully for their communication
activities.
As a result, a good number of
authors argue that online chan-
nels are not appropriate for
luxury brands because of the
absence of personal contact,
an ability to have a brand expe-
rience, and its wide accessibility.

12. In The Business of Luxury the contents
of this presentation are further expanded.
http://vdf.ch/the-business-of-luxury.html
Would you like
to know more?
What you will learn:
1. about the historical roots and the conceptual basis of luxury;
2. how the global luxury market is structured in terms of
industries and countries;
3. what major trends will shape the business of luxury in
future years;
4. about luxury in the online world and the specifics of
computermediated communication;
5. what the transition from product to service and experience
focus mean for luxury companies and what they can learn
from small niche players.
© 2017, vdf Hochschulverlag AG an der ETH Zürich. All rights reserved.We’re looking forward to your feedback: verlag@vdf.ethz.ch
Fabio Duma, Christine Hallier Willi, Cary Steinmann
2014, 62 pages, ISBN 978-3-7281-3662-6
vdf Hochschulverlag AG an der ETH Zürich
02 The Business
of Luxury
Fabio Duma, M.A. HSG
Prof. Christine Hallier Willi, PhD
Prof. Cary Steinmann, PhD