MAY 27, 2014

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Deloitte: Luxury Sector Remains Resilient

A report from the consultancy Deloitte examines the global luxury goods market and the brands that comprise it.  Deloitte's analysis found that the world's 75 largest luxury goods companies -- companies ranked within this report -- generated nearly $172 billion in sales in the most recent fiscal year. That was good for a 13% gain over the previous year.   The report covers business trends around luxury goods like designer apparel, handbags, jewelry and watches, and cosmetics and fragrances.  It does not account for automobiles, boats, art and travel.    

The positive story is fairly consistent across all brands within the report (58 companies with public profit statements within the analysis): only five reported a loss in 2012.  Much of the recent growth for luxury companies has come from Asia, however Deloitte is bullish about the United States' near term prospects in part because higher income households have recovered from the recession at a faster rate than the average household.  Deloitte's analysis found Michael Kors, Tory Burch and Christian Dior Couture to be the fastest growing luxury companies worldwide during the past three years.

LVMH tops the list overall with $21 billion in sales in the most recent fiscal year.




So what?

This is an incredibly useful report covering the state of the luxury goods category and the brands that comprise it.  It also includes a number of important insights on growth opportunities for the category from regional and economic perspectives, as well as how consumer behaviors might change the way luxury brands conduct business.

> Click here for full report
BCG: Companies Should Stay the Course in Emerging Markets

In the hopes of explosive growth, many companies and brands expanded to the BRIC countries (Brazil, Russia, India and China) and other emerging markets during the past 5 to 10 years.  However, growth has been slower than hoped in many of the emerging markets and a number of those same companies are asking themselves if their efforts internationally were worth it.  Consultants at Boston Consulting Group say that companies need to remain patient.  

In a paper released last week, the consultancy stressed that international markets still represent tremendous growth potential, pointing out that emerging markets accounted for 68% of all global growth last year.  Furthermore, GDP in the emerging markets is expected to outpace GDP in developed economies over the next four years.  Despite remaining positive about emerging markets overall, BCG does advise that companies will have to make some changes.  Companies must do a better job of understanding individual markets' opportunities and challenges rather than adopting a "one size fits all" emerging market approach.  Companies should also look to grow in the second-tier emerging markets beyond the BRIC countries; markets like Mexico, Indonesia, Nigeria and Turkey (now being coined the MINT countries).

So what?

The emerging markets have yet to meet their potential in a number of ways, but remain an important part of the long term growth strategy for many brands.  The middle and upper classes in many of these markets are still relatively small, but should grow in the next decade as lower households move up the socioeconomic ladder.  During that time, these households will be forming or changing brand preferences in a number of categories. Many Condé Nast brands have already established themselves in emerging markets and can serve as effective partners for brands introducing themselves to the market or seeking to gain share.

> Click here for full report
Original Digital Video Now Reaches 52 Million American Adults

52 million American adults age 18+ watch original digital video (professionally produced video for online distribution) each month, up 15% from 2013, according to the IAB and GfK’s annual study of online video viewing. Those who watch TV content online - now 67 million American adults – experienced slightly slower growth, while the biggest group – the 74 million who watch amateur video – has not changed in size since last year. The perception of original digital video is evolving, and it is now seen by viewers as more innovative, edgy, unique and mobile compared with regular TV. Viewers enjoy original digital video because they can watch it on their own schedule, and they turn to it as a break or a distraction from their digital routine. More than half of monthly Original Digital Video users report their viewing of the medium is unplanned and discovery is spontaneous. Word of mouth is still the main way viewers find original video content, but social media is playing an increasingly significant role in discovery.

So what?

The report shows that more consumers are turning to the internet for professionally produced video content, a category in which Condé Nast is a meaningful contributor. Advertisers can capitalize on the momentum that original digital video is gaining – both in scale and viewer perception – by including digital video in their plan when they advertise with us.

> Click here for full report
Millennials' Perceptions of Health and Aging

Healthy aging is a concern of consumers of all ages, and three in four American adults over 18 report taking better care of their health today compared to 10 years ago, according to Nielsen. While all generations agree on the importance of maintaining a sharp, healthy mind, Millennials place more of a premium than other generations on maintaining a healthy body in old age. Able-bodied Millennials are most afraid of losing their physical ability and self-reliance, such as the ability to drive, cook and shop. More so than physical health, financial health and the loss of financial freedom are perceived as most important to Gen Xers and Boomers. Financial health may not have yet registered as important to Millennials, as many have not established their own financial independence. Millennials are also more likely than older generations to consider alternative remedies to maintain health, such as acupuncture, herbal remedies and massage therapy.

So what?

Although the youngest adults, Millennials already invest in their personal health and are increasingly driving sales in healthcare products and preventive care. They are starting to make long-term, lifestyle changes to feel and look healthy, and maintain their independence as they age. There are many opportunities for marketers in the healthcare, food, pharmaceutical, and financial industries to connect with health-conscious Millennials and grow with them through their life stages.

> Click here for full report
Quick Takes
Millennials Will Soon Enter Their Prime Spending Years

Source: Bureau of Labor Statistics, Goldman Sachs, Business Insider
CPG Accounts for Nearly One-Third of All Online Ad Views

Source: FreeWheel
Steady Growth Continues for E-Commerce -- Up 12% in First Quarter Over Last Year

Source: comScore,
Cord-Cutters Are Using A Lot More Bandwith than their Fair Share

Source: Sandvine, Statista
Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 |

Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights