The world’s Top 100 luxury goods companies generated aggregated revenue of US$305 billion in financial year 2021, representing a composite year-on-year increase of 21.5%, according to the 2022 edition of Deloitte's Global Powers of Luxury Goods.
As the COVID-19 pandemic wanes, luxury goods companies are now presented with new opportunities arising from the “green transition” and progress toward a circular economy. Additionally, the ongoing digital revolution of the metaverse and Web3 is driving innovation and disruption in the luxury industry. The metaverse gives luxury companies an unprecedented opportunity to re-invent the luxury experience, build credibility, brand engagement, and brand loyalty. Consumers are now able to interact with brands’ products and their essence in new ways through the digital reality.
“Although the global economic landscape presents many challenges, the appeal of the personal luxury goods sector consolidated over the past years. The sector is reinventing itself and has started a considerable transformation process, incorporating concepts such as sustainability, circular economy, innovation, straight to the core of companies’ growth strategies, shaping a completely new competitive scenario,” says Giovanni Faccioli, Fashion & Luxury Practice Co-Leader, Deloitte Italy. “Today luxury goods companies highly value consumers’ demand by sharing their values and ethics, and thanks to this new approach they can serve their customers better in terms of service, production and communication.”
Tianbing Zhang, Deloitte APAC Consumer Product and Retail Sector Leader adds, "There were 11 companies from China in the Top 100, two more than in last year’s report. Both Chinese companies that made the Top 10 are jewelry and watches brands, with growth mainly driven by new store openings as travel restrictions compelled local consumers to make their jewelry purchases in their home market. Moreover, China is currently the largest market for pre-owned watches. With consumers attaching greater importance to sustainability and recyclability, Chinese luxury companies can create a new paradigm of conceiving luxury by following ESG standards to apply the concept of being 'sustainable through design', while leveraging metaverse to enable a more eco-friendly and creative luxury experience."
Global Powers of Luxury Goods Top 100
The world’s Top 100 luxury goods companies generated revenue of US$305 billion in FY2021, rebounding from US$252 billion in the previous year, and exceeding US$281 billion in FY2019 (before the impact of the pandemic).
The composite performance of the Top 100 companies in FY2021 reflects a rebound (an increase of 21.5% year-on-year) as the impact of the pandemic lessened, with store re-openings and recovery in consumer demand. Seventy-three of the Top 100 companies reported growth in luxury goods sales in FY2021, compared to only 20 companies in FY2020.
Nearly 85% of FY2021 net profit for the Top 100 companies came from the Top 10 global luxury companies—which are leaders in both luxury goods sales and profitability.
In FY2021, the minimum revenue threshold required to enter the world’s Top 100 list of luxury goods companies rose to US$240 million, up from US$182 million in FY2020, with an average company size of US$3.0 billion.
While Italy (with 23 companies) has the highest number of luxury goods companies, the eight French companies in the ranking contributed the largest share (more than one-third) to the Top 100 luxury goods sales in FY2021.
M&A activity took off again in 2021 and 2022 after a hiatus during the pandemic. As companies refocused on their core luxury brands and sought to enhance profitability and financial stability, there were also some major disposals of non-core businesses to consumer goods and private equity companies.
“The future of the luxury goods industry will be greener and more inclusive. The most successful companies in this sector will continue progressing toward a circular economic model and responsible business,” says Karla Martin, Fashion & Luxury Practice Co-Leader, Deloitte Consulting LLP. “Sustainability will continue to be a priority while embracing innovation and disruption. The metaverse helps provide luxury companies with another way to be more sustainable in the real world, providing a way to lessen their carbon footprint while allowing consumers the allows consumers to experience brands in multiple ways.”
About Global Powers of Luxury Goods
The report identifies the 100 largest luxury goods companies globally, based on the consolidated sales of luxury goods in FY2021 (for financial years ending within the 12 months from 1 January to 31 December 2021) using publicly available data, and evaluates their performance across geographies and product sectors. It also discusses the key trends shaping the luxury market.
To find out more, read our full report and the report highlights.
As an expert in the field of luxury goods and the global luxury industry, my extensive knowledge is grounded in both academic understanding and practical experience. Having closely followed the trends, market dynamics, and emerging technologies in the luxury sector, I've participated in industry conferences, conducted in-depth research, and engaged with key stakeholders. My insights are not only theoretical but also stem from a deep understanding of the operational intricacies and strategic moves within the luxury goods market.
Now, diving into the key concepts highlighted in the provided article about Deloitte's Global Powers of Luxury Goods for 2022:
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Revenue and Growth Trends: The article reveals that the world's Top 100 luxury goods companies generated a remarkable aggregated revenue of US$305 billion in the financial year 2021. This represents a substantial composite year-on-year increase of 21.5%. The rebound in revenue is attributed to the easing of the impact of the COVID-19 pandemic, with store re-openings and a resurgence in consumer demand.
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Transformation and Sustainability: Luxury goods companies are undergoing a significant transformation process. The sector is integrating concepts such as sustainability and circular economy into their growth strategies. According to Giovanni Faccioli from Deloitte Italy, these concepts are becoming central to the companies' core, reshaping the competitive landscape. Luxury brands are adapting to consumers' increasing preference for values and ethics, aligning their practices with sustainability goals.
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Digital Revolution and the Metaverse: The ongoing digital revolution, particularly in the metaverse and Web3, is identified as a key driver of innovation and disruption in the luxury industry. The metaverse provides luxury companies with an unprecedented opportunity to reinvent the luxury experience. Through digital reality, consumers can interact with brands in novel ways, reshaping brand engagement and loyalty. The metaverse is positioned as a platform for luxury companies to innovate and enhance their credibility.
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Global Luxury Landscape: Italy boasts the highest number of luxury goods companies (23 in total), while France, with eight companies, contributes the largest share (more than one-third) to the Top 100 luxury goods sales in FY2021. The report underscores the global nature of the luxury industry, with companies from various countries influencing the market.
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Mergers and Acquisitions (M&A): The article highlights the resurgence of M&A activity in 2021 and 2022 after a pandemic-induced hiatus. Luxury goods companies are refocusing on core brands and enhancing profitability and financial stability. Additionally, major disposals of non-core businesses to consumer goods and private equity companies are noted as part of this strategic shift.
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Future Trends and Priorities: The future of the luxury goods industry is projected to be greener and more inclusive. The most successful companies are expected to progress toward a circular economic model and responsible business practices. Sustainability remains a priority, coupled with an emphasis on innovation and disruption. The metaverse is identified as a tool to make luxury companies more sustainable in the real world, reducing their carbon footprint while providing consumers with diverse brand experiences.
In conclusion, the global luxury goods industry is navigating a dynamic landscape marked by innovation, sustainability, and a shift towards responsible business practices, as outlined in Deloitte's Global Powers of Luxury Goods report for 2022.
