LUXURY GOODS WORLDWIDE MARKET STUDY FallWinter 2015 A time to act: How luxury brands can rebuild to win By Claudia DArpizio, Federica Levato, Daniele Zito and Joëlle de Montgol erClaudia DArpizio and Federica Levato are Bain it is now the third-biggest market in the world, after the US and Japan. The most popular travel destinations for Chinese luxury shoppers shifttypically to Europe, South Korea or Japanin response to currency uctuations, which create temporary favorable price gaps. Chinese consumers play a primary role in the growth of luxury spending world- wide. They account for the largest portion of global purchases (31%), followed by Americans (24%) and Europeans (18%). Wholesale still dominates, but company-owned retail and e-commerce are growing faster Wholesale is still the dominant selling channel within the personal luxury goods market, capturing 66% of the total market. However, retail continues to gain share, driven by network expansion (600 new directly operated stores opened globally in 2015, a decline from the 750 opened in 2014) and growth in same-store sales (13% at current exchange rates). The wholesale channels slower perfor- mance stems from three factors: the ongoing “retailization” of luxury (converting franchised locations into company-owned stores or joint ventures); the lackluster performance of US department stores across product categories (particularly in leather goods); and the decreasing sales of Asian watch retailers, which are coping with excessive stock and a reduction in the overall store network. E-commerce grew to a 7% market share in 2015, nearly doubling its penetration since 2012. Special- ized e-commerce players are outperforming the market globally, with Chinese e-tailers progressively extending their geographic reach and gaining share on a global basis. The e-commerce sites of Euro- pean and American retailers (such as department stores) continue to grow, a response to customers demands for an omnichannel experience. Luxury brands are losing share online overall, with highly Luxury Goods Worldwide Market Study | Bain they now account for only 10%. Luxury consumers in mature markets, such as Europe, the US and Japan, tend to purchase locally. However, growth in these regions increasingly depends on spending by tourists. 2. Regional highlightsLuxury Goods Worldwide Market Study | Bain China joined the global luxury podium Source: Bain mainland China accounts for 20% of global Chinese shoppers purchases Source: Bain luxury goods purchases in New York City outweigh those across all of Japan Source: Bain & Company Personal luxury goods, top cities, 2015E ( billions) 27 New York City Japan Paris London Tokyo Seoul Hong Kong Beijing Las Vegas Los Angeles Honolulu Shanghai Milan Rome Taipei Munich Osaka Singapore Miami Dubai Moscow 20 13 13 9 8 7 66 6 55 5 4 4 4 4 3 3 3 3