Global Luxury Fashion Industry: Luxury goods retailing

The propensity and ability of millennials to spend on luxury fashion is rapidly increasing. As millennials tend to be more fashion-savvy and turn to fresh designs and styles more often than other groups, they invest in luxury items…

I. Global Overview
The global luxury market is estimated at US$ 402.5 billion in 2019 estimated to reach US$ 450 billion by 2023 growing at a CAGR of 2.5-3 percent. Worldwide, the personal luxury goods market experienced growth across most regions, driven primarily by more robust local consumption. Overall, luxury watches and jewelry, luxury fashion and luxury personal care were the top luxury categories.

Asia is estimated as the largest region for luxury sales, estimated at US$ 149 billion in 2019, projected to reach US$ 171 billion by 2023 growing at a grow at a CAGR of 3.5 percent. Mainland China continues to dominate the global market as local consumers demonstrate a strong preference for purchasing luxury goods at home thanks to price harmonization, consumer-centered strategies, and governmental initiatives. Japan remains an exclusive and attractive market for luxury brands. Tourist spending is expected to rise ahead of the Tokyo Olympics in 2020, with Chinese consumers already confirming their interest in the area. Across the rest of Asia, the outlook is positive, apart from Hong Kong and Macau, which continue to lose out to Mainland China.

With a market size of US$ 99 billion in 2019, Americas remains a big market for luxury goods. However, the region is seeing a slowdown in sales due to the strong dollar and strict travel policies imposed by the Trump Administration. Owing to China-U.S. trade war, there has been a decline in Chinese tourism to the U.S. as the exchange rate between the yuan and dollar has made the trip more expensive. High-end US fashion brands have become more vulnerable to an increase in trade war tariffs as they are more reliant on China for manufacturing of higher valued goods.

Despite socio-political turmoil in the United Kingdom and France, Europe experienced positive growth in 2018 due to an influx of tourism driven by the weakening of the Euro against all major currencies. Going forward, socio-political upheaval and a weakening macro-economic outlook continue to pose threats to the region’s spending on personal luxury goods.

A. Drivers

Economic improvements in various key countries

• Chinese affluent upper-middle class continues to presents an enticing prospect for the world’s designer brands. These consumers are eager to tap luxury as a means of social advancement and self-differentiation. However, uncertainties on US – China trade war causing continuing decline in Asian travel to the US.
• Improved purchasing power and higher disposable income made countries such as Mexico, Thailand, India, Chile, Peru, etc., the new destinations for luxury retailers, where luxury brands are expanding their store network.
• Japan’s economy is accelerating since 2013 due to economic program and monetary policy by Government of Prime Minister Shinzo Abe.

Millennials are evolving as the key consumer segment

• By 2025, Generation Y and Z will make up 55 percent of the luxury market balancing out the decreased spending by older consumers.
• The propensity and ability of millennials to spend on luxury fashion is rapidly increasing. As millennials tend to be more fashion-savvy and turn to fresh designs and styles more often than other groups, they invest in luxury items.

Growing online presence and airport stores

• Online channel will make up 25 percent of the market value by 2025 with digitalisation along the value chain and growing popularity of e-commerce and social media.
• Increased technological awareness and busy lifestyle of growing number of working professionals have fuelled the growth of online sales, which in turn, is encouraging luxury retailers to develop their online platforms.
• Increasing sales through the online channel against the backdrop of new product launches and discounts offered is driving luxury sales. Expansion of retailers in airports coupled with increasing tourists is driving growth.

Innovations

• Luxury brands are investing heavily in store designing and digital connectivity to enhance the shopping experience
• Growing use of interactive screens, AR, VR, & tablets to enhance shopping experience help to drive sales Luxury brands are launching pop-ups at key luxury events & introducing customized products to provide a more personalized experience to the customers.
• For instance, luxury brand like Giorgio Armani are engaged in an in-store installation collaboration agreement with Colombian artist Marta Luz Gutiérrez, while Louis Vuitton is conducting an advertising campaign using a building designed by the late Mexican architect Luis Barragán.

Growing tourism

• Recovering tourism in major European countries such as France, Belgium and Italy will aid the luxury market in near future.
• For instance, the EU’s pro-tourism policy — declaring 2018 as ‘EU– China Tourism Year’ motivated more Chinese to visit the region. Relaxing visa policies by various countries to boost tourism will also increase consumer spending on luxury goods.

Expansion activities

• Luxury retail space expansion in terms of new shopping mall openings provide an opportunity for retailers to enter the market or expand, thereby increasing reach to a wider customer base across the region.
• Refurbished and redesigned stores is also a key factor in attracting new customers.

B. Trends

Ongoing trade war between U.S. and China has resulted in a harder sell for U.S. luxury brands. Most of the Chinese goods exported to U.S. are consumer or basic input goods used by manufacturers, whereas, a large percentage of goods exported from U.S. to China are higher end products targeting wealthier consumers or users. Moreover, American brands are likely to lose price advantage against European rivals in Chinese market as the European brands (Louis Vuitton, Gucci, Hermès and Prada) are aggressively decreasing their retail prices in China whereas the American brands have to increase the prices to offset the impact on their profitability by passing it over to consumers.

Slowing Chinese consumer spending – Chinese consumers which represented 33 percent of the global luxury market last year – are tightening their purse strings in 2019 with an expected increase of only 10 percent in spending in 2019 as compared to the 20 percent recorded in last two years owing to slowing China’s economy. China’s market has been hit by global forces, but Chinese shoppers are gravitating towards home-grown brands with growing sophistication in tastes and a penchant for unique styles.

Digitalization has permeated into every purchase – Merger of the physical and digital retail is quietly invading the global retail. Amazon Go has already launched eight cashier-less stores in Chicago, Seattle and San Francisco & plans to ramp up to 3,000 by 2021. Lifestyle brand Guess in partnership with E-commerce giant Alibaba Group Holding has launched a new artificial intelligence driven concept for future fashion stores, incorporating technology into offline shopping to improve customer experience and drive sales. Virtual reality, artificial intelligence and augmented reality are changing how consumers interact with products and services. Examples are Dior’s virtual reality headsets and Kate Spade’s ‘Make it Mine’ service.

Millennials have been the growth engine for luxury in the past two years and now account for 40 to 60 percent of global sales for big brands.

Gen Z represents today only ~4 percent of personal luxury but have a clearly different set of behaviors and values that brands should better monitor and understand (i.e. Buying collaboratively / socially, evaluating brands on sustainability, acceptability of 2nd hand products etc).

Sustainable Luxury is becoming a genuine strategic factor for the development of brand with sustainable products accounting on average for 23 percent of luxury store purchases (26 percent in Europe, 24 percent in the USA, 22 percent in Japan and South Korea, 19 percent in China). The share is expected to rise to 40 percent in five years. Luxury retailers such as Kering are designing tools to allow shoppers to calculate the environmental impact of the products they purchase.

II. Luxury Market in India
Economic deregulation, fast GDP growth, increasing per capita consumption, and a growing young working population are driving the Indian Luxury market. India hardly seemed to be a potential market for luxury goods with primarily the royal families living a luxurious life. Post-liberalization policy changes welcoming MNCs, healthily growing affluent and educated middle-class and an increasing list of HNWI Indians have dramatically changed the scenario of luxury market in India. Now, there is a growing trend of a large number of Millennial luxury consumers who are well informed, and their preferences vary substantially. They are open to experimentation and look for value proposition, unlike traditional luxury consumers who are loyalists and don’t believe in switching brands.

Emergence of internet, seamless global markets and growing awareness among the people has propelled the demand for luxury goods. Wealthy Indians represent a source of enormous potential for global luxury brands. While Delhi and Mumbai top the list of leading Indian cities, rapid urbanisation has ensured that the market is penetrating fast into second and third-tier cities like Surat, Ludhiana, Bangalore, Chennai, Kolkata, Hyderabad and Pune. The most famous brands in Indian luxury market are Gucci, Armani, Hugo Boss, Louis Vuitton, Hermes, Jimmy Choo, Chanel, Ermenegildo Zegna, Versace amongst others. Titan, PC Jeweler and privatelyowned newcomer Joyalukkas are the three fastest-growing Indian luxury brands.

A. Market Size
Luxury Goods market in India is estimated at US$ 15 billion in 2019. The market is expected to grow annually by ~11.2 percent from 2019-23. Luxury Watches & Jewelry is the largest segment of India’s luxury market with a share of US$ 8.8 billion in 2019 which is in line with China with a share of US$42.45 billion for its largest segment, Luxury Watches & Jewelry. On the other hand, Prestige Cosmetics & Fragrances is the largest segment in Japan with a market volume of US$12.89 Bn. Average Revenue per person in Indian luxury market amounts to US$ 11.00 in 2019 as compared to China and Japan where it is US$ 46.7 and US$ 272.43, respectively.

B. Key trends that will redefine the
future of Indian luxury industry:
Luxury blending into Masstige: Consumers increasingly willing to consider higher price points for higher value, across categories. Emerging ‘masstige’ spaces. Luxury goods companies will need to come up with a specific price range that caters to the Indian consumer mindset of ‘value for money’ in order to grow and re-define premium products.

Democratization of expertise: Knowledge & advice is copious and freely available. Unbiased/unbranded advice taking precedence. Extend online influence beyond brand websites & advertising will be critical.

Expectations crossing categories: The best, ‘frictionless’ experiences set the benchmark – regardless of where consumers experience them.

Digitization of conventional channels: Technology applications in traditional ‘hard’ channels for both customer experience and efficiency gains. Brands like Arvind have introduced Magic Mirrors through its brand Creyate Custom Clothing. Shoppers Stop has launched an innovative augmented reality-based dressing room: ‘The Magic Mirror’- an intelligent photo booth that gives customers the option to select and view apparel and accessories on themselves without having to physically ‘try on’ the desired product.

‘Click and Mortar’: Technology is bridging hard and soft channels to create value – better availability, higher convenience and lower cost. Brands are thriving to provide a ‘Phygital experience’- innovative mix of physical retail and digital touch points – to create a fun and immersive user experience designed to engage and add value to the consumer at every step.

Predictive analysis to predictive selling: In sync with digitization, the role of channels is evolving to include generating and using consumer insights. Ex-Myntra founder Ganesh Subramanian has given Indian Fashion Industry its first futuristic analysis software, ‘Stylumia’, which will assist in better buying to be able to improve efficiencies and sell through ratios. Luxury brands can now manage their budgets better by using predictive analysis which coupled with predictive selling, could bring in the much needed correction in stocks over-load with luxury brands.

Mergers and acquisitions: Largest fashion and accessory conglomerate of Indian Luxury and premium space has taken shape with Reliance Brands (Indian retailers of Ermenegildo Zegna, Kate Spade, Thomas Pink and more) taking over Genesis Retail (Indian retailers of Bottega Veneta, Canali, Paul Smith and more) in 2018. Similarly, a new parent company – Capri Holdings Limited emerged after Michael Kors acquired Jimmy Choo in the past and later Versace in 2018. American luxury conglomerate is emerging, which may give European counterparts a run for their money.

Millennials’ affinity for luxury items: India is home to the world’s largest millennial population. As millennials possess high spending power, they are driving and ruling the entire consumer market. They have greater preference for luxury items and are regularly seeking social media as the first source of information with a desire for personalized and targeted promotions.

Luxury in emerging cities: As a result of increasing purchasing power, consumer spending in emerging cities are rising by more than 13 percent per annum whereas expenditures in top tier cities are growing by 10 percent. Luxury brands had earlier focused on enticing wealthy consumers in metro cities only, however, now sales records clearly reflect that Tier-II & III buyers are providing a healthy competition to Tier-I buyers with respect to their luxury appetite. Emerging cities like Ludhiana and Surat are now among the top 10 markets for luxury products.

Reusable and rentable luxury gaining momentum: Industry developing around second-hand luxury goods is making high-end fashion affordable for value-conscious Indian buyers. Start-ups such as ‘Confidential Couture’ offer reusable luxury goods while ‘Ziniosa’ and ‘Rent A Closet’ offer fashion on rent. Even affluent women now resort to renting high-end jewellery for their wedding. The fashion rental market is becoming the biggest trend. A wedding suit or gown worth ` 1 lakh could be rented for as low as `2,000 to `2,500.

The big fat Indian Wedding: All the sectors of luxury industry – from beauty, fashion, accessories, photography, jewelry, travel, hospitality, gifting to also the cuisine segment are boosted by this one sector. Aspirations of Indians to splurge on wedding is rising with high standards being set by star weddings.

Personalisation: MTO and ATO, personal shoppers, exclusive invitations. Personalisation is thriving within mass channels.

C. Challenges

Indian luxury market is still at a nascent stage and it lags behind its emerging market peers like China. India accounts for only 4 percent of the global luxury market whereas China is estimated to be about ~30 percent of the market. Some of the challenges inhibiting the growth of luxury retail in India are:

Infrastructure – The presence of luxury brands in India is still restricted to malls, countable luxurious hotels and airport shopping centers and that too to limited to city locations. When planning to open stores in Tier-II and Tier-III cities, luxury brands prefer small and medium-sized retail outlets over malls, favoring the quality of the space over the volume. These small and medium-sized retail outlets may not have the ambience which luxury brands consider essential for maintaining brand quality and can be easily overshadowed by the hustle and bustle of cities.

Counterfeits – Counterfeits product market constitute of around 10 percent of the Indian luxury market and it has been rapidly growing at a rate almost double of that of genuine products. Luxury retailers in India are facing supply side challenges like legal loopholes regarding intellectual property rights and a large number of online portals which are selling fake luxury products.

Government regulations – According to the latest government policy, a tax identification number is mandatory for transactions of `2.5 lakhs and above. In addition, the government’s move to reduce cash transactions for high-value purchases has led to a decline in luxury-brand sales, as consumers find having to divulge transaction details to the government overly intrusive. GST is becoming a major obstacle for luxury goods manufacturers. The government has imposed a 28 percent tax on luxury goods which has built a perception that luxury goods are especially expensive in India.

High import duty – An import duty, averaging 30 percent to 40 percent is one of the major challenge for luxury brands in India and is in harsh contrast to the rates in other Asian countries like China where it is 10-20 percent on an average. Certainly, high import duty and high-end prices are dampening the enthusiasm of luxury brands eyeing India as a business destination.

Legislation – As per the FDI policy of Govt. of India, FDI up to 100 percent under automatic root is allowed under single brand retail trading. This means that luxury brands can be directly owned, controlled and operated in India. However, to protect local industry, a further clause has been added which makes it mandatory that where FDI is above 51 percent, at least 30 percent of the value of products sold must be sourced from Indian small industries, as well as village and cottage industries, artisans and craftsmen. This is onerous for luxury brands, as it may require them not merely to change their business model, but to alter their brand DNA.

Conservative Buyers – There exists a huge section of conservative Indian customers who have the resources, but do not appreciate fine luxury brands due to lack of exposure, accessibility and brand
awareness.

Shortage of Skilled Labour – There is need to have trained manpower who understands unique characteristics of luxury items and is well-equipped to handle luxury consumers.

Comparison of Indian luxury market with other luxury markets like China, Japan, Italy, US, France

Market Outlook – On the whole, market turbulence and competitors struggling for a decreasing share of consumer spending will be the primary battle lines in luxury goods. However, there are a few growth drivers for global luxury brands:

The Indian luxury market is smaller in size (estimated at ~US$ 15 billion) compared to countries like the US (~US$ 207 billion), China (US$ 67 billion) and Japan (~US$ 35 billion). However, with the rising per capita and growing aspirational middle class, this market is expected to grow rapidly (CAGR of ~10-12 percent) over the next 5 years. Aspiring Indians are spending more than ever on luxury experiences. Growing affluent and educated middle-class and an increasing list of HNWI Indians have fueled up the luxury spending in India. Luxury companies need to have a clearly defined strategy for India to be able to tap into this growing market. Having a clear consumer understanding, right channels, customized product portfolio and dynamic pricing coupled with right marketing channels will be critical for companies to win.

The Chinese luxury market is expected to grow at a slower pace (~6 percent CAGR) as a result of growing trade war tensions with U.S. Further, Chinese shoppers are gravitating towards home-grown brands with growing sophistication in tastes and a penchant for unique styles. However, it still remains an attractive market given the scale and growth opportunities. At the same time, the Japanese market is expected to pick some pace owing to the 2020 Tokyo Olympics which is spurring investments in retail infrastructure and it will be a boon to the luxury industry. Further, increasing tourist inflow driven by weak yen and relaxed visa rules for Chinese citizens is expected to boost the Japanese luxury market to grow at ~3.5 percent CAGR over the next 4-5 years.

Taxation – The current 28 percent tax by the Indian government on luxury goods is a big dampener from a demand generation perspective. Additionally, an import duty, averaging 30 percent to 40 percent is one of the highest globally and is a key challenge for luxury brands in India. Favorable regulatory interventions can significantly boost demand for luxury goods in India.

Other Asian countries like China have an import duty of ~10-20 percent which is significantly lower compared to India. Further, countries like China and Japan have eased regulatory norms to boost demand for luxury goods e.g., the new E-commerce policy of China has raised tax exemption limit for cross-border purchases for a single transaction from 2,000 yuan to 5,000 yuan; Japan’s Economic Revival Program led to monetary easing and has triggered a spike in luxury goods consumption.

Regulatory Considerations – Counterfeit industry is one of the major challenges inhibiting the growth of global luxury market. According to ASSOCHAM, the market for fake luxury goods in India is likely to touch ~US$ 1 billion this year. Globally, the fake luxury products market accounts for 7 percent of the overall global luxury industry worth about US$ 320 billion with an estimated value of over US$ 22 billion. China and India represent majority of counterfeit market as compared to Europe and US where stringent laws and punishments are in place. Traceability solutions like QR codes and RFID tags leveraging Blockchain are being used to increase product security and curb this grey market.

III. Key Considerations for respective stakeholders of luxury goods in India

Luxury retail industry is evolving in India and it is witnessing a gamut of new trends. Understanding consumer interests can help luxury houses to engage and interact with consumers by keeping them up-to-date on brand happenings, products and services.

A. Imperatives for the luxury brands operating / planning to enter India:

The Indian market provides a significant opportunity for growth of luxury goods as the per capita income increases coupled with the growing middleclass aspirations. However, the Indian consumer is value conscious and companies will need to innovate across pricing ladder, product portfolio, GTM and promotions to win in the market:

Mix of off-line and online channels – While modern trade and EBOs remain the preferred channels for the luxury goods (accounting for ~50 percent + sales), E-commerce is becoming a critical channel accounting for over 15 percent sales across categories. Companies need to have the right channel mix to cater to the India market.

Targeting tier 2 & 3 cities in India – Tier II & III cities in India account for a sizable share of luxury auto in India (~15-25 percent) as the spending capability of consumers has grown manifold. However, luxury fashion, watches and personal care segments have not percolated down in the similar manner. Brands will need to have specific strategies for this segment to win.

Pricing – Indian consumer is value conscious and will not spend the money unless he sees value for his money. Companies will need to adopt innovative price tiering to attract consumer segments in India while maintaining the premiumness of the brand and not going down to the masstige segment.

Localized Innovation of Product portfolio – Brands will need to innovate and customize their global product portfolio to meet the Indian consumer requirements given the vast demographic and cultural diversity in India. Effectively utilizing local media, local celebrities to have a stronger resonation with customers will be critical to win.

Targeting for occasions – Brands need to innovate with product bundling, sales promotions, advertising based on the festival seasons and other critical occasions across the Indian customer journey e.g., consider gift packs for festivals like Diwali, Durga puja etc., and promotions associated with key occasions like wedding, anniversaries, birthdays etc.

Using online and social media marketing – Effective strategy for use of online and social media channels for marketing is critical for luxury brands in India to help increase reach and penetration, create a stronger re-call, and better fulfilment.

B. Imperatives for the regulatory body in India:

Tackling Counterfeits – The regulatory body needs to bring in and successfully implement stringent laws in India against counterfeits e.g., Under French law, purchase of fake product could lead to penalty or three years imprisonment, such laws should also be enacted in India to protect the growth of Indian luxury market.

Skilled labor development – Focus on opening / strengthening educational institutions in India to provide systematic luxury training to the youth who then can better serve to the needs of this industry.

Re-consider high import duties – High import duties also restrict the growth of Indian luxury market. The duties are higher as compared to other Asian countries like Singapore. Import duties range from 20 percent to as high as 150 percent which discouragers the international players to enter India as well as customers to buy in India. Therefore, customers prefer to fly to Dubai or Singapore where they get large variety at competitive prices due to no import duties unlike India. A lower duty could encourage customers to prefer local premium purchases thereby enhancing the revenue for government as well.

Clearly defined framework – Government should work and lay guidelines towards categorizing the real time demarcation of Luxury products in India. Flexibility in the “Packaging and Labelling Laws” related guidelines could also be considered.

Department for Promotion of Industry and Internal Trade (DPIIT) should consider to ease on the 30 percent domestic sourcing requirement.

Indian Luxury brands are unable to establish their benchmark in the global luxury market and are still unknown to the world. Proper funding and promotional initiatives by respective industry bodies especially focused on Tier II & III cities could be carried out and encouraged by the respective governments.

IV. Appendix

1. India
Market Size: US$ 15,028 MN (2019) CAGR: 12.45 percent (2015-23)
Avg. Revenue per Capita: US$ 11 (2019)

REGULATIONS & POLICIES
Taxation: 28 percent tax by government on luxury goods is a big obstacle for luxury goods manufacturer
Policies:

• Reduction of cash transaction for high value purchases.
• Mandatory clause by government for luxury brands with FDI above 51 percent to source at least 30 percent of the value of products sold from Indian small industries.

TACKLING COUNTERFEITS

• As much as 19 percent of consumers have received a counterfeit product from an e-commerce site as claimed in a study by LocalCircles.
• The first national IPR Policy was announced in 2016 and was followed by launch of IPR Enforcement Toolkit in 2017.
• Anti-Counterfeit protection measures introduced in draft e-commerce policy released in Feb 2019 targeted towards taking down online counterfeit markets.
• The government has proposed that e-commerce firms must give trademark owners like a brand or a reseller the option to approve the sale of every product that carries their trademark listed for sale by a vendor on their platform.

OTHER KEY INSIGHTS
Growing affluent and educated middle-class and an increasing list of HNWI Indians have fueled up the luxury spending in India.

2. China
Market Size: US $ 67,299 MN (2019) CAGR: 6 percent (2015-23)
Avg. Revenue per Capita: US$ 46.7 (2019)

REGULATIONS & POLICIES
The New E-Commerce Law of 2019

• Raises tax exemption limit for cross-border purchases by increasing the limit of a single transaction from 2,000 yuan to 5,000 yuan and the annual purchase limit from 20,000 yuan to 26,000 yuan.
• Cross-border purchases will be exempt from duties and will receive a 30 percent discount on consumption tax and VAT.

TACKLING COUNTERFEITS

• Stricter Govt. Stance – All e-commerce operators must now be properly registered and licensed.
• Close Monitoring of electronic payment methods, taxation and e-commerce dispute resolutions.
• Use of QR codes and RFID tags leveraging Blockchain technology to track the origin and history of the product at every stage of supply chain
• Use of online monitoring programme to identify key sites, including legitimate sites, where counterfeits may be offered and developing effective takedown systems (e.g., 1688.com (Alibaba China), ioffer.com and overstock.com).

OTHER KEY INSIGHTS
As a result of growing trade war tensions with U.S., Chinese consumer spending is expected to decline. Per capita growth in consumer spending is estimated to be only 8 percent in June 2019 as compared to 10 percent in June 2018.
The new regulatory changes are focused on encouraging luxury goods players to invest more in China’s e-commerce. China’s market has been hit by global forces, but Chinese shoppers are gravitating towards home-grown brands with growing sophistication in tastes and a penchant for unique styles.

3. Japan
Market Size: US$ 34,560 MN (2019) CAGR: 3.5 percent (2015-23)
Avg. Revenue per Capita: US$ 272.43 (2019)

REGULATIONS & POLICIES

• Prime Minister Shinzo Abe’s Economic Revival Programme led monetary easing and it triggered a spike in luxury goods consumption.
• Increasing tourist inflow driven by weak yen and relaxed visa rules for Chinese citizens boosted luxury market in Japan.

TACKLING COUNTERFEITS
The trade agreement Trans-Pacific Partnership (TPP) – which involves Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States has strengthened trademark protection and enforcement.

OTHER KEY INSIGHTS
2020 Tokyo Olympics is spurring investments in retail infrastructure and it will be another boon to the luxury industry.

4. France
Market Size: US$ 20,698 MN (2019) CAGR: 4.7 percent (2015-23)
Avg. Revenue per Capita: US$ 317.79 (2019)

REGULATIONS & POLICIES

• France is the first in the world to introduce new regulations prohibiting apparel brands and retailers from discarding or incinerating unsold items in favor of sustainability.
• Proposal for introduction of potential tax breaks to make sorting more profitable for companies that re-use and recycle rather than landfill waste such as textile and plastic.

TACKLING COUNTERFEITS

• Purchase of fake product could lead to penalty (~300,000 €) or three years’ imprisonment.
• Launching of various anti-counterfeiting campaigns like “Real ladies don’t like fakes!”, “You Can’t Fake Fashion” and “I Won’t Buy Fakes” to educate customers about cost of counterfeiting.
• Luxury brands in France like Louis Vuitton, Dior, Guerlain, Kenzo and Givenchy are suing eBay for ‘culpable negligence’ of its goods.

KEY OTHER INSIGHTS
There is a slowdown in the luxury sector because of decline in spending trend of affluent Chinese millennials and the impact of the Yellow Vest protest in France

5. Italy
Market Size: US$ 15,936 MN (2019) CAGR: 2.2 percent (2015-23)
Avg. Revenue per Capita: US$ 263.19 (2019)

REGULATIONS & POLICIES

• A stronger euro and foreign exchange volatility have driven up prices in Italy and France by 13.5 percent in dollar terms in an year.
• Tax-free travel retail is expected to increase by 26 percent and 19 percent in Europe and Italy, respectively.

TACKLING COUNTERFEITS
Anti-counterfeiting Information System – computerised platform enabling rights holders to send information on their infringed products for ready reference by the control agencies, therefore increasing the efficacy of criminal prosecution.
The Italian Competition Authority has power to shut down clone websites selling counterfeit brands. The Telecommunication Authority also recently adopted Resolution 680/13/CONS, which provides a fast, economic and simplified procedure for the removal of copyright-infringing online content, especially in urgent cases. Both interventions proved to be effective and have been widely used so far.

OTHER KEY INSIGHTS

• Italy’s successes in the luxury market have assisted the Italian economy during its stagnant economic situation and have propelled all of Europe to a hub for tourism-based purchasing.
• Healthy growth in luxury markets in Italy is driven by experiential luxury which is leading consumers to shift some of their purchases from luxury items to luxury experiences.

6. United States
Market Size: US$ 20,698 MN (2019) CAGR: 4.7 percent (2015-23)
Avg. Revenue per Capita: US$ 317.79 (2019)

TACKLING COUNTERFEITS

• Introduction of various smartphone apps like uFaker, that helps in tracking flow of counterfeit goods by rights holders and also rewards consumers on reporting fakes cases.
• Two trade agreements like Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (T-TIP) – between the European Union and the United States have strengthened and secured advancement in trademark protection and enforcement.

OTHER KEY INSIGHTS

• US remains the world’s largest luxury goods market reinforcing its strategic importance within the global industry.
• Trade war to hit high-end US fashion brands dependent on specialized Chinese manufacturing.
• Owing to China-U.S. trade war, there has been a decline in Chinese tourism to the U.S. as the exchange rate between the yuan and dollar has made the trip more expensive.
• Due to reduced rates of saving and higher levels of borrowing, consumer spending has been growing much faster than household income. This unsustainable growth poses a danger of shrinking spending on luxury goods, unless growth rates in wages begin to accelerate.