The luxury leather goods market - France

1.2 A growing global market and optimistic professionals

Breakdown of luxury revenues by segment World, ****, % Source: ****

The global luxury market has grown in recent years to reach $**** billion in ****. **% of revenues are for the luxury personal goods segment, which includes luxury leather goods.

Breakdown of luxury personal goods revenue by segment World, ****, % Source: ****

The Luxury Leather Goods segment represents **% of the total luxury personal goods market in ****.

Luxury leather goods sales trend World, ****-****, in millions of dollars Source: ****

Global sales of leather goods have been steadily increasing over the past few years. From $**.* billion in ****, they now reach $** billion.

Top ** countries in terms of luxury leather goods sales World, ****, millions of dollars Source: ****

In ****, the United States is broadly in the lead in luxury leather goods sales with sales accounting for approximately **% of global luxury leather goods sales. In second and third place are China and Japan, which account for **% and **% of the market, respectively, with $*.* billion and $*.* billion in luxury leather goods sales. France is in *th place: its luxury leather goods sales represent *.* billion dollars, or *% of the global market.

The top ** countries in terms of sales represent **% of global luxury leather goods sales.

Luxury leather goods sales volume evolution World, ****-****, thousands of units Source: ...

1.3 A fast growing French market

In line with the good figures worldwide, luxury leather goods are doing very well in France.

Evolution of luxury leather goods sales France, ****-*****, million euros Source: ****

Luxury leather goods recorded a strong increase between **** and ****. According to Euromonitor forecasts, this trend is expected to continue: between **** and ****, Euromonitor considers that sales will increase by around €* billion.

The vast majority of luxury leather goods are bags and small leather goods. They account for **% of luxury leather goods sales. [***]

2.1 A demand primarily from women

Distribution of sales of luxury leather bags and small leather goods by gender France, ****, % Source: ****

The demand for luxury leather goods in France is mostly female. Sales of luxury leather bags and small leather goods are mainly aimed at women. The latter accounted for **% of sales in **** and still accounts for **% of sales in ****. As sales have increased for the categories equally, the proportion has not changed over this period.

In ****, sales of women's bags and small leather goods reached *,*** million euros in France, while men's sales were at *** million. In ****, the latter amounted to *** million euros against *,*** million euros for women's items.

2.2 The different consumers

Tourists, especially from China

Luxury leather goods have been able to benefit from an increase in local and especially international purchases. Indeed, France has set new records in terms of tourist arrivals, with over ** million foreign visitors in **** and ****. Among them are Chinese tourists, who now play a key role in the French luxury industry.

Although the Chinese are in *th place in terms of flight arrivals to France, with **** flights originating from China, this number has only increased in recent years (***) and is expected to continue to rise according to Euromonitor's forecast to reach **** flights from China in ****. [***] Matching this increase in flights from China is the revenue from Chinese visitors: these have increased sharply in ****, mainly due to duty-free products and Golden Week. Golden Week refers to two weeks of vacation during which most workers in China enjoy time off. These weeks are marked by massive population movements during which the most affluent Chinese citizens travel abroad. Chinese travelers love to shop, and were attracted by the new Chinese-only outlet in Paris that was opened by the high-end retailer Galeries Lafayette in the middle of the reporting period.

Thus, mainland China has been a driving force for the luxury ...

2.3 Sustainability criteria: the emergence of veganism

According to a BCG survey, **% of the French consider that their purchasing behavior is influenced by sustainable development criteria. This trend is even stronger among the younger generations. However, the criteria vary according to the age category as illustrated below.

Which sustainability criteria do you value when it comes to buying luxury goods? World, ****, % Source: ****

Buying a luxury product is influenced by different factors:

transparency of materials ethics ecology animal welfare

The importance given to these different factors depends on the age group.

Veganism

It is understandable that consumers are looking for cruelty free and more environmentally friendly alternatives. The interest of consumers for ethical and sustainable solutions is growing. However, leather implies water consumption, chemicals used to soften the skins, deforestation caused by intensive livestock farming as well as animal welfare issues.

To meet this demand, more and more brands are turning to certified vegan leather, and other innovative materials. For example, Piñatex, a material made from fibers extracted from pineapple leaves, is very popular with vegan brands, but also with luxury brands that want to change their habits, such as Lancel and Hugo Boss. [***] The brand Stella McCartney (***), whose founder is a vegetarian, refuses to use leather, fur ...

2.4 The Made-in France label

Made-in-France is a guarantee of quality: consumers associate it with know-how and history.

Which manufacturing country do you consider the best for luxury brands? World, ****, % Source: ****

According to a survey conducted by BCG, France ranks second in terms of recognition of its know-how. Although Italy is considered the best manufacturing country for luxury brands (***) by **% of the surveyed population, France is just ahead of it and thus far ahead of the states. Thus, **% of the population considers France to be the best country for manufacturing luxury brands.

The gap widens somewhat when it comes to handbags and shoes: France is considered the best manufacturing country for these items by **% of the population while **% consider that it is Italy.

3.1 At the base of the value chain: the activities around the raw material

Suppliers of raw hides and skins

Companies operating in the leather and raw hide sector are often directly integrated into the slaughterhouses. Their activity depends largely on the economic situation of the agricultural world (***) as well as on the evolution of the national and international leather market.

Evolution of the turnover of the raw hides and skins trade France, ****-****, thousands of euors Source: ****

In the raw hides and skins collectors sector, in ****, there were ** companies with a total workforce of *** employees. In ****, there are ** companies with *** employees. There is some decorrelation in the number of players in the sector (***). When this sector generated a turnover of *** million euros in ****, it would only generate *** million euros in ****.

Tannery

In the tannery-megisserie sector, in **** there were ** companies with a total of **** employees. In ****, there are ** companies with **** employees. We observe, over the past few years, a certain stability of the sector both in the number of players and the number of employees. This contrasts sharply with the massive decrease in the number of players observed since the early ****s: in ****, there were ** companies in the sector, compared to ** ten years later, in ****. The same phenomenon can be observed for the number of ...

3.2 French leather goods production concentrated in Ile-de-France and Auvergne-Rhône-Alpes

In this section, we broaden the scope of the study, and focus not only on luxury leather goods, but leather goods in general and more specifically items manufactured in France (***). The turnover of the French Leather Goods industry amounts to *.* billion euros, up *% from last year in ****. [***] This trend is explained in particular by the good performance of companies that produce luxury items.

The thirty-one companies with more than *** employees account for **% of the sector's billings and employ just under three-quarters of the employees.

Source: ****

Number of companies in the leather goods sector

France, ****, number of companies

Source: ****

3.3 A concentrated market

Breakdown of the luxury leather goods market share France, ****, % Source: ****

The French market is highly concentrated: indeed, * groups gather **% of the market share. These are LVMH SA, Hermès International SCA and Kering SA. LVMH SA is the leader in this market, with **% of sales, far ahead of Kering SA (***).

While LVMH SA has ** brands, the most important of which are listed in the graph below, Kering SA has only * (***) and Hermès International SCA only markets one brand.

Breakdown of market share for the various brands France, ****, % Source: ****

Above, the graph represents the market share for the different brands. Louis Vuitton is well ahead, accounting for **.*% of sales in France in ****. The Hermès and Gucci brands account for *.*% and *.*% of sales, respectively.

3.4 The distribution of leather goods is marked by the rise of digital technology

Evolution of the distribution of luxury leather goods sales by type of distribution France, ****-****, % Source: ****

It can be seen that the majority of sales are made in stores. Online sales are in the minority, but the share of luxury leather goods sales made online has been growing steadily in recent years. It represented only *% in **** but has increased by * percentage points and represents **% of sales in ****.

We can distinguish two types of stores:

specialty stores that offer only one product family. This is the majority distribution channel, although the share of sales made in specialized stores continues to decline. non-specialized stores that sell more than one product family, sometimes including several types of services. The share of sales in non-specialized stores has been increasing slightly in recent years.

The growing importance of social networks

The appeal of social media is growing rapidly: major brands had an average of *.* million followers on Instagram in ****, this number almost tripled in ****. All brands now consider digital a strategic priority. [***] Instagram is the preferred platform, accounting for about **% of brand posts (***) and over **% of social shares.

4.1 Price range & auction

Pricing of leather luxury products

Source: ****

Although it is difficult to define a clear boundary between what is luxury and what is not, one great characteristic that is unique to luxury items is that they have no upper price limit. Thus, if we can arbitrarily consider that a luxury handbag starts around ***€, it is not uncommon to see items exceeding **,***€.

One factor explaining this lack of limit is the value that the brand has in the eyes of customers, and their relative insensitivity to price - luxury is above all aimed at a very exclusive clientele. A second factor is the use of materials that are not used anywhere else: lambskin, snakeskin, crocodile leather, metals and precious stones. The designers do not set any limits and do not have to worry about the final price of the article.

Luxury leather goods as an investment: the auction

Fashion and more particularly luxury accessories are an investment sector for collectors. [***] Some leather goods are indeed perceived as works of art. There are many thematic sales dedicated to Hermès, Chanel or Vuitton bags. Luxury leather goods attract buyers with varied profiles, from antique dealers to Russian or Asian individuals. These are sales dedicated ...

4.2 Production concentrated on a small number of products

In this section, we broaden the scope of the study, and focus not only on luxury leather goods, but leather goods in general and more specifically on items manufactured in France (***). Billing for leather goods manufactured in France by an establishment or one of its subcontractors amounted to approximately €*.* billion in ****.

Breakdown of invoicing in the leather goods sector by type of item France, ****, % Source: ****

Handbags dominate the market: handbag invoicing represents **% of French leather goods invoicing.

Production of leather goods France, ****, thousands of items produced Source: ****

This graph shows the volume of production of the leather goods sector in France in ****, so it does not only include luxury leather goods, the field is broader than that of the study.

We note that it is mainly handbags (***) that dominate the market.

The rise of backpacks in the luxury sector

In the luxury bags and small leather goods sector, backpacks have recorded strong growth in **** due to their practicality and versatility. Backpacks have become must-have fashion accessories and are now part of every luxury fashion designer's range. This growth has come at the expense of business bags, as they are considered more formal and do not follow the latest trend in casual ...

4.3 The growing importance of the second-hand market

The second-hand market is steadily increasing. Luxury brands of bags and luggage are particularly popular via these channels, with bags accounting for **% of the second-hand market in France and small leather goods accounting for **% of luxury second-hand purchases.

Multiple web platforms promote second-hand items, as illustrated in the chart below:

Platforms most used to purchase second-hand luxury items France, ****, % of people Source: ****

However, some major retailers like Galleries Lafayette or BHV are looking to capitalize on this and are now offering second-hand items. [***] InstantLuxe.com is an e-commerce reference specializing in the purchase and sale of second-hand luxury items. The brand offers a choice of handbags, small leather goods, jewelry, watches and accessories on its website as well as in the corners offered by major retailers.

The main motivations for buying second-hand items are as follows

attractive prices: second-hand items are sold on average ** to **% below the price of new items, environmental concerns: desire to reuse durable goods, consumers are keen to change: styles are constantly evolving, so the possibility of changing accessories regularly is attractive, the professionalization of platforms that guarantee the authenticity of products, access to rare and unique luxury products.

4.4 The threat of counterfeiting

European luxury manufacturers lose nearly ** billion euros a year to counterfeiting. [***] This is not only a loss of revenue, but also a loss of direct jobs: legitimate manufacturers need less manpower and as a result, nearly ***,*** jobs are considered directly lost in these sectors across the EU. Specifically, the luxury clothing, footwear and accessories sector in Europe loses €**.* billion annually, or *.*% of sales.

Which of the following categories are all affected by counterfeiting? France, ****, % of people considering the category as concerned by counterfeiting cSource: ****

Leather goods and accessories (***) is considered the sector most affected by counterfeiting. In fact, when asked "in your personal opinion, which of the following product categories are all affected by counterfeiting?", **% consider that leather goods are affected by counterfeiting.

Which of the following categories have you ever purchased counterfeit goods? France, ****,% of people who have ever bought counterfeit goods Source: ****

Of those surveyed in the study, **% admit to having already purchased counterfeit leather goods. This number is on the rise: in **** and ****, they were only **% who had ever bought counterfeit. With this percentage, leather goods are in *nd position in terms of purchases of counterfeit items behind sportswear. We notice that the purchase of counterfeit goods is ...

5.1 Regulations

The "leather" denomination

The term leather is protected by French regulations (***), chips or powders of reconstituted leather and even materials derived from bio-manufactured hides can not bear the name leather. The indications "synthetic leather", "reconstituted leather" or "leather of ..." are therefore not legal and have no right to be affixed to an article.

To inform the consumer of its composition, any finished product must be labeled with its composition when marketed in France. The labeling is different for shoes and for other leather articles (***).

6.1 Segmentation

• Hermès International
• Prada Groupe
• Chanel
• Michael Kors
• Maroquinerie Auguste Thomas
• Les ateliers d’Armançon
• Les Ateliers de Vitré
• Maroquinerie Pierre Cotte
• Lancel (Piquadro)
• Lancaster Maroquinier
• Farfetch
• Rioland Groupe
• Kering
• Moynat Paris
• Montblanc (Richemont Groupe)
• Jean Rousseau Manufacture
• Fleurus Groupe
• Coach (Tapestry Capri)
• Piquadro
• Partson Groupe
• Jacquemus
• Gucci
• Cartier (Richemont groupe)
• Louis Vuitton Malletier
• Camille Fournet Maroquinerie
• Algo Goyard Maroquinerie
• Goyard (Algo Groupe)
• SIS Maroquinerie Groupe
• Perrin Créations Maroquinier
• Fendi France
• Fendi