We know that there is a very basic difference between a normal good and a luxury good. A luxury good will add to your comfort or give you high amounts of pleasure, but it would not be indispensable. For instance, a luxury handbag isn’t absolutely necessary for your survival, is it? But they’re selling extremely well all over the world!
Today, customers across the globe are shelling out several thousand dollars to buy luxury handbags and luxury watches. The reason for purchasing such high-priced items isn’t just a ‘beautiful design’, rather it is primarily the brand value. Yes, the brand name is indeed a powerful attraction for most luxury good buyers. No wonder so many people are tempted to purchase fake branded goods just so that they can flaunt the designer’s name.
In 2016, Louis Vuitton was named the most popular luxury brand in the world. On the other hand, Burberry came in at the 7th position with a brand value of approximately $4.59 billion.
Let’s have a look at some of the most valuable luxury brands selling in the global markets today.
Louis Vuitton, popularly referred to as ‘LV’, is a fashion house with its origins in the beautiful country of France. It was founded in the year 1984 and is currently the most valuable luxury brand all over the world. Its present brand value is an approximate $28.51 billion. Though LV has been at the top of the global luxury market for a long time now, its brand value has suffered a 12 percent loss since 2012.
Some of the best-selling LV bags are priced for more than $10,000. Also, the Tambour Monogram collection of watches has items priced in the range of $26,000-$29,000.
In 2016, Louis Vuitton recorded earnings amounting to $40.08 billion, suggesting a 5 percent increase from the previous year. The brand is doing consistently well in the American, European and Asian (excluding Japan) markets. Recurring operations profit in 2016 was recorded at $7.63 billion. This was a 6 percent increase from 2015.
Another French luxury brand, Hermes, started the year on a very solid footing. It managed to deliver record profits in 2016, showcasing an excellent recovery in the highly competitive luxury goods market.
Hermes is most popular for its $10,000 worth Birkin bags as well as its printed silk scarves, priced at $400. The brand reported that its net profit had increased by 13% to $1.9 billion (1.1 billion euros) in 2016. At the same time, the operating margin of the brand amounted to 32.6% of the total sales in 2016 as compared to 31.8% in 2015. The dividend of the company also witnessed a 12% rise. The present brand value of Hermes is $19.8 billion and it is the second most valuable luxury brand in the world.
The third on the list of the most valuable global luxury brands is none other than Gucci, with a current brand value of $12.7 billion. Guccio Gucci founded this luxury brand in the Florence, back in 1921. At present, this brand is incorporated into the Gucci Group with a French company as its owner. Patrizio di Marco is the current Gucci CEO.
In October 2016, CNN Money reported that Kering’s shares had risen by nearly 10%. Gucci is the most profitable division of Kering and reported an increase of 18% in its third quarter sales last year.
Gucci has surprised the market with its profit reports as most luxury brands have been suffering a decline due to slow tourism in Europe and the series of hard-hitting terrorist attacks.
Fourth on the list of the most valuable luxury brands is yet another French company, Chanel. Founded in 1909 by Coco Chanel, the company is presently under the ownership of Gerard and Alain Wertheimer, grandsons to the original business partners. Chanel has its headquarters in Paris and is extremely popular for its signature perfume, No. 5 de Chanel.
The current brand value of Chanel is $10.32 billion.
The leading brand in Swiss watches, Rolex, has its headquarters in Geneva and was founded in 1905 by Hans Wilsdorf. Till date, this high-selling luxury watch brand enjoys an unparalleled reputation for its expertise and quality all over the world.
Rolex is fifth on the list of the most valuable brands in the world with a current brand value of $8.15 billion. Its Oyster range of watches have Superlative Chronometer certification and are known for their performance, reliability, and accuracy. Around 26 different types of drop tests are carried out for all Oysterlock bracelets by Rolex. The testing team opens and closes the fastening of these bracelets at least a thousand times before stamping an approval. And of course, they are also immersed in sand and salt water as well as in chlorine water solutions to test the durability before they are rolled out.
The brand recorded profits of $4.7 billion in 2016 and its operating profit margins are approximately 30 percent. Rolex has a solid brand presence in the world of sports. It has endorsements in motor sports, golf, yachting and tennis. Tiger Woods, Roger Federer, Lindsey Vonn and Phil Mickelson are some of the most popular athletes advertising for Rolex watches.
Tiffany & Co.
For companies looking to increase profit margins through marketing, there is no better inspiration than Tiffany & Co. Tiffany & Co. has its headquarters in New York City and has managed to establish itself as the leader in the space of luxury jewelry as well as specialty clothing.
Besides being extremely popular for its beautiful jewelry designs, it is also known for its watches, china, sterling silver, crystal, personal accessories, leather goods and fragrances. The current net worth of this luxury brand is $11.6 billion and it recorded sales of $4 billion in 2016. The brand was established way back in 1837 and employs over 11,000 people globally. Michael Joseph Kowalski is the CEO of Tiffany & Co. and it operates via five distinct geographical divisions:
Customers are happy to pay several thousand dollars more to get a Tiffany product as compared to any other silver product that does not have the prestigious Tiffany logo. The brand has done an excellent job in marketing its logo and creating a lasting impact on buyers’ minds.
Prada, one of the leading luxury brands of the world was founded by Mario Prada in the year 1913. The first Prada store was opened in Milan in the Galleria Vittorio Emanuele II. The exclusive store offered a range of luxury goods including luggage and accessories featuring sophisticated workmanship and high-quality materials to its customers.
The aristocratic class in Milan was quick to fall in love with all Prada offerings. The brand became hugely popular among the elite in Europe.
The current net worth of Prada is $11.4 billion and it continues to be one of the most sought-after luxury brands globally. Today, its product range has extended t include handbags, leather goods, apparel, footwear, fragrances, accessories and eyewear. These products are marketed under different brands such as Prada, Church’s, Car Shoe and Miu Miu.
The current CEO of Prada is Patrizio Bertelli and it reported net sales of $3.91 billion in 2016. The distribution network of the Prada Group extends across seventy nations, including over 600 directly-operated stores that form the foundation of the brand’s global expansion strategy. Prada also sells through selected multi-brand retail stores and department stores in the some of the major cities of the world.
Coach Inc. is a global luxury brand that is most popular for its range of women’s belts, handbags and retail customized apparel. The product line of Coach includes scarves, gloves, jackets, hats, footwear; jewelry pieces (necklaces, bracelets, earrings and rings), travel kits, luggage, fragrance, body lotion and a couple of other self-care products. The brand has its headquarters in New York and its current net worth is $11.1 billion (May 2017). It employs over 15,000 workers and was launched in the year 1941. Coach’s geographical areas of operation are divided as:
- North America
Dawn Hughes is the founder of this luxury brand and Victor Luís is its current CEO. The net sales, as reported in the fourth quarter, increased by over 15 percent as compared to the previous year. Coach also reported a 7 percent overall increase in sales in 2016.
Burberry is a luxury fashion house that was founded in Basingstoke, Hampshire, UK in 1865 by a man named Thomas Burberry. Thomas was an expert in designing trendy outdoor sportswear and was quick to establish a clientele of wealthy people who were committed to fishing and hunting.
Today, Burberry Group Plc is a global brand that undertakes designing, production and sale of luxury products and operates through wholesale/retail as well as licensing business networks. Its current market worth is $9.6 billion and it reported sales of $3.65 billion in 2016. Christopher Bailey is the CEO of Burberry.
The wholesale/retail business network of Burberry is devoted to selling luxury products through the brand’s mainline stores, outlets, ecommerce, department stores and Burberry franchises. The licensing business network, on the other hand, provides international licenses of eyewear, fragrances, children’s wear and timepieces. The headquarters of Burberry are in London, UK and it presently employs over 10,000 people all over the world.
Cartier is a heritage luxury brand that has been serving the royalty of Europe for over a century now. It has approximately 300 boutiques all over the world showcasing extremely high-end watches and jewelry. Cartier has its headquarters in Paris and its current net worth is $9.3 billion. The brand did experience a setback in 2016 when profits dropped by over 20 percent because of an overall decline in the luxury industry. The flagship store of Cartier was re-opened in NYC in September post an extensive renovation. New stores were also opened in China, Turkey and Australia in 2016. Stanislas de Quercize is the current CEO of Cartier.
Geneva-based firm, Richemont, is the owner of Cartier as well as other watchmakers like IWC and Piaget. In the last quarter of 2016 (i.e. three months leading up to 31st December), it reported an increase in sales to $3.3 billion (EUR3.09 billion) from EUR2.93 billion reported in the same quarter in the previous year.