DDT Survey: 70% Of Investors Will Continue To Increase The Luxury Sector After The Outbreak.

DDT recently released the 2020 global fashion luxury private equity fund and investor survey (Global Fashion & Luxury Private Equity and Investors Survey 2020) report.

Based on industry data and interviews with top management, the report analyzes the trend of luxury market and commercial mergers and acquisitions. The report points out that investors in the global fashion and luxury sector have to face the impact of increasingly protectionist policies, unstable political situations, advanced digital technology and the outbreak of new crowns on business models.

According to market expectations, the sales of personal luxury goods will increase by 10% between 2019 and 2025 after the fall of the new crown epidemic in 2020, with an average annual growth rate of 1.9%. The other segments of the fashion industry will grow by 20% in 2025, with an annual growth rate of 2.4%.

It is estimated that El Luxor Hotel, yacht, furniture, clocks and jewellery will be the most affected areas, while cosmetics, perfume and private aircraft will be less affected. After the outbreak, El Luxor Hotel, clothing and accessories, cosmetics and perfume will benefit more quickly from the lifting of the blockade order and the trend of online sales.

In the field of personal luxury goods, the European and American markets are expected to have stronger demand shrinking, sales will drop 30%-40%, and the expected recovery time will be 12 to 18 months. The most commonly used coping strategies will focus on online distribution channels, marketing, digital promotion and sustainable environmental initiatives.

　　 DDT partners Elio Milantoni said that even in this difficult year, the luxury industry will continue to be a fertile ground for investors. In fact, about 70% of the respondents said they would continue to invest in the luxury market after the outbreak. The most attractive areas will be clothing and accessories, cosmetics and perfume, and luxury business. "Next year will be a good time to invest in luxury business. Meanwhile, the traditional stores will be upgraded from the sales side to the experience side. For private equity funds, this also reflects the importance of online sales."

According to DDT's survey, 70% of the funds are evaluating investments in fashion and luxury goods in 2020, including obvious interest in luxury business, clothing and accessories, cosmetics and perfume (15%). However, considering the impact of the epidemic, sales of clothing, watches and jewellery, yachts and private aircraft are expected to remain stable, while sales of cosmetics, fragrances and home sectors will increase. As a positive impact of the outbreak, luxury electric business will become the biggest growth area.

Investors expect the Asian and Middle East market to recover faster and the fashion luxury industry to grow simultaneously. On the other hand, the recovery of the European and Latin American markets will be slower.

In view of the acceleration of the digital process caused by the epidemic, luxury companies are looking for start-ups and Internet companies related to innovative technologies such as big data analysis and application, artificial intelligence and Internet of things, in order to retain online customers. In 2020, 57% of respondents said they would invest in such disruptive technologies.

DDT also stressed that 2019 was a profitable year for luxury market mergers and acquisitions, with 271 transactions, 6 more than in 2018 (an increase of 2%). On the other hand, the number of M & A transactions in the personal luxury sector decreased (compared with 53 in 2018), of which 26 of clothing and accessories (17% of the total) decreased, while watches and jewellery (4% of the total) decreased by 17, while cosmetics and perfume (12% of the total) decreased by 10. El Luxor Hotel area (43% of the total) was the best, with an increase of 40 transactions over 2018.