WIXLIB

8 out of 10 disappointed consumers plan to react :In 50% of cases likely to translate in lost sales"In case of a progressive separation between the price and the perceived product value,what would you do?% of respondents perceiving a price discrepancy45%17 %100 %25%83 %17%Perceived No reaction Reactionmisalignment15%13%10%10%9%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Lost salesBuy other Look for Look forGo to Renounce Trade Buy lowerluxury discounts discounts brand’sto buydown topricedbrandonlineoffline outlets topremium from same(multibrand) findbrandsbranddiscountsLost salesGoing off-price / lower priced itemsSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Consumer Insight 2017 Edition Draft PPT v44(Storyline).pptxDraft—for discussion only2020

As a result 60 out of 230 Brands surveyed losingtraction, especially total look ones"Is there a brand on which you have the feeling that you have reduced /you will probably reduce your luxury spending?"% of brands recalled by respondents74%CategoryspecialistsCopyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Lifestyle /total look100%26%Total personalluxury brandsResilientAffected byspend decrease36%19%Brands Affected byspend decreaseNote: Out of the total 12,000 respondents, 79% mentioned a luxury brand on which they reduced their spend. Total personal luxury brands include 230 brandsspontaneously recalled by respondents. Brands affected by spending decrease include those mentioned by more than 50 respondents. Possible to mentiononly one brand Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Consumer Insight 2017 Edition Draft PPT v44(Storyline).pptxDraft—for discussion only2121

Trading down is an attitude also for beyond moneyLuxury consumers . Americans the most active"Do you have the feeling that you have partially shifted your spending from luxurybrands to premium and / or fast fashion brands?"% of respondentsBy luxury spendBy nationality7%Yes41%37%43%10%44%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.57%81%93%No59%63%57%90%56%43%19%Total5-20 k 20-50 k 50 k Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Consumer Insight 2017 Edition Draft PPT v44(Storyline).pptxDraft—for discussion only2222

Luxury Consumers trading down to premium brandsalmost 2x than to fast fashion ones"Do you have the feeling that you have partially shifted your spending from luxurybrands to premium and / or fast fashion brands?"% of right 2016 by The Boston Consulting Group, Inc. All rights reserved.Yes% of respondents trading down59%TotalTotalNote: Multiple options answer. In calculating the % of respondents trading down to premium and fast fashion brands, respondents trading down to bothpremium and fast fashion brands were counted twiceSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Consumer Insight 2017 Edition Draft PPT v44(Storyline).pptxDraft—for discussion only2323

Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.More Casual, more Customized!BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only24

Casualwear with increasing appeal vs. formalfor 2 / 3rd of True-Luxury Consumers"Has your attitude towards formal wear changed?"% of respondentsCopyright 2016 by The Boston Consulting Group, Inc. All rights reserved.34 %100 %66 %OverallNo changeperceivedin formalDecrease offormal in favorof casualSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only2525

Casualwear fuelled by wardrobe saturation for theeldest, higher appeal and acceptance for the youngest"What are the key reasons driving the lower appeal for formal wear in your mind?"OverallBy generationMillennialsEnough formal wearfor formal occasions55%Casual suitableto more occasionsFollow casualizationat the officeFormal wear nowtoo expensive48%37%29%Baby B. & Silver55%51%More comfortwith casualGen. X52%50%50%48%40%33%54%61%49%40%36%28%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.% of respondentswith lower appealfor formal wear28%19%Note: multiple options answer (up to three reasons)Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only2626

The Luxurization of the CasualwearLuxury sneakersSneakersOther shoes9.3 Bn 0.98.42009Market @ Retail value (Bn )16.0 Bn 3.013.02016Down jacketsOther outerwear9.6 Bn 0.59.1200913.0 Bn 2.0Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Market @ Retail value (Bn )Luxury down jackets11.02016Source: BCG Luxury market modelBCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only2727

Growing demand for customization"Is customization relevant for you when purchase luxury?"Avg.% of respondents answering "Yes"22%Avg.16 %17 %18 %20 %14%15 % 15 % 15 %13 %13 %10 %2013201420152016Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.23 % 23 % 23 %22 %Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only2828

Bespoke is the most desired feature;different customization priorities by product category"Which are the elements of customization that you value the most?"% of respondents considering each customization aspect %#3Service52%#4Made tomeasure#5Initials orwritings50%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.#147%1st categoryby relevanceNote: multiple options answer (ranking of three reasons)Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only2929

Made-in Italy still leading, fuelled by Apparel,Bags and Shoes"Which country of manufacturing do you consider the best for luxury products?"Drivers of the increase (2014-2016)Δ 2014-2016 (pp)29%23%12%10%11 13 pp519%42014032%2016 6 pp 20 pp40%20%20142016 1 pp-3 pp-5 pp21%18%15%10%2014201620142016 10 pp 18 20162014.3% 7 pp-2 2 pp 0 pp53%2016 2 1420161. Excluding cars, luxury boats, design and lighteningSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only30Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.% of respondentsthat check Made-in130

Made-in Italy recognized worldwide, whileMade-in U.S. mainly appreciated by AmericansMade-in preference (Italy vs. US) by consumer nationalityFocus on Personal Luxury1% of respondents40%Made-inCopyright 2016 by The Boston Consulting Group, Inc. All rights reserved.30%20%Made-in10%0%1. Excluding cars, luxury boats, design and lighteningSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3131

Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.True Luxury Consumers buying more at homeBCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only32

True-Luxury Consumers are buying more in theirhome country"Where did you buy your last luxury item?"1% of American respondentsAbroad35%Abroad35%61%Of which16%online65%Local23%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.% of Chinese respondents"Where did you buy your last luxury item?"177%LocalOf which20%online65%39%20142016201420161. For Top 4 EU nationalities (French, German, Italian, British) local purchases from 48% in 2014 to 79% in 2016. For Japanese local purchases from 71% in2014 to 82% in 2016 2. Includes both cities where respondents bought in the last 12 months and plan to buy in the next 12 months. Multiple optionsanswer (all cities that apply) Note: Hong Kong, Taiwan and Macau included in "Abroad" Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3333

Chinese increasingly back home to buy luxury"Where did you buy your last luxury item?"% of Chinese buying locally1Daigou Effect65%Locally(MainlandChina)High Price GapStrong Yuan30%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.41%Government Initiatives39%(Duty Rates, Boarder Controls)Global PricingWeak Yuan20132014201520161. Hong Kong, Macau, Taiwan excludedSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3434

True Luxury Consumers are buying more in theirhome country"Where did you buy your last luxury item?"1"Where did you buy your last luxury item?"1Top destinations for luxury shopping22015% of American TokyoLondon#2LondonTokyo#3New YorkParis#3MilanParis#4MilanNew York#4DubaiDubai#5DubaiMilan#5Hong KongMilanCopyright 2016 by The Boston Consulting Group, Inc. All rights reserved.% of Chinese respondentsTop destinations for luxury shopping21. For Top 4 EU nationalities (French, German, Italian, British) local purchases from 48% in 2014 to 79% in 2016. For Japanese local purchases from 71% in2014 to 82% in 2016 2. Includes both cities where respondents bought in the last 12 months and plan to buy in the next 12 months. Multiple optionsanswer (all cities that apply) Note: Hong Kong, Taiwan and Macau included in "Abroad" Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3535

Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Luxury goes OmnichannelBCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only36

Store solo sales decreasing but omnichannel thereal trend vs. online solo sales"Where have you bought your last luxury item? Where have you researched it?"% of respondents on last purchase201361%Digitally Influenced8%Digitally Influenced10%7%9%Copyright 2016 by The Boston Consulting Group, Inc. All rights resolo51% OmnichannelROPO1ShowRoomingOnlinesoloTotal21. Researched Online, Purchased Offline 2. Researched Offline, Purchased OnlineSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3737

Digital influence growth fuelled by Americans"Where have you bought the last item purchased? Where have you researched it?"OverallBy nationalityDigitally influencedpurchases1 2016 (%)61%64%72%54%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.( On line solo Showrooming ROPO)22 ppTrend 2013-2016(Δ pp)9 pp8 pp6 pp1. Considering the last luxury purchaseSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3838

Millennials the most digitally influenced"Where have you bought the last luxury item purchased? Where have you researched it?"1% of respondents onlast purchaseStore soloBy generationMillennials39%32%Gen. XBaby B. & Silver42%Copyright 2016 by The Boston Consulting Group, Inc. All rights ne soloDigitally influencedpurchases (%)9%10%12%61%10%7%10%6%10%68%58%44%1. Mainly personal items ( 90%), among experiential includes wine & spirts, furniture, smartphones,.Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only3939

60% of online purchases are perceived to beadditional to physical retail purchases"Do you have the feeling that your spending online is in addition to orcannibalizing your luxury spending in physical stores?"OverallBy nationality2016online purchases19%21%22%17%In additionto Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.% of respondents177%23%1. Considering the online channel among the top 3 channels used over the last 12 monthsSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4040

Full price multibrand eShops key for Millennials :Brands' websites and Marketplaces for the eldest"Which kind of online store did you buy the product from?"OverallBy generationMillennialsBrand owned onlinestoresFull price multi-brandonline stores(e.g. Net à Porter, Dept.Store e-commerce)Online marketplace(e.g. Amazon, TMall, JD.com)Discount specializedonline stores (e.g. Yoox)Gen. XBaby B. & ight 2016 by The Boston Consulting Group, Inc. All rights reserved.% of respondents20%7%Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4141

Demand for an omnichannel experience is growingfast , driven by Chinese and Americans"How important is it for you that a brand can bereached through different channels?"OverallBy nationality (2016)% of respondentsNot important25%% of respondents considering omnichannel not negotiable/very 4%23%36%38%Not negotiable / 37%very important19%54%Consistent BrandImage49%Integrated Deliveryand Service Level39%Same Rewards38%Customer relationshipManagement38%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.2014"What you would expect wheninteracting with your preferred luxurybrand through multiple channels?"151%40%39%1. Multiple options answer (ranking of three reasons)Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4242

How effectively are Luxury Brands responding to theomnichannel expectations? (I) 100 brands includedin the analysis1Brands' satisfaction distribution (2016)Omnichannel Satisfaction Index (People mentioning as the best brand – people mentioning as the worse brand)100%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.50%0%-50%1. Only personal luxury goods, Included only brands with statistical significant observations in total satisfactionSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4343

How effectively are Luxury Brands responding to theomnichannel expectations? (II) 100 brands includedin the analysis1Omnichannel needsBrands' satisfaction distribution (2016)Consistent brand imageCopyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Integrated deliveryand service levelSame Rewardsacross channelsCustomer relationshipmanagementSatisfaction Index21. Only personal luxury, Included only brands with statistical significant observations 2.# respondents who selected the brand as best brand –# respondents who selected the brand as worst brandSource: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4444

Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.Monobrand at the heart of an omnichannel experienceBCG Altagamma True-Luxury Global Consumer Insight 2017 Edition Draft PPT v44(Storyline).pptxDraft—for discussion only45

Monobrand stores losing traffic and sales;Japan and China more resilient"Have you bought your last luxury item from a monobrand store?"OverallBy nationality (2016)% of respondents36%7%Abroad32%At 12%9%20143%2016Trend '14-'16Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.35%Source: BCG 2016 ad hoc study (12,000 respondents in 10 countries)BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4646

Too many stores opened in the past vs. market growthGlobal retail footprint1 growth vs. Personal Luxury Market growth (2014-2016)@ Constant Exchange Rate3x5.0%2x1.9%Copyright 2016 by The Boston Consulting Group, Inc. All rights reserved.4.0%1.6%0-1%0.0%.2014Market Growth20152016Retail Footprint Growth (Store #)1. # storesSource: BCG Analysis, "Luxury Goods Store Wars 2016" - BernsteinBCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptxDraft—for discussion only4747

Shopping experience and product assortment themain reasons for monobrand disaffection"Do you have the feeling that you willpurchase more or less frequently inmonobrand stores

BCG Altagamma True-Luxury Global Cons Insight 2017 Ed v69 14feb17 Final No BUP.pptx 1 Draft—for discussion only ed. The True-Luxury Global Consumer Insight