The Luxury Barometer

Contents Overview

2016 outlook: seizing the opportunities and tackling the challenges..... 5 Section 1

Outlook and perceived growth drivers...................................................... 7 Section 2

The digital marketplace – opportunity or threat?...................................13 Section 3

Looking forward – the big challenges to tackle......................................19 Section 4

The global perspective..............................................................................29

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Overview 2016 outlook: seizing the opportunities and tackling the challenges As a leading international law firm advising clients in the fashion and luxury sector, Taylor Wessing has commissioned independent research to share a snapshot of the market for the year ahead. The research touches on outlook, growth plans and concerns, to offer insights on both the opportunities and challenges for the year ahead – and also the support that luxury brands may need in achieving their business goals. The new research paints a picture of a sector with a generally positive outlook, despite the context of global market uncertainty for 2016. Product innovation and evolution emerge as key drivers for growth. The online marketplace is set to be a key determinant of business fortunes, both in its perceived importance as a sales channel – and, paradoxically, in potential under-investment in brand protection, cyber security and protection against other operational risks. Jason Rawkins International Head of Taylor Wessing’s Fashion & Luxury Brands Group

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Section 1 Outlook and perceived growth drivers a) Confident business outlook More than two in five luxury businesses surveyed (41%) expected growth for 2016. Around three in ten businesses surveyed (27%) predicted a year where their business would face no change in outlook. Those UK businesses that actively operated in overseas markets were significantly more confident than UK luxury businesses whose audience was just in the UK – 48% versus 35% respectively. With the luxury sector estimated to be worth around £32 billion to the UK economy,1 it is clearly an important sector for not just retail but the economy. The new findings would suggest a generally confident outlook and focus on growth for 2016 from luxury brands, which stands apart from more cautious assessments for the overall retail sector, where some have predicted the consumer recovery may lose some momentum in 2016.2 Looking at businesses by age, growth was expected predominantly from start-ups and heritage brands – presenting something of a squeeze on evolving or established businesses, which may be more likely to consolidate. Heritage brands often have scale and track record to support their evolution, and start-ups emerged as particularly likely to have a positive outlook for 2016 (53%). They were also the youthful businesses most inclined to rate the importance of online as a key channel for selling products.

The British fashion industry contributes over £20 billion to the UK economy and employs around 800,000 people around the country. London has a long standing reputation as one of the world’s leading fashion capitals. Our major events like London Fashion Week and the British Fashion Awards showcase the best talent from emerging designers through to heritage and global luxury brands to an international consumer and trade audience. We are also proud to have some of the best fashion colleges in the world.

Caroline Rush CBE, Chief Executive, British Fashion Council

41% of luxury businesses expect growth for 2016

1 www.thewalpole.co.uk/walpole-economic-study 2 www.retaileconomics.co.uk/offers/outlook-for-the-UK-retail-industry-in-2016

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Table 1: 2016 business outlook by company age Start up

Evolving / established

Heritage

9%

4%

9%

Modest/organic growth

44%

28%

45%

Total: predict growth for 2016

53%

32%

54%

Major expansion

The research shows that the general outlook in the sector remains positive, in spite of changes in the economic climate which means that times are more challenging than a few years ago. The slowdown in China’s economy and the fact that the Chinese customer is travelling less is an issue. The uncertainty in the Middle East and to a degree also Russia means that the travelling consumer has slowed down. To weather these and other challenges, having a physical presence and digital strategy that go hand in hand will continue to increase in importance.

Jason Rawkins, Taylor Wessing, London

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53% of start-ups have a positive outlook for 2016

b) Growth drivers for 2016 Looking at specific growth drivers, product innovation and expansion was the dominant growth driver for 2016 – with 27% of respondents placing emphasis on launching new products and 23% mentioning the expansion or re-launch of existing ranges. Unsurprisingly, these factors were especially important to decision makers in the clothing and accessories sector, where 42% rated the importance of launching new products and 33% mentioned re-launching or expanding existing product ranges.

Launching new products

42%

Investing in technology was second behind the focus on product development. One in five businesses specifically stated that investing more in online and digital channels was a key growth driver for 2016. Overall this was given slightly greater emphasis than expanding a brand’s retail footprint.

Table 2: Top drivers of growth by specific luxury areas1 Clothing

Jewellery / watches

Accessories

Perfumes / cosmetics

Food & beverages

Launching new products

42%

44%

48%

38%

27%

Re-launching/expanding existing ranges

33%

38%

33%

24%

36%

Investing more in digital/online channels

28%

31%

26%

24%

14%

Expanding retail footprint

19%

22%

22%

19%

14%

Market share growth in existing markets

17%

16%

19%

19%

36%

Expanding into new markets

11%

16%

15%

14%

–

1 For this and other tables, respondents were able to select more than one factor/category.

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Looking at the specific category areas within luxury retail, in all areas growing market share in established markets was rated as more important to growth in 2016 than expanding the business into new markets. Investing in digital channels was a particular priority for jewellery and clothing businesses. Businesses specialising in accessories and jewellery/watches placed more emphasis than other sub-sectors on expanding their retail footprint. Overall only 35% of luxury brands were either unsure where growth would come from or didn’t foresee any material growth for the year ahead. Two in three brands had a clear sense how they could grow their business in 2016.

Expanding retail footprint

22%

The globalisation and digitalisation of the fashion sector’s consumer-base presents particular opportunities and challenges for younger brands. It offers access to a global audience, but also an ever-shifting target that cannot be served with a one-size-fits-all approach. It adds the complexity of issues like geo pricing and varying local languages, cultures, seasonability and sales periods to an already complex industry. General perceptions of what drives the sector are often weighted towards the heritage retail groups, but this can overlook the challenges other less established brands face on the ground. For example, although the increasing move towards releasing collections straight from the catwalk to retail offers consumers instant gratification (and closes the traditionally longer window for copycats and counterfeiters to get first to market), it is a much tougher business model for wholesale-focused younger brands to follow. New entrants should also be prepared to walk the tightrope of keeping their inner workings (ranging from stock systems to corporate governance) in check with commercial momentum. When expanding locally and internationally, opening retail stores is a major brand-building step. For younger brands, the franchise model can still offer an attractive road to entry in more regulatory and investment-heavy markets like Asia and the Middle East (compared with launching directly operated shops in the US, for example). Physical sales are very important for engaging with consumers, but online is key too. It can provide the first step from wholesale to direct retail, and offers the consumer a key aspect of luxury: convenience.

Zach Duane, CEO, Victoria Beckham Limited

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The luxury chocolate sector has a distinct advantage over most segments of the luxury goods market, in that as well as being an aspirational product, it is more affordable than most other luxuries. This is especially the case in key emerging markets, in particular, China and other parts of Asia. Here the key to sustainable growth of a luxury chocolate brand is to make the brand accessible yet still aspirational. A key objective is to take that accessibility further so that the brand becomes relevant for an everyday occasion, rather than a luxury bought for a celebration or gift. A multi-channel approach is important for this, requiring a strong retail footprint aligned with a clear digital offering.

Peter Coveney, General Counsel, Godiva

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Section 2 The digital marketplace – opportunity or threat? a) Key online channels The online marketplace will become a key determinant of business success for the year ahead, rather than being an additional channel for luxury brands to achieve a boost to growth. When asked about key drivers for growth, more luxury brands referred to online channels than their own retail stores (61% and 37% respectively). It is easy to see why the online channel is so important. Luxury brands are a truly international phenomenon, and 86% of UK businesses operating overseas report online as a key channel. And online becomes especially significant for particular product types. Clothing, accessories, jewellery / watches, and perfume and cosmetics brands proactively exploit the Internet for sales. A large proportion of luxury brands clearly embrace a multichannel strategy, particularly those which operate across various customer segments and geographical markets.

Part of the appeal of buying luxury fashion is the premium customer experience, and it’s important to ensure that this is replicated when selling online. The buying experience needs to be flawless – not just from the look and feel of the website, but to the packaging, delivery and after sales contact. The future of luxury retail isn’t purely online, rather it is a combination of both online and offline. The winners will be the brands who successfully merge the two to deliver a true omni-channel experience for their customers.

James Maynard, General Counsel, Farfetch

61% online channels important for driving growth

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Table 3: The channels that are most important for driving growth Clothing

Jewellery / watches

Accessories

Perfumes / cosmetics

Food & beverages

Online

67%

72%

81%

81%

43%

Retail own store

42%

25%

22%

29%

71%

Retail: department store

17%

13%

15%

24%

29%

The link between online use and overall growth is something to watch during 2016. Those businesses expecting major expansion over the coming year might be a minority, but nearly three-quarters of these decision makers perceive online as a key channel through which products will be sold (73%). Further, nearly two-thirds (62%) of those expecting organic growth likewise valued the importance of online channels.

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Table 4: Degree of positive business outlook by key channels to market Major expansion

Modest / organic growth

Consolidation/ no change

Online

73%

62%

55%

Retail own store

40%

40%

30%

7%

9%

10%

Retail: department store

The digital marketplace also emerged as a significant priority for new luxury brands, a channel that removes various barriers to entry. The younger a brand the more likely it was to value the online channel for sales; whereas the older the brand the more likely it was to value traditional retail.

Table 5: Channels considered important – by age of business Start up

Evolving / established

Heritage

Online

66%

61%

41%

Retail own store

27%

39%

59%

Retail: department store

10%

5%

14%

3%

5%

18%

Affinity / third party

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Building an ecommerce platform does bring with it a number of legal and regulatory issues to navigate, and in our experience these are sometimes not given enough attention. They include compliance with consumer laws relating to distance selling and marketing, payment services regulations, website and mobile app development, terms and conditions and data protection – and these typically include an international dimension depending on the different markets that the ecommerce platform targets and/or sells into.

John Finlay, Taylor Wessing, London

b)The digital world and managing risk Given the perceived importance of online channels, it is striking that only a fifth (20%) expect growth to come from more investment in Internet and digital channels. While there is some variation, the planned investment would seem to under-represent the confidence in product and sales growth. Intriguingly, such levels of investment could also fail to adequately address some of the principal business risks acknowledged by managers. When looking more broadly at challenges for the year ahead, the majority of respondents mentioned digital factors (56%). Specifically, the biggest single challenge identified by all executives is the online environment itself (42%), which is seen as a competitive threat capable of driving down prices and undermining product value. Surprisingly, in a world of cyber crime and counterfeiting, the threat posed to data and online transactions, intellectual property, ideas and talent are largely underplayed as perceived challenges to luxury brands. For example, when asked what the top challenges to their business might be in the next 12 months, less than one in ten businesses surveyed mentioned intellectual property protection (2%),

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Investment in intellectual property data security or cyber crime (8%) or the impact of social media activism (8%). This perhaps correlates with the relative mismatch between the high proportion of businesses that ranked the importance of online channels for sales and the smaller proportion that mentioned investment in digitisation as a key driver of growth for the year ahead. The research suggests luxury brands are embracing online and mobile technology as an opportunity for growth and expansion, but without also foreseeing fully the risks of operating in an online market. For some businesses, this at times unbridled optimism could itself create risks that challenge business growth plans.

42% the biggest single challenge identified by all executives is the online environment itself

Luxury brands wishing to immerse themselves in the digital marketplace need to invest in premium and innovative sales, marketing and distribution channels that match up to and conserve their aura of exclusivity and personal touch. Some luxury brands (such as Burberry) have excelled at this. Counterfeiters, copycats, discount sellers and parallel importers are also hungry to exploit this market and its new platforms and technologies (including social media and 3-D printing). These offer lower running costs, no borders, and more anonymity – making them particularly attractive for infringers and harder for brand owners to protect and police their IP. Whether or not they fully embrace the digital marketplace themselves, brand owners therefore also need to invest in suitably protecting their IP and policing infringers online. Appropriate selective distribution arrangements should also be implemented to preserve exclusivity. The underplayed importance of these investments disclosed by the survey is therefore surprising, and signals that some businesses may be underinvesting in adequately competing or protecting themselves in key online channels.

Tom Carl, Taylor Wessing, London

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Section 3 Looking forward – the big challenges to tackle While the sector has a generally positive outlook for 2016, and the majority of respondents could identify key growth drivers for 2016, luxury brands were also aware of risks to their business, which we will now assess in more detail. When looking ahead at the challenges a luxury business faces, respondents were presented with a series of factors that were grouped into four thematic categories: uu

uu

uu

uu

Digital dynamics – specific challenges ranging from data security and social media activism to pressure on pricing. Reputation dynamics – management risks, risks to brand reputation from supply chain or advocates/partners. Creative dynamics – issues such as protecting ideas, IP and talent retention. Market dynamics – the challenges of managing multiple markets – supply chain, regulatory and legal developments, staying apace with local tastes and trends.

This thematic approach will, over time, become the Taylor Wessing Luxury Barometer, allowing us to track continuity or change in how luxury brands rank the challenges their business must overcome to grow and prosper. When business decision makers in the luxury sector were asked to identify the biggest challenges to their business for the year ahead, factors relating to the competitive digital landscape emerged as the most prevalent.

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Digital dynamics

56%

More than one in two businesses mentioned digital dynamics, which included issues such as online competition driving down prices and keeping up with the speed of change. The risk of online competition driving down product value was cited as the most significant single issue (42%).

42% The risk of online competition driving down product value

It’s a challenge for businesses to stay compliant whilst exploiting ever increasing data volumes. The key is to be clear, telling individuals the reasons for collecting, using and sharing the data. Increasing consumer interaction across brands and platforms generates more data, especially through connected devices and CRM programmes, further increasing the need for robust transparency mechanisms. Data collection laws mandate the need for such transparency and new EU laws will go further with tougher consent requirements and demanding that privacy law can no longer be just an afterthought. Data breaches are now widely considered to be a ‘when’ not ‘if’ phenomenon. Of course, implementing appropriate security measures proportionate to the size and nature of organisation is critical, however breach readiness has become a prominent factor determining how significantly a breach impacts a business. Recent high profile data breaches have shown how quickly a breach can escalate and the speed at which the media become involved. A well prepared business will weather a ‘breach storm’ far better than those who react as it unfolds under the spotlight. Under new EU laws, a solid and well tested breach readiness position is the way to avoid a fine of up to 4% of global annual revenue. Using supplier and cloud based technology following the dramatic demise of US Safe Harbor brings the issue of legitimising data exports under greater Regulator attention and must form an integral part of data accountability and compliance programmes.

Vinod Bange and Lucy Lyons, Taylor Wessing, London

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Market dynamics

35%

Second on the priority list was tackling the relative complexities of market dynamics on a global stage. The most prevalent factors here comprised of managing distribution (16%) and keeping fully up to date with regulatory and legal changes across key markets (9%). Stores in luxury shopping streets are still considered essential. Without these showrooms it is difficult for many customers to see the fabrics or construction of the garments or weight / quality of the watch or jewellery. Also the luxury sales staff can add value to the sale in the store by suggesting additional accessory sales. In central London, the future of bricks and mortar outlets is reinforced by The Crown Estate’s policy only to commit to retailers taking new stores if they are prepared to agree to use their stores in Regent Street to showcase their entire online range as well as their store range. Demand for larger stores is softening in the prime luxury locations although the reverse is true for smaller boutiques of 1,000 sq ft or less. This rally for the smaller shops is the result of watch brands and jewellery looking to acquire freestanding fascias rather than being part of a multibrand store or department store offer. At the same time accessory divisions of large fashion houses such as Chanel or Hermès are also seeking new opportunities. The result is Bond Street rents are now touching £2,000 per sq ft zone A and Sloane Street are now in excess of £1,000 per sq ft zone A.

The increasing cannibalisation of store sales by online sales is raising a number of interesting issues when it comes to negotiating retail leases. For example: There is a trend for landlords increasingly looking to catch a share of online sales in turnover rent calculations (which are commonly applied to store sales in retail leases), arguing that the increasing blur between store and online sales (shoppers trying in store and then buying online) means that some online revenue should properly be attributed to stores. However, this can be fraught with difficulty. Some turnover leases already catch online sales received or fulfilled in store (for example, “click and collect” and sales via in-store online terminals). Attempts to extend this to other online sales will only continue with the rise in online retailing. The look and feel of retail and online stores is key to a luxury brand. Landlords will want to have some control over the alterations that a retailer can carry out, but should not be too prescriptive. Brand owners – who have much more control of their online stores – will want a lease that allows sufficient flexibility to create their look and feel.

Louise Tobutt, Taylor Wessing, London

16% Managing distribution

Eric Eastman, Executive Director, CBRE

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Reputation dynamics

20%

The next most significant theme was protecting reputation dynamics. Key contributory factors here included managing supply chain to avoid exposure to risks, and maintaining team cohesion and succession planning. Rigorous planning, pre-mortems and horizon scanning are invaluable. When an issue strikes, responding swiftly in this era of immediate soundbites that travel is critical.

Laura Buchanan, Partner, Brunswick Group

The value of luxury brands can be as much about their reputation as their products. A luxury reputation can take years to build, but moments to be harmed. The potential threats include campaign groups (e.g. animal rights), the press and social media, as well as errors made by the company itself and top talent and senior staff. Having a PR and legal team in place and able to react quickly to a call from a journalist is essential. It is generally better to try to prevent a false or malicious story from being published in the first place, than to try to obtain a retraction after the damage has been done. When it comes to unwelcome social media posts, overreacting can backfire. Successfully navigating reputation management usually involves the right mix of good market understanding as well as sound judgment and legal knowledge.

Timothy Pinto, Taylor Wessing, London

... threats include campaign groups (e.g. animal rights), the press and social media ...

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Creative dynamics

18%

Set against the challenges of digital and supply chain mechanics in a more global, complex marketplace, creative dynamics were rated overall as the least significant theme. Less than one in five decision makers surveyed ranked this as a major business challenge for the year ahead. This emerged as a surprise, given that talent, ideas and intellectual property are inseparable from the perceived value and allure of most luxury brands.

Retaining top talent is paramount in the luxury sector ...

Retaining top talent is paramount in the luxury sector, and key to competitive advantage and growth. Talent acquisition and retention also tend to feature prominently on the M&A checklist when a fashion or luxury brand is being acquired. Traditional approaches include appropriate notice periods in employment contracts, adequate bonus provision and even providing an equity stake in the business. The latter has perhaps been the most effective tool in retaining top talent given that share options and other share incentive plans directly align with business performance. Recent changes in the modern workplace have led to a focus on bespoke talent management programmes and work / life balance initiatives. Flexible working practices have become much more common and seen as a key benefit by many male as well as female employees. It’s likely the new concept of ‘agile’ working will need to be embraced by the luxury sector. Issues around head designer departures at major fashion houses have in particular come to the fore in a number of recent cases in France – ranging from sackings for disreputable behaviour to designer burnout. Such head designers are usually hired as consultants, not employees. They therefore do not fall within France’s strict working hours legislation, and normally operate under a fixed term contract with the brand – which can get contentious when breached, expired or terminated.

Nicola Walker and Lowri Hardcastle, Taylor Wessing, London

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42% Online marketplace / competition driving down product prices 14% Ensuring supply chain and manufacturing arrangements do not cause risks

15% Keeping up with pace of change in the digital world 8% Social media activism

6% Maintaining team unity and succession

8% Data security / cyber crime

2% Cohesive CSR/ethics strategy

20% Reputation

56% Digital

35% Market

18% Creative 16% Managing logistics and distribution 10% Reacting quickly to peer group activity

10% Developing ideas that truly reflect changing demographics

9% Keeping fully up-to-date on regulatory and legal changes in key markets

4% Preventing ideas and talent being poached by competitors

7% Best insight on changing tastes in local markets

4% Protecting products against counterfeiting 2% Protecting IP

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Observations The majority of challenges to growth come from the digital world. This suggests the UK luxury sector is at an interesting crossroads. On the one hand it is seen to be a key enabler for growth and also an essential sales channel for new brands – yet at the same time, the speed of change that is an implicit feature of the digital marketplace also represents a serious growth challenge. One issue identified – as experienced in the media, music and entertainment sectors in the last 15 years – is the risk of the online market forcing prices down, an important issue for the luxury sector where brand allure is a key asset that traditionally maintains a high level of value and protects pricing.

Also a surprise, given the importance placed on digital issues, was that relatively few businesses focused on important creative dynamics. Not only are these core to the value of luxury brands but they also can be directly impacted by digitization. For example, the risks to intellectual property score very low, as do the risk of losing ideas and key people to competitors. These are all issues and risks for luxury brands that become heightened in a digital marketplace. Within sub sectors of UK luxury there were subtle variations in emphasis on the issues that were seen to be most significant.

Beyond this, an unexpectedly small proportion of businesses placed emphasis on technology risks – whether this be the risk of cyber crime or the impact of social media activism.

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Table 6: Categorisation of business challenges by luxury sub-sectors Clothing

Jewellery / watches

Accessories

Perfumes / cosmetics

Food & beverages

Digital / technology dynamics

61%

59%

70%

67%

57%

Creative dynamics

22%

25%

30%

14%

14%

Market dynamics

22%

47%

41%

24%

43%

Reputation dynamics

28%

31%

30%

43%

29%

Perhaps more insightful was looking at UK brands by age. Looking specifically at the top individual factors mentioned, new brands seemed more broadly focussed on establishing distribution on and offline and also ensuring their products were appropriate to specific target audiences so they would land well. For established and evolving businesses the perceived challenge of the digital landscape was more strongly felt. These were perhaps businesses that were attempting to re-engineer or adapt their businesses to the digital world. Heritage brands seemed more concerned about protecting their distribution and keeping apace with changing consumer tastes. Digitisation featured as important to all these businesses, but the relative weighting of it varied.

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... new brands seemed more broadly focussed on establishing distribution on and offline ...

Start up business (top three factors mentioned)

Evolving brand (top three factors mentioned)

Heritage brand (top three factors mentioned)

35%

50%

32%

Online marketplace driving down product prices

Online marketplace driving down product prices

Managing logistics and distribution

19%

16%

27%

Managing logistics and distribution

Keeping up with the pace of change in the digital world

Developing products that truly reflect the demographics of our audiences

16%

14%

27%

Developing products that truly reflect the demographics of our audiences

Ensuring our supply chain and manufacturing arrangements to not expose us to undue risks

Online marketplace driving down product prices

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Section 4 The global perspective Our initial study is UK based. It has captured an international perspective, given that many of the senior managers polled worked either for international brands or for UK brands that had an international footprint or ambition. The digitization of the luxury sector, its audiences, its supply chain and its management naturally give the sector a global footprint. Many of the opportunities and challenges raised in our initial research point towards managing growth on a borderless digital and international stage. To conclude our report we offer a series of on-the-ground insights from our expert team of luxury sector practitioners around the world. The sector faces many opportunities and challenges that are global or universal in nature, but this needs to be blended with local knowledge and insight to help brands tailor a global approach most appropriately to local markets.

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France

USA

China

Paris is the motherland of some of the world’s most prestigious luxury brands – particularly in the fashion, accessories and cosmetics sectors, and its exclusive Champagne.

Luxury has been a bit behind on the technology front compared with other sectors, but over on the West Coast we are seeing this really starting to pick up. Particularly on the fashion side, tech is becoming more important and we are certainly seeing more investment from VCs into fashion/luxury tech.

The slowdown in China’s economy, coupled with political scrutiny on displaying luxury and the clampdown in gift-giving, has resulted in a decline in the luxury market. However, this is likely to stabilise due to the high demand for luxury goods and the rise in China’s middle class.

Competition remains strong. The established luxury groups remain on top and continue to diversify their brands, but there is also a new layer of brands, both French and international, hoping to make their mark. Unlike some other sectors, the Paris attacks at the end of 2015 have not had a significant knock-on effect on the luxury sector, mainly due to the strength of the export market (exports of wine, Cognac and Champagne have increased dramatically).

Mark Barron, Taylor Wessing, USA

The travelling Chinese consumer provides a boost for other markets. Purchasing abroad attracts less scrutiny and, due to the scale of counterfeit goods in the country, is also a way of ensuring that they are getting the genuine article. Until the counterfeit issue is adequately tackled – including in the massive online market – this will continue to be the case.

Retail remains dominant in France. There is still a prevalent perception that online does not deliver the whole luxury experience.

Unsurprisingly, Western brands are still the most popular, but there are some national brands such as Shanghai Tang which are growing in popularity.

Benoît Goulesque-Monaux and Grégoire Toulouse, Taylor Wessing, France

Thomas Pattloch, Taylor Wessing, China

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UAE

South Korea

Setting up a foreign business in the UAE is subject to strict rules, so it is a big step – but it is an ideal market for luxury brands.

There has been a shift in the South Korean luxury market in recent years, from being driven by image and status to valuing high quality, setting trends and having the full “luxury experience”. This is demonstrated by the increase in high end shops, hotels, resorts and cafes (for example, the Dior Café in Seoul) which give customers the whole package. Purchasing online has not been a very popular option, but this is gradually starting to change, especially for online-exclusive products.

Dubai is the shopping destination in the UAE with big brands setting up here before moving across the region. Known for its high end shopping malls, resorts and hotels, customers can fully immerse themselves in the luxury experience. Jewellery is a very strong sector. Cars are also hot property with consumers vying to own an “exotic” brand or specially promoted limited edition models. Physical stores are King in Dubai. They are celebrated through initiatives such as the Dubai Shopping Festival, and department stores such as Bloomingdales have picked Dubai as their first foreign base. Online is coming though. Luxury shopping platforms such as Souq.com are growing in popularity. Dubai has committed to becoming a SMART city, and improved infrastructure will mean a more advanced and secure online shopping network.

Ben Constance, Taylor Wessing, Dubai

Korea is a shopping hot-spot for Chinese visitors who have money to spend and enjoy the tax-free perks. It is not uncommon for a luxury shop to open its doors specifically for Chinese shoppers at certain times. However, there is change in the air. Luxury brands are engaging more with Koreans as their buying power increases and, although the big name Western brands still dominate, up and coming luxury Korean designers are also on the rise. The country is also seeing a marked increase in menswear, male grooming and jewellery.

Joong-woo Bae and Catherine Kim, DR & AJU International Law Group, South Korea 

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Methodology The independent research was conducted by YouGov for Taylor Wessing among a national sample of 251 senior managers in retail focussing on the luxury sector. The survey was undertaken in November 2015, completed online and respondents were asked to consider their outlook and plans for the next 12 months. To give a sense of the relative significance of various luxury sector findings, decision maker opinion was categorized into broad luxury sub sectors.

To discuss any of our findings, please contact: Jason Rawkins +44 (0)20 7300 4834 [email protected] Tom Carl +44 (0)20 7300 4910 [email protected]

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© Taylor Wessing LLP 2016 This publication is intended for general public guidance and to highlight issues. It is not intended to apply to specific circumstances or to constitute legal advice. Taylor Wessing’s international offices operate as one firm but are established as distinct legal entities. For further information about our offices and the regulatory regimes that apply to them, please refer to: www.taylorwessing.com/regulatory.html TW_001740_03.16