That model, the “Spread of Luxury” model, describes how countries advance through several stages of luxury goods consumption. Each stage corresponds to not only a different level of economic development, but also a different level of consumption. Those stages range from “Start of Money,” in which few consumers purchase luxury goods, to “Way of Life,” in which a country’s luxury market is fully saturated. According to Chadha and Husband, the "Way of Life" stage is the end stage for Asian markets as they become fully developed.
I have applied this model to estimate the future growth of two of the world's largest luxury companies, LVMH group and Compagnie Financiere Richemont. I will now apply that model to Kering, the third of the three major luxury conglomerates profiled in Chadha and Husband's book and the owner of fashion brands such as Gucci and Yves Saint Laurent as well as sports brands such as Puma.
To do this, we first need to calculate where Kering's customers come from. This requires us to apply global trends in personal luxury goods sales to the company's sales around the world. Once we have done so, the next step is to predict the company's growth by forecasting the development of its per capita sales in each region. (Read More)