Bulgari CEO Babin: India Might Become One of Top Markets

Summary

The luxury market, particularly in Asia, faces complex challenges and opportunities heading into 2025. Uncertainty around political and trade policies, especially between the U.S. and China, could affect growth. However, China’s transition to a service-driven economy and tech advancements offer potential for recovery. India’s strong GDP growth and favorable demographics position it as a rising luxury market, while Japan sees a resurgence driven by a younger generation and increased tourism. Bulgari's focus on e-commerce and expansion into these markets, along with strong performance in jewelry and watches, sets a positive outlook despite risks of slowing growth.

Takeaways

• 😀 The luxury market in China is facing challenges due to oversupply in real estate and manufactured goods, but European luxury brands like Bulgari are expected to remain less affected by tariffs.
• 😀 Bulgari is prioritizing e-commerce expansion in China, particularly through platforms like Tmall and JD.com, instead of opening new physical stores in smaller cities.
• 😀 Despite economic uncertainties, the Chinese market is expected to require several years to absorb its oversupply and transition to a service-oriented economy.
• 😀 India is experiencing strong growth in its luxury market due to favorable GDP, demographics, and increasing interest from investors. It may become one of the top five luxury markets globally.
• 😀 Bulgari is expanding in India with new flagship stores in Mumbai and a focus on e-commerce to reach cities without luxury malls.
• 😀 Japan's luxury market is entering a new growth phase, driven by optimism among younger generations and significant investments in real estate and tourism.
• 😀 Bulgari sees positive prospects in Japan, with the country benefiting from a boost in tourism and the luxury market’s recovery.
• 😀 Bulgari's Serpenti collection has been a key driver of growth, alongside strong sales in jewelry, watches, and handbags.
• 😀 The main risk for Bulgari in 2025 is being pessimistic, which could lead to reduced investment and creative stagnation, negatively impacting growth.
• 😀 Despite challenges in China, Bulgari's global luxury market remains stable, with growth opportunities in India, Japan, and other regions.
• 😀 The company is taking a cautious approach to expansion in China, focusing on leveraging its existing store network and enhancing its digital presence.

Q & A

What impact do potential Trump tariffs have on the luxury market in China?

While potential Trump tariffs on Chinese goods could affect trade relations, the luxury market in China is unlikely to be significantly impacted. This is because China mainly imports luxury goods from France and Italy, rather than exporting luxury items to the U.S.

How is the Chinese economy expected to evolve, and what does this mean for the luxury market?

The Chinese economy is facing challenges, particularly from an oversupply of real estate and manufactured goods. This oversupply, coupled with a shift towards a service-oriented economy and advanced technologies, is expected to take several years to balance. The luxury market may experience slower growth in the short term, but the long-term outlook remains positive.

What is Bulgari's expansion strategy in China for the coming years?

Bulgari is not focusing on opening new stores in China due to a well-established presence, but rather aims to increase productivity in existing stores. Additionally, Bulgari is enhancing its e-commerce presence, particularly through platforms like Tmall and Gigi, to reach consumers in cities without physical stores.

Why is e-commerce considered an effective strategy for luxury brands in China?

E-commerce allows luxury brands like Bulgari to reach cities where they do not have physical stores, particularly in locations without proper luxury malls. It provides a way to engage Chinese consumers without the need for establishing a boutique in every major city.

What are the growth prospects for India in the luxury market?

India is expected to grow rapidly in the luxury sector, driven by strong GDP growth, favorable demographics, and increasing investment in luxury malls. It is projected to become one of the top luxury markets globally, possibly entering the top five markets in the near future.

How is Bulgari approaching the Indian market?

Bulgari is expanding its footprint in India, focusing on flagship stores in key cities like Mumbai. The company is also pioneering e-commerce in India, reaching a broad audience through platforms like Click and Concession, and leveraging Indian celebrity Priyanka Chopra to enhance the brand's emotional appeal.

What is driving growth in Japan's luxury market?

Japan's luxury market is experiencing growth due to a new generation of consumers rebelling against previous stagnation. The country's real estate sector is booming, and tourism is also a major driver, with visitors from both China and Western countries boosting demand for luxury goods.

Which Bulgari products are seeing the best growth?

Bulgari is experiencing significant growth in its jewelry, watches, and handbags, with the Serpenti collection being a standout. The brand's watches have achieved their best year ever, alongside strong performances in handbags and jewelry.

What is Bulgari's main risk for 2025 in the luxury market?

The biggest risk for Bulgari in 2025 is pessimism. If the brand reduces its creative efforts or investments, it could create its own erosion and stifle growth. Maintaining an optimistic and proactive approach is crucial to staying competitive.

How does the global luxury market outlook for 2025 compare to 2024?

The global luxury market is expected to experience more modest growth in 2025, especially due to a continued slowdown in China. However, other markets like India, Japan, and certain parts of Europe may continue to see strong growth, offsetting challenges in the Chinese market.