Consumers and Designer Brands: A Global ACNielsen Report

May 2006

According to a recent ACNielsen survey, Ralph Lauren is currently the most popular designer brand globally, but Gucci and Giorgio Armani are the most aspired to, if money were no object.
According to an ACNielsen global online survey of 21,000 consumers in 42 countries, Ralph Lauren is the worlds most popular designer brand, followed by Gucci, Christian Dior and DKNY. Yet when it comes to the most coveted brand if money were no object, Italian fashion powerhouses take the lead, with Giorgio Armani the most aspired-to, followed by Gucci. ACNielsens global online survey was conducted on the Internet in November 2005, asking 21,000 consumers in 42 markets across Europe, Asia Pacific, UAE, North and Latin America about their current and aspirational fashion brand purchasing.

To what extent do you agree with the following statements:

I buy designer brands
Agree
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Neutral 1% 1%

Disagree 1%

Dont know 0% 1%

1%

40%

50%

49%

44% 60%

49%

36% 28% 30%

35% 26%

30%

24%

21%
Europe

20%
Asia-Pacific

20%
Other

14%

21%

Latin America
Base: all respondents

North America Global average

To what extent do you agree with the following statements:

Many people I know buy designer brands
Agree
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Neutral 4% 21% 8% 24%

Disagree 6%

Dont know 5% 27% 6% 24%

3% 10% 19%

28%

29%

27%

24%

28%

26%

67% 45% 42% 41% 39% 44%

Latin America
Base: all respondents

Other

Europe

North America

Asia-Pacific

Global average

Attitudes towards luxury brands differ worldwide As many as one fifth of Internet users worldwide confess to buying the worlds most famous designer brands, although nearly half claim to know someone else rich enough or image-conscious enough - to buy them too. Consumers unanimously agree that designer brands are overpriced. However, people are willing to pay extra for the certain social status these brands project. Designer products are not only for the slaves of fashion. Sixty percent of our survey participants associate designer brands with social status, while only 34 percent say they are only for the fashionconscious, says Tom Markert, Senior Vice-President, Global Marketing for ACNielsen. In Europe, the cradle of fashion, wearing designer brands is considered the norm and not only for the fashion conscious. Less than a third of Europeans, especially in such countries as the Nordics, Germany, Austria, Eastern Europe and the Mediterranean countries of Greece, Italy and Turkey, claim designer brands to be for fashion followers only. At the other end of the scale, however, the French, British and Dutch internet users are among those least likely to indulge themselves with designer labels. British and Spanish consumers top European rankings in believing that designer brands are overpriced. This is largely due to the existence and success of high-street brands originating from these countries and local consumers getting designer-style clothes and accessories at a fraction of famous design brand prices. Indeed, the high-street fashion successes from Spain and Britain Zara, Mango, Topshop and Marks & Spencers are expanding rapidly throughout other

regions of the world, offering men and women everywhere the option of looking fashionable in current design trends without burning a hole in their wallets. In the developing markets of Latin America, Asia, South Africa and the UAE, however, designer brands stand for fashion and superior quality. A half of respondents in these countries think these brands are for fashion followers, and up to 40 percent believe they offer superior quality. On the matter of quality, North Americans are the worlds most sceptical when it comes to designer brands, with only 18 percent believing they surpass their non-designer counterparts on quality. As many as 36 percent of Internet users in North America twice more than in

any other region - believe that imitation designer brands are just as good as the real ones. Interestingly, the greatest percentage of people who believe designer brands offer significantly higher quality over their nondesigner alternatives hail from Malaysia, Taiwan, Hong Kong and Turkey all countries where many of these fashion houses are likely to outsource their production to and where imitation brands are widely found! Acceptance of imitation design brands in Europe is highest in Norway, Switzerland and Austria and least acceptable among Greeks, Czechs and Italians who prefer the buy the real thing or nothing at all.

To what extent do you agree with the following statements:

Designer brands are usually overpriced for what they are
Agree
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Neutral 1% 4% 13% 2% 4% 15%

Disagree 1% 6% 14%

Dont know 3% 7% 15% 2% 6% 15%

1% 3% 10%

87%

82%

79%

79%

75%

77%

North America Base: all respondents

Latin America

Other

Asia-Pacific

Europe

Global average

To what extent do you agree with the following statements:

Imitation designer brands are just as good as the real ones
Agree
100% 90%

Neutral 8% 6%

Disagree 5%

Dont know 6% 7%

5% 21%

80% 70% 60%

42% 38%

44%

49%

50%

44%

50% 40%

32%
30% 20% 10% 0%

35%

31%

31%

32%

36% 19%
North America Europe

16%
Other

15%
Latin America

14%
Asia-Pacific

17%
Global average

Base: all respondents

Whats in a designer name? According to the ACNielsen survey, US designer Ralph Lauren is the most frequently bought luxury brand worldwide from the list of 18 brands surveyed. Ralph Lauren products are bought by 15 percent of Internet users, followed by Dior (13%), Giorgio Armani, Gucci (12%) and YSL (11%). In Asia Pacific, Louis Vuitton (LV) also made the top five ranking, with at least one in ten claiming to have bought the French brands products. In fact, nine of the top 10 markets with most people buying LV products hailed from Asia Pacific, with Hong Kong (23%) and Japan (17%) the top two markets globally purchasing Louis Vuitton. Besides LV, Asia comprised most of the top 10 markets for current product ownership of brands like Prada (6), Celine (7) and Ferragamo (8). Its worth noting that Philippines ranked number one in the world top ten list with most people claiming to buy Ralph Lauren (34%) and Celine (18%) products, while Koreans top the list for Ferragamos products (12%). Currently in Europe, its a close run thing between Ralph Lauren, Giorgio Armani and Christian Dior for the top three most bought brands today. The story is a bit different in the Pacific where local fashion designers in Australia and New Zealand are prospering. High import taxes for design brand products combined with the differences of seasons in the southern hemisphere and relaxed, outdoor lifestyle of Aussies and Kiwis make their local designers more wearable and affordable. It is hard to find consumers in Australia and New Zealand who stand out for a particular international brand.

And if money were no object? However, one in three consumers from the online world said they would purchase Giorgio Armani or Gucci if money were no object. It is a remarkable testament to the power and universal appeal of these two luxury brands. Giorgio Armani and Gucci fashion houses clearly understand that strong brands make for profitable businesses. They are not merely selling fashion, they are selling an image something consumers are willing to pay a premium for, said Markert. Regardless of where they live, when consumers in Italy, China or UAE purchase a Gucci bag or a Giorgio Armani suit they

are prepared to pay a premium because they are buying the image the brand represents. In Armanis case, consumers know they are getting quality, sophistication and style timeless values with global appeal. For Gucci, its the combination of heritage, together with its sexy, modern appeal. Next on the list of the most desired brands in the wardrobes of the worlds fashion followers were Versace (27%), Christian Dior (25%) and Chanel (23%).

To what extent do you agree with the following statements:

Agree
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Designer brands are of significantly higher quality than standard brands

Neutral 2% 27% 4% 26% 39% 45% Disagree 5% Dont know 3% 4% 33%

2% 27%

32%

35%

35% 34% 34%

34%

39%

35%

34%

22%
Europe

18%

28%

Latin America Base: all respondents

Asia-Pacific

Other

North America Global average

To what extent do you agree with the following statements:

Only fashion conscious people consider buying designer brands
Agree
100% 90%

Neutral 3% 27% 2% 30%

Disagree 3% 26%

Dont know 4% 3%

2% 27%

80% 70% 60% 50% 40% 30% 20% 10% 0%

42% 26%

35%

28%

27%

31% 28% 28%

45%

42%

41%

40% 26%

34%

Latin America Base: all respondents

Other

Asia-Pacific

North America

Europe

Global average

Consumers in Asia Pacific certainly had their own list of preferences were money no object leading consumers in all other regions in their aspirations towards Louis Vuitton (32%), with Hong Kong housing the worlds most admirers of the brand justifying the recent opening of LVs flagship store in the city. Other brands that top the list for Asia Pacific consumers include Hermes, DKNY, Ferragamo and Bottega Venetta. Fashion consumers remain loyal to homegrown designers Not surprisingly, consumers in the worlds fashion capitals USA, Italy and France remain loyal first and foremost to their own country designers. North American consumers choose the top US designer Ralph Lauren, who topped the US online consumers choice for current and most coveted fashion brand of the future. However, European labels most coveted for future purchase were Gucci and Giorgio Armani. Historic French design houses, Yves Saint Laurent (despite now being owned by an Italian fashion conglomerate), Chanel, Dior and Hermes have the strongest following in France at present, as well as for future purchase. Meanwhile, fashion-conscious Italians clearly out-rank Giorgio Armani, Prada, Emporio Armani and Versace among their most coveted fashion brands today as well as in the future. Fast growing markets - tomorrows fashion Meccas The future survival of leading fashion houses depends on brand longevity and it is no surprise that designer fashion houses have been investing in their future by building commercial and brand presences in the fast growing markets of Asia, UAE and Russia.

Making up the worlds most populated nation, Chinese consumers who can afford designer brands are currently investing in Chanel (15%), LV (13%) and Versace (12%) the most among other brands. The potential for these brands is far greater with as many as 38 percent of future big spenders saying they would opt for Versace and Chanel and a third for LV. The effort of all the fashion shows held in Shanghai these days is worth it! Global results from the ACNielsen survey reveal that Christian Dior which has also successfully re-positioned itself with a more youthful image and is a favourite

among the international young IT crowd - has high commercial potential in UAE, Russia, Latin America and India. Versace too, has very strong growth potential in the new emerging markets of China, Russia and India as well as the USA, possibly because of its I have arrived appeal combined with its glamorous life celebrity image, particularly appealing to the upcoming nouveau riche. However, among more conservative consumers of the affluent Gulf States of UAE, the coveted brands which appeal to future consumers are Giorgio Armani and Chanel.

Which of the following brands products would you prefer to buy in the future if money was no object? (Global average)
GIORGIO ARMANI GUCCI VERSACE CHRISTIAN DIOR CHANEL RALPH LAUREN LOUIS VUITTON YVES SAINT LAURENT PRADA EMPORIO ARMANI DKNY GIVENCHY HERMES FERRAGAMO MAX MARA FENDI CELINE BOTTEGA VENETA None of these

31% 30% 27% 25% 23% 21% 21% 19% 16% 15% 13% 11% 8% 6% 5% 5% 4% 3% 26%

Base: all respondents

Which of the following brands products do you buy? (Global average)

RALPH LAUREN CHRISTIAN DIOR GIORGIO ARMANI GUCCI YVES SAINT LAURENT CHANEL DKNY EMPORIO ARMANI VERSACE GIVENCHY LOUIS VUITTON PRADA MAX MARA HERMES FENDI CELINE FERRAGAMO BOTTEGA VENETA None of these

15% 13% 12% 12% 11% 10% 10% 8% 8% 7% 6% 4% 2% 2% 2% 2% 2% 0% 58%

Base: all respondents

Currently, UAE consumers are buying Dior, Armani and Yves Saint Laurent. Of these, only Giorgio Armani ranks highly for future aspirational purchase. If Dior and Yves Saint Laurent want to grow market share and attract a future generation of consumers in the UAE, they may want to invest more now in building their brands, observed Markert. Future big spenders in India would like to fill their wardrobes with Gucci, G. Armani, LV and Dior, while in China, the most coveted aspirational brands are Chanel and Versace, followed by LV and Giorgio. Armani. Eleven percent of Indians online consumers say they buy Armani now, but 38 percent would buy Armani if they could afford it. And while nine percent of online Indians currently buy Versace, 34 percent aspire to buying Versace in the future. Latin America and Asia are the most promising regions for designer accessories According to the ACNielsen survey, shoes, sunglasses, wallets, handbags and belts are the most sought after designer accessories, but preferences for the type of accessory and the brands differ strongly across the worlds regions. Shoes and belts are favoured by Latin America, while South Africans go for sunglasses, in Asia, home to the worlds biggest rainy day savers, its wallets. In their shoes Outside Latin America, luxury shoes are the most popular choice in Belgium and the Netherlands, Turkey and the UAE, Thailand and Philippines and - perhaps not surprisingly France.

The right shoe maketh the outfit certainly rings true among Europeans. Many Europeans believe that shoes are the most important accessory of any outfit, and a new pair of shoes is the easiest way to change and update any look. It is not surprising therefore that shoes are the leading choice of accessory among Europeans now, as well as for future purchase. A pair of designer shoes is the leading purchase for the Dutch, Belgian and French consumers. Another bright but challenging prospective market is Russia, scoring number one by the number of Internet users who would aspire to buy designer shoes if money was no object. 81 percent Russians said they would buy luxury shoes if money were no object, versus one third of Russian respondents who currently buy them.

Russia is certainly a must-be place for fashion houses, with its ever-growing number of well-off people and their love of new and fashionable clothes. According to the ACNielsen study, 70 percent of Russian Internet users claim to spend their spare cash on new clothes. It is more than in any other country surveyed and one a half times more than the next nation most spending on this item - Spaniards. Russia is also notorious for charging among the worlds highest prices for luxury brand goods, largely due to the cost of retail space in Moscow, one of the highest in the world. Among countries least inclined to buying designer shoes are North America, the Pacific, Nordics Finland and Denmark -Czech Republic, Austria and Japan.

Which of the following designer accessories do you buy? (Global average)

Shoes Sunglasses Wallet Handbag Belts Stationery (palm pilot holders etc) Briefcase Luggage KeyChain None of these
Base: All respondents

49% 32% 26% 21% 21% 14% 10% 7% 6% 35%

Belts its a wrap For a luxury brand marketer betting on belts sales, Mexico, UAE and Argentina would be the priority countries to consider, with up to half of Internet users there claiming to buy luxury branded belts. France, Netherlands, Turkey and some of the Asian countries also present big opportunities. Russians wouldnt mind a designer belt either, with 37 percent of respondents aspiring to their purchase if money was no object. The Japanese, Austrians, Finns and dwellers of the Pacific countries and Eastern Europe seem to resist designer belts, as well as shoes. Only 10 percent on average in these countries say they buy belts. Sunglasses One doesnt need to look too far to see where the greatest opportunities are to market designer sunglasses - its sun-baked countries like the UAE, Greece, South Africa and Turkey. Over a half of respondents in these countries claim to buy designer sunglasses. Additionally, South Africa leads the world with the number of Internet users aspiring to buy sunglasses if money were no object (69 percent). Latin American countries along with South Korea, Philippines and New Zealand would also be the target of aggressive marketing campaigns. Nearly 60 percent of respondents there would buy designer sunglasses if they had the money to spare.

Reach for your designer wallets in Asia Nine of the top 10 countries ranking by the biggest number of consumers buying designer wallets (45%) hail from Asia. Interestingly, Asians also outscored all other nations as the worlds biggest money savers, according to an earlier ACNielsen online survey which asked consumers what they do with their spare cash after covering essential living expenses. In the Nordics, Eastern Europe, Germany, Austria, the US and the UK, a designer wallet does not seem to add a lot to its owners social status, judging by the fact that, on average, only 10 percent are buying luxury wallets in these countries, and only twice as many aspire to buy them.

Handbags, briefcases, stationery Handbags, briefcases and stationery items, like palm-pilot or mobile phone holders, pens, etc., are the most popular in Asian and Latin American countries. Handbags also present a good opportunity in Italy and Russia; stationery - in Hungary, Switzerland and South Africa, while briefcases are the most coveted in Asia. When women cannot afford more expensive items of design brand products, a handbag is seen as the best investment as it is an item that can be used daily for almost all occasions.

Which of the following designer accessories would you prefer to buy in the future if money was no object? (Global average)
Shoes

65% 48% 37% 36% 31% 25% 24% 21% 8% 15%

Sunglasses

Wallet

Handbag

Belts

Luggage Stationery (palm pilot holders etc) Briefcase

KeyChain

None of these

Base: all respondents

Have designer luggage, will travel Luggage was the most popular designer accessory of choice in the UAE, where a quarter of Internet users opt to travel in designer style. According to the ACNielsen survey, Asians are among the biggest spenders on holidays and travel worldwide and would be the last of all nations to forsake their annual vacation even when times get tough. This may explain their need for enduring, high quality luggage bags, and the fact that six out of top ten countries buying designer travel bags hailed from Asia. Price may be one of the four marketing Ps that fashion houses should pay attention to when marketing luggage. The ACNielsen survey has found that, whereas an average of seven percent of Internet users worldwide buy designer luggage now, a quarter would buy them if money were no object. In some countries, such as Brazil, Ireland, Philippines and South Africa, the differential between those buying now and those aspiring to buy was as big as 30 percentage points. The ACNielsen Global Online Survey, the largest twice-yearly survey of its kind, is aimed to gauge consumers current confidence levels, spending habits/ intentions, current major concerns and attitudes and opinions to a variety of issues. The most recent wave of the survey took place in November 2005 and polled over 23,500 consumers regular Internet users in 42 markets in Europe, North and Latin America, Asia-Pacific region, Africa (Republic of South Africa) and the Middle East (UAE).

About ACNielsen ACNielsen, a VNU business, is the worlds leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsens market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. To learn more, visit www. acnielsen.com.