Europe's luxury goods market at risk← Back
About 3 Years, 3 Months, 4 Weeks, 1 Day, 12 Hours, 17 Minutes ago.
ACE European Group, global insurance provider for casualties and property, has published a study focusing on luxury goods brands in Europe and the key risks that might affect them in the next two years.The luxury goods industry could grow 50% faster than the global GDP by 2015 according to predictions by consulting firm Bain & Co: risks to luxury goods companies are therefore not to be underestimated.
For the purpose of the study, a survey was led amongst 45 individuals who deal with risk management within the European luxury goods industry. In addition ACE conducted qualitative interviews. Looking at four main risk areas, it emerged that the largest concern for the luxury goods industry is the lack of tools to assess and manage risk.
Respondents cited environmental risks as the factor that was likely to have the most financial impact on their company, as customers and shareholders have started to take more interest in environmental issues.
The study also indicates to what extent globalisation is impacting the luxury goods sector. It has led most companies to break into new markets and 90% of respondents agreed that their companies relied on business travel as a consequence. The expansion into emerging countries therefore puts employees in situations of higher travel risks as they face unfamiliar territories. A further impact of globalization is the expansion of infrastructures: 92% of respondents cited supply chain risks as a key threat as infrastructures have become more complex and less easy to manage.
Directors and officers liability emerged as a further risk, with bribery and corruption being cited as the main problem areas.
Finally the study revealed the key role reputation plays for luxury goods companies. Reputation is felt to be the strongest asset, with two-thirds of respondents agreeing that luxury goods companies face the greatest reputational risk.