According to Bain & Company’s recent ‘Spring 2011 Update: Luxury Goods Worldwide Market Study’, the luxury market sales worldwide is expected to touch 185 billion euros in 2011, up 8 percent from 172 billion euros in 2010, www.diamondworld.net says. This is being attributed to the healthy growth in retail observed in the US, Europe, continued growth of China and emerging growth in Russia, Brazil and the Middle East. The high of 2010, i.e. 172 billion euros surpassed the peak of 2007 (pre-recession), which stood at 170 billion euros. The improvement observed in 2010’s holiday sales was 14 percent versus 2009.
The sales at department stores and direct-owned luxury stores improved to double digits in February and March as compared to 2010, and order lists for the Fall/Winter 2012 season seems strong. The activity at retail level is positive with restocking, especially in accessories, leather goods and hard luxury categories such as jewelry and watches, underlined by a high degree of optimism that the consumption vigor and pattern is going to be similar to pre crisis levels.
According to the various markets, the report predicts sales in Americas for 2011 this year to be up by 8 percent, to nearly 52 billion euros. U.S. is projected to stand still as the world's largest luxury goods market, China will be pumped with 25 percent growth y-o-y. Sales of Greater China (including Hong Kong, Macao and Taiwan) could well exceed Japan for the first time. Growth in Europe will reach be 7 percent in 2011. Japan would see a dip of 5 percent, owing to ‘structural’ and ‘earthquake impact’, but sales are ultimately expected to stabilize in Japan in the third quarter of 2011, with recovery in consumption and reconstruction propelling GDP growth.
But it is the emerging markets that the study believes will be the ‘most exciting’, for two to three years, owing to a change in lifestyle in these markets. Luxury goods’ sales in Russia note 5 to 10 percent annual growth, new store openings will propel 10-12 percent growth in Middle East (10 percent to 12 percent) and Brazil would attract international brand investment (10 percent to 15 percent). China's fast-growing wealth will fuel both same store sales growth and new store openings.
‘Luxury has made a brilliant return to the retail stage, but the script has been re-written’, as the study mentions. Factors like ‘more demanding customers, generational shifts, new loyalty rules, an increasingly integrated offline and digital customer experience and the continued growth of China and other fast-growing markets’ are the growth triggers.
The future perspective into 2014 and beyond, it is estimated that the market would be a 214 billion euros to 221 billion euros entity market within three years. Three key elements are outlined as guidelines to "owning the luxury goods future": Deep focus on emerging markets-penetration; route-to-market; a tailored value proposition; Adaptation to the continuing generational shift-baby-boomers retiring; Generation Z (always connected); Continuous enhancement of the customer experience-increase loyalty and satisfaction; integrated online and offline experiences; unrelenting service.
