Mainland demand drives growth in sales of luxury goods
The demand for luxury goods continues to rise.
Driven by Chinese demand, the global luxury market is expected to post a steady annual growth of 4 to 6 percent at constant exchange rates to a market size between 271 billion euros (US$302 billion) to 276 billion euros in 2019.
In China, due to solid consumer confidence and a willingness to buy especially among young generations, an annual growth of 18 to 20 percent at constant exchange rates is expected, according to a joint study by Bain & Company and the Italian luxury goods manufacturers' industry foundation Fondazione Altagamma.
However, Hong Kong and Macau are losing ground.
China's mainland continues to dominate the global market as consumers demonstrate a strong preference for purchasing luxury goods at home thanks to price harmonization, consumer-centered strategies, and government initiatives to boost spending on imported goods.
The report also pointed to weakening consumer confidence in North America, as well as a decreased number of visitors to malls and department stores, which dragged down personal luxury spending during the 2018 holidays.
The European market is forecast to post 1 to 3 percent growth in 2019 as socio-political upheavals and a weakening macro-economic outlook take effect.
Leather and jewellery sales are set to maintain a sustained pace of growth, with positive momentum for handbags. Solid growth in sales of skin-care and make-up products will be partially offset by mild performance in fragrances.
"Overall we are seeing moderate growth in most markets," commented Claudia D’Arpizio, a partner with Bain & Company and lead author of the study.
By 2025, Chinese customers will account for more than 45 percent of the global market, with half of their luxury purchases on the Chinese mainland.
The global market size is estimated at 320 billion to 365 billion euros by then.
Digital channels are also on the rise and online channels will represent a quarter of global market value by 2025. At the same time, there will be store network consolidation and radical changes to the role of physical stores.
Insurgent brands and business models are also challenging established brands.
