Chinese customers boost luxury market
Chinese customers are driving growth in the market for luxury goods.
The Chinese mainland has been a growth driver for the luxury industry this year with a market size estimated to rise 26 percent to 30 billion euros (US$33.2 billion) thanks to government policies and lower price differentials, according to a study by Bain & Company and Fondazione Altagamma, the Italian luxury goods manufacturers' industry foundation.
Globally, the personal luxury goods segment is expected to see spending grow 4 percent to an estimated 281 billion euros by the end of the year. It's estimated the sector will enjoy a 3 to 5 percent compound annual growth rate until 2025 with a total value between 335 and 375 billion euros.
Chinese customers' spending both home and abroad account for 35 percent of the total value of luxury goods and, as they turn their sights to other Asian destinations they are boosting the performance of these markets.
Japan's luxury market grew by 4 percent to 24 billion euros while the rest of Asia grew by 6 percent with total size of 42 billion euros.
"Luxury brands need to connect with consumers with more individualistic approaches as young consumers want brands to cater to their emotional demand, and new consumption models and evolving retail channels are requesting luxury brands to respond to market trends even faster," said Bruno Lannes, a Bain & Company partner in Shanghai.
The European market experienced slow growth of 1 percent with the market reaching 88 billion euros. Spain and the UK were among the top performers, driven by tourism and a weak currency, respectively.
Online channels continue to gain share and now account for 12 percent of the market.
Shoes and jewelry were the best performing categories, both growing by 9 percent in 2019, followed by leather goods (7 percent) and beauty (3 percent). Watches had a sluggish performance with a 2 percent decline.
The survey anticipates that the luxury customer base will expand to 450 million by 2025, up from 390 million in 2019, mainly thanks to a growing middle-class, especially in Asia.
This will further stimulate the entry level price segments, which in 2019 already represent a sizable part of the market (35 percent in leather goods and 30 percent in jewelry).
