Luxury industry to witness low single-digital growth
The world’s leading luxury stores line the tony shopping street Kohlmarkt in Vienna, Austria.. (Image: Alamy)
Low growth of luxury personal goods sector will continue until 2020 around the world, says a latest study.
Research firm Bain & Co, in collaboration with Italy’s Fondazione Altagamma, rolled out a report “Bain Luxury Study 2016 Spring Update” saying that the personal luxury goods market will continue measured growth of 2-3 percent through 2020, reaching an estimated €280-295 billion in revenue. However, that outcome is heavily contingent upon the continuous growth in Mainland China.
Around the world, younger generations continue to outspend Baby Boomers across all personal luxury goods categories, says the report Growing spending among Generation X shoppers, as a result of changing consumption habits, and the increasing growth Generation Y, driven almost entirely by the Chinese middle class, will pump an estimated 50 million new consumers into the market.
“The luxury market will continue to receive a substantial boost from Generation Y and Generation X,” said the report’s co-author Federica Levato from Altagamma – the Italian luxury goods manufacturers’ industry foundation. “Together with Generation Z, which will continue to make up just a sliver of luxury spending, these younger consumer will comprise three-quarters of the global luxury market by 2020. Therefore, the market cannot afford to ignore them or their preferences for accessible yet content-rich products and brands.”
According to Bain, the 2015 slowdown seeped into the first quarter of 2016 with only one percent growth – a trend that is expected to continue throughout the year.
“The luxury market is stuck in a holding pattern for the foreseeable future,” said Claudia D’Arpizio, a Bain partner and lead author of the study. “All eyes are again on Mainland China, which is the key to unlock recovery around the world, and the United States, where local consumption is failing to offset decreased tourism. Consumers’ changing purchase patterns, including a reshuffling of tourism and revitalized local spending in Europe, will likely do little to drive luxury brand growth much beyond the low single digits.”