MILAN — Consumers' deep pockets are becoming deeper and there is no apparent end to their desire for luxury goods, a sector that's also being boosted by the increasing demand from emerging markets.
According to luxury goods organization Altagamma, spending in the high-end range of the market grew 7 percent last year and it is expected to grow between 6 and 7 percent this year. Meanwhile, over the past three or four years, the luxury goods consumer has become younger, with an average age of between 18 and 25.
Last year, consumers around the world spent 83 billion euros, or $106.2 billion at current exchange, on luxury goods. Italy led with a 27 percent market share, accounting for 23 billion euros, or $29.4 billion, followed by France with a 22 percent share. The U.S. accounted for 11.6 billion euros, or $14.8 billion, and a 14 percent share.
"The U.S. and Asia are growing the most, between 8 and 10 percent, and 20 percent, respectively," said Armando Branchini, general secretary of Altagamma. "The design and furniture categories, in particular, grew 17 percent in the U.S."
Europe, excluding Italy, grew 10 percent.
However, most executives present at the Altagamma conference held here Thursday touted Europe's performance. "We've registered impressive growth in Western Europe for the past two years," said Francesco Trapani, Bulgari's chief executive officer. Trapani attributed the growth to a clear strategy and investments in new stores, marketing and personnel. "In general, we've noticed there is more interest for products with a higher price and increased quality," said Trapani.
Michele Norsa, ceo of Valentino Fashion Group, also said that Europe is a strong market for the Valentino brand and that Italian fashion houses should start focusing on the European market once again. "Competitors from around the world invest in Europe and we Europeans tend to neglect this market, even now that tourism is back and helping to boost sales," said Norsa.
Gildo Zegna, ceo of Ermenegildo Zegna, said Eastern Europe is "our own China at home," and that Germany is emerging from the crisis. "If Germany works well, the other European countries follow suit," said Zegna. Germany is Europe's largest single economy.That said, Altagamma is pushing investments in emerging markets, as well, and in India in particular. The association is finalizing an agreement with retail developer McArthur Glen to create Altagamma shopping malls in Mumbai and Delhi. Leonardo Ferragamo, president of the association, described India as a "big opportunity," where Italians are already well positioned. Ferragamo said Altagamma is working with Milan's Bocconi University and the National Institute of Design in Ahmenabad, India, to organize a course to create professional managers capable of handling distribution and retail.
Ferragamo directly addressed Italy's new minister for international trade, Emma Bonino, who chose the Altagamma conference for her first official speech under the new Romano Prodi government, with Altagamma's request to universally level custom duties to a maximum 15 percent. "Custom duties and taxes imposed from countries such as the U.S. and Japan dramatically reduce our growth, while the European market is the only one in the world entirely open to the free trade," said Ferragamo.
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