LONDON — The U.K. luxury sector is set to grow 12 percent this year to 7.4 billion pounds, or $11.51 billion, and will post double-digit growth annually for the next five years, according to the fourth annual Walpole Ledbury Luxury Benchmark Report.
The report, which is based on interviews with 78 senior luxury executives in sectors ranging from fashion and accessories to watches and jewelry to hospitality, said that brands remain “optimistic” about the outlook, and they have every reason to: The sector is set to double in size over the next five years to 12.2 billion pounds, or $18.98 billion, in 2017.
Some 83 percent of luxury brands said they are expecting to see a rise in sales in 2013, according to the study by Walpole, the not-for-profit organization that represents British luxury companies, and Ledbury, a market research firm specializing in the luxury sector.
The study added that tourists remain “crucial” to the British luxury industry, with 64 percent of respondents targeting this group specifically through various initiatives such as foreign payment methods, and hiring foreign speaking staff.
While Americans remain the most important nationality of luxury visitors to the U.K., the Chinese are considered the fastest growing group of luxury shoppers to the U.K.
“The findings from this year’s study provide an insightful look at the changing landscape of the U.K. luxury industry and the key priorities and challenges facing senior luxury executives in the coming year,” said Julia Carrick, Walpole’s chief executive.
“Despite the backdrop of the euro zone crisis and a difficult economic environment, the U.K. luxury industry remains extremely robust and is forecast to grow significantly,” she added.
The report said that key potential growth regions for U.K. luxury brands include the BRIC economies, Brazil, India, Russia and China. With the Olympics and World Cup coming up, 52 percent of brands have plans to enter the Brazilian market.
Outside of the BRIC economies, South Korea, Mexico, Indonesia, and Vietnam were seen to be the most important target markets for U.K. luxury brands.
The report said that, looking ahead, the two most important challenges facing British luxury businesses in 2013 are “maintaining product quality, and reaching the next generation of consumers.” The report said that 98 percent of the brands surveyed believe that reaching the next generation will be a challenge to some degree.