MILAN — The luxury goods market is expected to grow 4 to 5 percent globally in 2013 and 5 to 6 percent on a yearly average through 2015, according to consultancy Bain & Co. This represents a slowdown compared with the past three years, when luxury goods showed annual double-digit growth.
Claudia D’Arpizio, partner at Bain & Co., presented the spring update of the “Luxury Goods Worldwide Market Study” in cooperation with Italy’s luxury goods association Fondazione Altagamma on Thursday.
This year will be negatively impacted by the fluctuation of exchange rates, said D’Arpizio.
Bain confirmed that luxury revenues gained 10 percent in 2012, reaching 212 billion euros, or $271 billion at average exchange, boosted by “strong growth tailwinds” in the first half of the year. At current exchange, revenues would have grown 5 percent.
“The U.S. is rediscovering luxury, while Europe is struggling,” said D’Arpizio.
The sector is on track to break the threshold of 250 billion euros, or $322.4 billion at current exchange, by mid-decade, said Bain.
Southeast Asia and South America claim top spots as growth leaders while China’s rise of the luxury sector will keep pace with growth in its gross domestic product.
Bain identified tourists and “HENRYs” (High Earnings, Not Rich Yet) as key drivers for growth, as well as the rise of the middle class in emerging countries.
Despite some recovery of spending on apparel, the main drivers remain leather goods and other accessories, especially absolute luxury items, while watch consumption has decelerated sharply as retailers de-stock and Chinese luxury consumers slow their purchases.
In 2013, Bain said the impact of a 12 percent sales growth in Central and South America, in particular in Brazil and Mexico, will result in a 5 to 7 percent gain in the Americas. “High consumer confidence among the affluent, increased store openings in American cities, and intensive investments in linking physical and digital shopping are all fueling U.S. sales growth,” said D’Arpizio. Despite the “major obstacle” of high import tariffs and duties, Brazil is promising as it gets ready for the World Cup and Olympic Games.
China is expected to grow 7 percent, while Southeast Asia is forecast to show 20 percent growth, boosted by new stores and the increasing relevance of second-tier markets, such as Indonesia and Malaysia. Hong Kong and Macau are benefiting from a shift in tourism flows previously targeting Europe.
Japan is seen posting 5 percent growth in light of the country’s devaluation of the yen, which is boosting local consumption, “but luxury brands are still struggling to capture changing consumer behavior, especially that of younger generations, which are not very interested in luxury. Japan is very relevant as a test market,” said D’Arpizio.
Europe remains challenging and is “bracing for a summer spending dry spell,” as tourism is seen slowing, with a flat to 2 percent growth.
Dubai, an attraction for Russians, Indians and Africans, remains at the heart of business in the Middle East, which is growing steadily. “We are seeing a more even distribution of global growth,” said D’Arpizio, adding that the market in 2025 will likely be more than five times larger than in 1995.
Going forward, “superior customer experience, flawless retail management and people excellence will be key for success,” said the research.
“We are entering a new phase in the evolution of the luxury market. More markets, more segments and more diversity of tastes all combine to create more variables to solve for when pursuing the right strategy for growth.”
Altagamma also presented its study, called Consensus, and estimates for 2013, a year marked by a slowdown in growth, but with gains in all categories. Updating data provided in October, the study said Asia will grow less than expected, while the Americas and Japan will show a brisker pace.
In terms of categories, only perfumes and cosmetics will grow more than expected — 5 percent and not 4 percent. Leather goods, shoes and accessories, together with jewelry and watches, are the sectors with the highest growth rate — 7 percent (in October, the Consensus forecast growth of 10 and 8 percent, respectively). This was attributed to China, affected by the anticorruption policies of the new government. In the region, gift-giving accounted for 30 percent of business, but there is now “a healthier development and local consumption is spread over real consumers,” countered D’Arpizio.
Apparel was forecast to grow 6 percent but it is now expected to grow 5 percent.
Asia was expected to grow 17 percent, now adjusted to 10 percent. The U.S. was expected to grow 6 percent but is now expected to grow 7 percent. “The U.S. area is a positive and extraordinary surprise,” said Altagamma’s executive director, Armando Branchini.
“The U.S. is rediscovering luxury,” echoed D’Arpizio. “Consumer confidence is higher and pushing domestic consumption.”
The companies’ average earnings before interest, taxes, depreciation and amortization is expected to grow 9 percent compared with a 7 percent forecast in October. Branchini said the second half of the year will be stronger than the first.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)