The Americas are expected to surpass China in terms of luxury goods spending growth, while global revenue will climb an estimated two percent to $299 billion, according to a new study by Bain & Co.
The "Luxury Goods Worldwide Market Study 12th edition" also found that Italian brands have made the largest jump in luxury market share, up from 21 percent in 1995 to 24 percent today. However, French conglomerates such as LVMH and Kering take up 29 percent of the market and show no signs of curbing their rapidly expanding portfolios.
"America's economy has more resilience than most other markets in the world," said Milton Pedraza, CEO of The Luxury Institute, New York.
"China is going to be a much bigger long term play, but in the short term, China has a lot of growing pains," he said. "Both are going to be engines of growth for luxury in the next decade."
Mr. Pedraza is not affiliated with Bain & Co., but agreed to comment as an industry expert.
Bain & Co. did not respond by press deadline.
Bain's Luxury Goods Worldwide Market Study 12th edition was enacted with Italian luxury goods trade association Altagamma to analyze the market and financial performance of more than 250 of the world’s leading luxury goods companies and brands.
Globally clement
The study found that Europe's spending on luxury goods will rise two percent, buoyed by the traffic of tourists.
Tourists generate 60 percent of revenue in France, 55 percent in Britain and 50 percent in Italy, signalling that luxury brands must continue to adapt to the tendencies of international shoppers.
Wallpaper* magazine’s Handmade “Best of” exhibition at Harrods
Southeast Asia's 11 percent predicted growth stems from Singapore, Malaysia, Indonesia, Vietnam, and Thailand. Dubai continues to account for much of the Middle East's growth, which stands at five percent.
Africa has demonstrated a promising future, with a projected 11 percent growth arising from new markets such as Angola and Nigeria.
Although China has seen a dip in growth to 2.5 percent, its consumers account for nearly 30 percent of overall luxury spending.
Japan is pegged as a sore spot in the global luxury economy, with growth expected to fall 12 percent in the wake of the depreciating yen.
Color in the categories
Leather goods and jewelry now reign as the fastest growing luxury accessories categories, each boasting five percent growth.
Tiffany window display
The luxury automotive sector dominates luxury sales overall with $439 billion in revenue and a growth rate of six percent.
Hotels have the highest overall growth rate at nine percent. Apparel accounts for a quarter of the market, and expects growth of one percent.
In online sales, shoes are the top-performing category. Online sales overall account for 28 percent of the year's growth and will accumulate $28 billion in sales, which equals five percent of total luxury spending.
Although there are a few weak spots in the global economy, luxury marketers should be heartened by widespread growth.
"I think Japan will always be a strong market in terms of size, given its population, immigration policies and its closed-economy," Mr. Pedraza said.
"However, I don’t see it as a growth opportunity for the future," he said.
Final take
Joe McCarthy, editorial assistant on Luxury Daily, New York