The US will present the biggest growth opportunity for the luxury market over the next decade according to a report by the Boston Consulting Group (BCG). The explosive growth of luxury consumption over the last five years, led by extremely strong Chinese demand has petered out due to a number of reasons.
Research of the luxury goods market by Exane BNP indicates that China’s lower economic growth rate, the strong crackdown on corruption in that country as well as pollution in the major shopping cities has impacted the luxury industry.
A study by the US consultancy Bain & Company and the Fondazione Altagamma has said in a statement that the world luxury market has reached a “maturity and stabilisation” phase with growth of around 2 percent expected in 2014 — around the same level as in 2013.
Developed countries are once again the focus, accounting for fully half of all luxury consumption. The US leads in luxury consumption because of spending by locals as well as tourists — many of them Chinese. According to one analyst, the abating of demand in China may well be offset by the demand from Chinese tourists abroad.
Another major factor influencing luxury consumption is the increasing influence of online marketing, social media and the widespread use of smartphones and wearable technology, according to a BCG survey. This has led major groups such as LVMH, Kering and Richemont to rethink the way they position and market their luxury brands.
Despite the slowdown in China, the growth in luxury consumption is still disproportionately focussed on the Asia-Pacific region, where the income of the higher-earning segment is growing faster than the others. This is expected to correct going forward and the developed markets will once again assert their dominance.
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