According to a new report [1] by market research firm Global Industry Analysts (GIA), the global luxury goods market should recover poise and gain steady momentum in the short to medium term to reach US$307.3 billion by 2015.
The luxury watches market represents the largest segment within the luxury goods market, having contributed a share of about 17% in the total dollar sales, while luxury cosmetics market is projected to be the fastest growing segment over the analysis period 2007-2015.
Europe will continue to retain its leadership as a producer and exporter of luxury goods, helped by the advantage of a weaker euro and its influence on luxury goods purchases and increased tourism.
Cyclical market
“With its high correlation to a country’s GDP, the luxury goods industry is extremely cyclical in nature, with economic ups and downs amplifying the response demand patterns. For instance, in periods of economic boom demand waxes higher than the growth in GDP, while conversely in periods of slowdown, demand recedes rapidly as consumers quickly axe their spending on high-priced luxury goods,” GIA explains. The pal of gloom set over luxury markets in Europe, North America and Japan in 2009, is perfectly illustrative of this trend. These leading luxury markets faced the most severe impact of the global economic recession, with “High Net Worth Individuals” dramatically decreasing their spending.
New consumer base
However, a quick bounce back to market fundamentals is expected. “Diversification of the consumer base for luxury goods away from the conventional ultra rich consumers augurs well for the industry in the medium to long-term and as a result of which perception of luxury will emerge well beyond the traditional confines of fashion, and exclusivity to include quality and intrinsic product value,” GIA says. “The changing consumer habits and values are generating enormous opportunities for brands to draw potential customers as well as reinforce their relationships with their more wealthier and absolute luxury shoppers”.
Growing Asian demand
Growth in the luxury goods market should also be fuelled by the growing demand in developing Asian countries, such as China and India. Growing awareness over international prestige brands, coupled with rising standards of living, as well as the emergence of new classes of affluent consumers, particularly working women, are the main factors contributing to the penchant for living unique lifestyles in these countries.
The Asia-Pacific market is expected to produce the fastest CAGR [2] (15.7%) over the analysis period 2007-2015.
