MILAN: Recent luxury market trends have been reversed as a new report says the Americas will grow faster than China in 2013, but ironically some of this growth is being fuelled by Chinese tourists.
The Luxury Goods Worldwide Market Study from consultants Bain & Co indicated that the global luxury market would grow at 2% in 2013 to reach $299bn. The Americas were expected to increase twice as fast as the global luxury market in 2013, at 4%, while that in mainland China would achieve only 2.5%.
But when the Greater China region was considered, growth was on a par with the Americas as Macau and Hong Kong benefited from their role as tourist destinations for many Chinese travellers.
Those venturing further afield to the west of the US were also helping drive luxury spending in that market, which was further boosted by a series of store openings in second-tier cities.
"America's economy has more resilience than most other markets in the world," Milton Pedraza, CEO of The Luxury Institute, told Luxury Daily.
"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, adding that both China and the US would be "engines of growth for luxury in the next decade".
Tourism was also an important factor in other countries, generating 60% of revenue in France, 55% in the UK and 50% in Italy.
Some of the fastest growth rates were expected in Southeast Asia and Africa, both of which were projected to increase 11%. In particular Singapore, Malaysia, Indonesia, Vietnam, and Thailand were highlighted in Southeast Asia, while Angola and Nigeria merited a special mention in Africa.
The study further said that online sales were growing significantly faster than the rest of the market, at 28%, and now accounted for around 5% of all luxury sales.
This was the point at which, Bain suggested, brands could no longer treat the channel as an incidental source of additional revenue, and instead needed to integrate into their overall channel strategy.
The forthcoming issue of Admap, published on Warc next week, is devoted to the art of luxury branding. It looks at how luxury brands are addressing various digital issues, from creating seamless consumer journeys to targeting consumers on social media.
In the meantime, a free preview article from the issue is available - Luxury brand marketing: Making a luxury brand - in which Brand Opus's Nir Wegrzyn explains how luxury brands tap into consumers' search for happiness and must appeal to the subconscious and conscious parts of their psyche.
Data sourced from Luxury Daily, Bain, Admap; additional content by Warc staff