BOSTON: Global luxury goods sales will fall by 10% this year to $201 billion (€152bn; £135bn) according to Bain & Co., the management consultancy firm, which has revised its previous forecast of a 7% decline as consumer spending patterns change in the downturn.
The rise of the luxury sector has been one of the defining features of the modern marketing landscape, and it has been argued that some brands are well-place to prosper despite the financial crisis.
However, Bain & Co. estimates that worldwide luxury revenues could decrease by up to a fifth in the first two quarters of 2009, before the situation improves in the second half of the year.
It also predicts that the luxury category in the US, which accounts for almost one third of the market's total value, will see a slide of 15% on an annual basis.
Europe and Japan – which together with the US are responsible for 80% of global luxury sales – are similarly both expected to post drop offs of 10%.
With regard to specific product categories, apparel is forecast to register a decline of 15% worldwide, with jewellery and watches down 12%, and "high-end" shoes and leather goods by 10%.
Claudia D'Arpizio, a consultant for the company, argued that luxury consumers were increasingly trading down to less expensive brands, particularly in the clothing category.
She said "shoppers are more and more looking for value," with some "mixing and matching expensive items with cheaper clothing" and others "waiting for markdowns, and looking for high discounts."
On a more positive note, Bain & Co. does expect luxury sales to increase by 7% in China, and 2% in the Middle East, this year.
Data sourced from Wall Street Journal; additional content by WARC staff