MELBOURNE: The luxury market in Australia has been growing by almost 10% a year in recent years as the country has avoided the worst effects of global financial instability, a study has said.
The luxury retailing sector has "gone from strength to strength" according to the Luxury Retailing in Australia report from researcher IBISWorld, and a market now worth $1.6bn is expected to reach $2.4bn in the next five years.
"Australian luxury retailers have been relatively insulated as growing discretionary incomes have fuelled consumers' passion for fashion," Ryan Lin, senior industry analyst at IBISWorld, Melbourne, told Luxury Daily.
As a result, high-profile Australian designers and labels have gained greater prominence while global brands have sought to expand their retail networks across the country. The top three luxury brands in Australia are currently Louis Vuitton, Tiffany & Co. and Prada.
Nor is it only indigenous consumers who are driving the steady growth of the luxury market. Euromonitor has noted an annual influx of more than 600,000 wealthy Chinese tourists and luxury brands are opening stores to cater to this clientele. Each tourist spends around $7,000, with luxury goods featuring on many shopping lists as they seek to avoid the high taxes on the same products when imported to China.
Last month, Alex Alamsyah, senior director of retail leasing at commercial property specialist Knight Frank, told the Sydney Morning Herald that if 2014 had been about fast fashion, 2015 would be the year of luxury retailers.
The focus for many is Sydney's Pitt Street Mall, one of the most expensive in the world, with names such as Tag Heuer reported to be paying $1.4m a year for 100 square metres.
Lin observed that competition in the sector was increasing, "especially as flagship stores bring the fight back to independent boutiques and online retailers as they ramp up exclusive offerings and five-star customer service".
But he thought that there was space for emerging luxury labels to target cash-rich younger consumers. "This is expected to benefit independent boutiques, which have greater flexibility in what they stock," he added.
Data sourced from Luxury Daily, Sydney Morning Herald; additional content by Warc staff