BOSTON/MILAN: Global sales of personal luxury goods are forecast to grow by between 2% and 4% in 2017, as higher spending in China and increasing consumer confidence in Europe offset a weaker outlook in the US and the rest of Asia.
That is according to Bain & Company, the management consultancy, whose spring luxury update predicts that the global market will grow to €254bn – €259bn this year.
Previously, the industry had been hit by economic slowdown, the impact of terrorism on tourist spending as well as other country-specific issues, such as China's official crackdown on corruption and gift-giving, but now Bain is optimistic.
"This year looks promising so far. After a difficult 2016, the first quarter of 2017 brought some relief to the luxury industry," said Claudia D’Arpizio, a Bain partner and lead author of the study.
"Factors such as the continuous repatriation of Chinese consumption as well as a positive outlook in Europe both for locals and tourists will help drive overall market growth during the remainder of the year," she added.
Europe, where luxury spending was badly affected by a series of terrorist attacks, is now seeing an increase in tourism, and Bain expects the region to be the fastest growing market for luxury goods this year, with growth of between 7% and 9%.
Spain and the UK are highlighted as "bright spots" because the former is perceived as a safe destination while the fall in the value of the pound over the past year has made the UK more affordable.
Mainland China is also rebounding, Bain said, as Chinese consumers show a strong preference for buying luxury goods at home. Growth in China is expected to increase between 6% and 8% this year.
However, the outlook is less encouraging in the rest of Asia where luxury sales are expected to shrink by -2% to -4%, with Japan – usually a safe market – forecast to see flat growth.
Hong Kong, Macau and Singapore are "on the mend", according to the report, but Taiwan and Southeast Asia face decreased tourism, particularly from China and South Korea.
The US, the largest luxury goods market in the world, is also expected to disappoint amid a slowdown in tourism and what Bain describes as a "still unsettled political climate".
And even though Canada remains "dynamic", the market there is still poised to slow, so that the overall Americas region, including Latin America, is expected to deliver growth of just -2% to 0% this year.
Data sourced from Bain & Company; additional content by WARC staff