ROME: Sales of luxury goods are expected to grow by over 5% a year worldwide in the period to 2014, but brand owners must reflect changing tastes and demographics, according to a new study.
Altagamma, the trade body, and Bain & Company, the consultancy, reported that category revenues rose by 10%, to €191bn, in 2011, after a 13% jump in 2010, when figures hit €173bn.
Looking ahead, it was predicted that sales would grow in the 6–7% range in 2012, thus bettering €200bn. An uptick of 7–8% was then slated for 2013, as total returns surpass €216bn.
The pace of expansion was pegged to be in the 8–10% bracket for 2014, meaning purchase levels of exclusive products should reach €235bn at minimum by this date.
Some trends driving this process were argued to include the "feminisation of men" and "male-isation" of women, a "casualisation" of luxury and the arrival of "bigger money", or very affluent, buyers.
"Consumers' insatiable chase for quality and craftsmanship, and for the use of high-end materials, has pushed many brands to focus on their top offer rather than the entry level one," the study added.
As a corollary, logos are "no longer" the only way through which brands can achieve distinctiveness, with unique design, materials and personalisation all gaining in popularity.
More broadly, manufacturers need to serve ageing shoppers in Europe, Japan and the US as well as a younger target group in Asia and other emerging markets, which already yield 30% of sales.
Indeed, demand in China will improve from some €12.9bn in 2011 to at least €15bn, and possibly €16bn, in 2012, as buyers in lower tier cities and online offset "flattening" like-for-like growth.
India is at a more nascent stage, and could be worth €1.2bn in 2012, versus €1bn in 2011. Its fledgling infrastructure and limitations on foreign direct investment have been obstacles, but the country is one of the next decade's "largest opportunities".
Growth rates in Europe are anticipated to be between 2% and 4% in 2012, standing at 5% and 7% for the Americas. Asia Pacific, not including China or Japan, may see a lift of 14% to 16%. Japan, however, will most likely be static.
In terms of market share, Asia, excluding Japan, should enjoy an increase from 19% in 2011 to 27% in 2014. By contrast, the Americas will witness a decline from 30% to 27%.
Elsewhere, Europe is set to endure a slide from 36% to 32%, while Japan experiences a contraction from 10% to 8% during the same timeframe, the study suggested.
Data sourced from Altagamma; additional content by Warc staff