While the broader Australian retail sector is facing tough times, the local luxury market has experienced impressive growth in the past year.
Research from market research firm IBISWorld, based on public and private data sourced from the Australian Bureau of Statistics and tourism research, among others, indicates retail in Australia has only grown by an annualized 0.5% in the past five years yet the luxury market has grown by 9.1% for the same period.
For Australian consumers, discretionary spending has been reduced by the increase in cost of necessities such as electricity, gas, water and medical costs which, in some cases, have risen by almost 100%.
With household budgets tightening, shoppers are looking online to find the best deal which is putting the pinch on local retailers who have, in turn, applied discounts to shift excess stock.
Kim Do, Senior Industry Analyst at IBISWorld, told the Mumbrella Luxury Marketing Summit in Sydney: “As a result, retailer’s profit margins fell and many have been unable to survive. However, Australia's $2.2 billion luxury retail industry has been resistant to these trends.”