According to Kim Do, Senior Industry Analyst at market research firm IBISWorld, over the past five years the luxury retail market has grown eighteen times faster than retail generally – and luxury brands have flocked to Sydney, Melbourne, the Gold Coast and Brisbane to set up shop.
“Flagship stores offer the ability to create an environment and a platform to build your brand,” she told a recent Sydney conference.
“With luxury retailing, most consumers still prefer to hold and touch a product and to enjoy the shopping experience,” Do explained. (For more, read WARC’s report: Why Australia’s luxury retail sector is thriving.)
But that is set to change as Australia plays catch-up with other developed markets and sees more luxury sales taking place online.
Currently, online sales make up just 8% of luxury purchases in Australia, compared to 15% in the UK, for example.
“In the next five years, we’re going to see luxury retailers really invest in their online platform in Australia, and especially their online channel shopping experience,” Do declared.
That’s because the typical consumer of luxury retail is no longer just the cash-rich, middle-aged cohort; the phenomenon of market polarisation has emerged as an important driver of domestic luxury sales.
This involves consumers making the majority of their purchases from low, discount and specialty retailers, Do explained. These items are then complemented with luxury purchases such as accessories and handbags – a practice particularly common with younger shoppers.
“Younger consumers are such an important market for luxury retailers nowadays, this social media and online channel shopping experience is becoming more important than ever,” she said.
Sourced from WARC