The international management consultancy also forecast that growth would continue at 4-5 percent per year to 2025, when it is expected that the global luxury goods market will be worth between €366bn and €390bn.
Bain’s latest update forecasts respectable rates of growth in Europe and the Americas, but makes clear that mainland China – and especially the country’s younger consumers – will account for the lion’s share of growth in 2018.
After a few years of stagnation following an official clampdown on gift-giving, the luxury goods market in China is expected to rebound with a growth rate of 20-22 percent this year, as brands adapt to the tastes of local consumers, especially young and tech-savvy users of social media.
“2018 is off to a strong start. Currency fluctuations will have an impact, but we expect the healthy trend to continue across all regions and customer segments,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study.
“Chinese consumers continue to stand out as a growth-driver for the industry, and are more fashion-savvy and digitally advanced than ever before, accelerating the shift of the industry to the millennial state of mind,” she added.
Local influencers and social media are also key for younger consumers in Japan, where the luxury goods market is expected to grow by 6-8 percent this year (at constant exchange rates).
Meanwhile, the rest of Asia, including the key markets of Hong Kong and Macau, is expected to deliver growth at a healthy rate of 9-11 percent.
The outlook for most other regions is also improving, Bain predicted, with the Americas expected to grow by 3-5 percent this year and Europe by 2-4 percent.
But the rest of the world is expected to witness only modest growth of 2 percent (again, at constant exchange rates).
Sourced from Bain & Company; additional content by WARC staff