Bain & Company, the international management consultancy, working with Altagamma, the Italian fashion manufacturers’ association, said Chinese consumers already account for 33% of luxury spending and that they are “leading the positive growth trend around the world”.
Bain’s latest annual luxury study, now in its 17th edition, also revealed luxury sales in mainland China grew 18% at current exchange rates over the past year to €23bn and that, interestingly, this was driven by rising demand rather than by price increases.
Meanwhile, luxury sales in Japan grew 3% at constant exchange rates to €22bn, while across the rest of Asia sales increased 7% to €39bn, with especially “dynamic” growth in South Korea.
The positive outlook comes despite concerns about the possible impact of a China-US trade war on luxury goods and other “bumps in the road” expected in the short term.
“Last year, we saw the global luxury market return to healthy growth, albeit at a more moderate pace than in the past,” said Claudia D’Arpizio, a Bain partner and lead author of the study.
“That trend continues in 2018, reinforcing the ‘new normal’ we predicted, led by flourishing luxury demand from Chinese consumers, the continued rise of online channels, and increasing influence from younger generations of consumers.”
Globally, the report found that the overall luxury market, which includes experiences as well as goods, grew by 5% at constant exchange rates in 2018 to an estimated €1.2 trillion.
Personal luxury goods posted 6% growth at constant exchange rates to reach €260bn and, although this positive growth rate is expected to slow to 3% to 5%, the market is forecast to be worth between €320bn and €365bn by 2025.
Online sales continued to accelerate, Bain added, growing 22% over the year to €27bn – and, while the US accounted for nearly half of the total (44%), Asia is emerging as “the new growth engine for luxury online”.
“All signs point to significant changes afoot for luxury brands over the next several years,” concluded D’Arpizio.
“They can weather these disruptions by keeping in mind three key strategies: be proactive in developing approaches to serve new customers and address market trends; be distinctive in designing a winning formula; and be next-gen minded.”
Sourced from Bain & Company, Altagamma; additional content by WARC staff