Worldwide luxury sales will rise 4 percent to 5 percent to as much as 222 billion euros ($285 billion), excluding currency shifts, the consulting company estimated in a report published today. That compares with 2012’s 5 percent growth.
While the strength of the euro against major currencies such as the yen, the dollar and sterling led European luxury-goods makers to post “disappointing” first-quarter revenue growth, overall “the market outlook is positive,” Claudia D’Arpizio, a Milan-based partner at Bain, said by phone.
LVMH Moet Hennessy Louis Vuitton SA (MC) last month cited a decline in Japanese tourism and fewer store visitors in China for slowing sales growth, while Gucci owner PPR SA (PP) reported weaker consumption in Europe, Taiwan and Korea. Those patterns will continue through 2013, with bright spots being rising demand in Southeast Asia and in the U.S., D’Arpizio said.
The industry will expand 20 percent this year in Southeast Asia on a currency-neutral basis as destinations such as Singapore benefit from increased tourism, Bain estimates. Demand for luxury is also rising in Malaysia and Indonesia, leading companies to open stores there, the consultant said.
“We see Southeast Asia as the next engine for long-term luxury growth,” D’Arpizio said.
In Europe, where spending may not increase this year, sales are stalling as Chinese travelers reduce the amount they spend because of higher prices, Bain said. And domestic consumption in the region has yet to recover, according to the report.
Charging more in Europe to close a price gap with China and other markets means luxury brands are becoming inaccessible even to the region’s wealthy consumers, D’Arpizio said. Europeans are “trading down” to more affordable brands, she said.
Sales will rise about 7 percent in China, about a third of last year’s rate, Bain estimates. While the so-called high-end is booming, premium brands are benefiting as a new middle class emerges and as “aspirational” shoppers grow weary of heavily logoed products, according to the report.
In the Americas, demand in Brazil and Mexico will help boost spending as much as 7 percent, Bain estimates. U.S. consumers are rediscovering luxury and European brands “see room for growth” in North America, D’Arpizio said.
In Japan, the yen’s depreciation will boost domestic luxury consumption as much as 10 percent in 2013, while leading to a 30 percent to 40 percent drop in spending abroad, Bain estimates.
Still, a different attitude to luxury among young Japanese consumers compared with previous generations means the market is “a question mark going forward,” D’Arpizio said.
Leather goods will underpin this year’s industrywide sales growth, with demand for non-logoed products using precious materials leading the way, Bain said. Watches are decelerating due to destocking and cosmetics sales are also slowing, it said.
Longer term, the luxury-goods market will grow an average 5 percent and 6 percent a year through 2015 to as much as 250 billion euros, excluding currency moves, Bain estimates.
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