Luxury Market Headed for Slowest Year of Growth Since 2009: BainAndrew Roberts
Worldwide luxury-goods sales will expand at the slowest pace since 2009 this year as slack Chinese consumption and the weakness of the Japanese yen weigh on growth, according to an estimate from Bain & Co.
Sales of personal luxury items such as apparel and watches will rise 2 percent to 217 billion euros ($300 billion), a fifth of last-year’s pace, the business advisory firm said today in a global report. That would be the weakest growth since sales declined about 8 percent four years ago.
LVMH Moet Hennessy Louis Vuitton SA and Kering SA this month reported slowing revenue growth as their biggest brands tightened distribution and raised prices. Gucci sales fell in China in the third quarter, owner Kering said last week. Swatch Group AG said Oct. 25 that declines in the value of currencies such as the yen are holding back growth.
The yen’s devaluation is driving more than half the differential between real and nominal growth, Bain said in today’s report. The Japanese currency has slumped 15 percent against the euro this year. Luxury spending will climb 6 percent on a currency-neutral basis, compared with 5 percent growth in 2012, according to the report.
The Americas will this year surpass Asia as the industry’s “main growth engine,” while new hotspots for demand include Southeast Asia, Australia and Africa, Bain said.
Europe will expand at the same pace as the global industry as increasing tourist flows offset a decline in discretionary spending by locals, the consultant said.
In China -- which will surpass France this year as the fourth-biggest luxury market behind the U.S., Japan and Italy -- a government crackdown on luxury spending by public officials is still weighing on gift purchases, Bain said. Consumer attitudes to luxury, meanwhile, are polarizing as shoppers tire of logos, the consultant said.
Globally, sales of the most expensive clothing are growing faster than cheaper alternatives, Bain said. Still, the discount segment is “increasingly important as part of the consumer quest for value for money.”
Women are buying more products typically associated with men such as complex watches, while men are spending more on leather goods, helping accessories remain the fastest growing -- and biggest -- category this year, according to the report.
The luxury-goods market will expand to between 245 billion euros and 255 billion euros by 2016, Bain estimates.