As the luxury goods industry aims to improve growth in 2015, companies need to address the impact of foreign exchange and implement growth strategies for key markets. The industry is expected to see an increase in growth of digital sales of luxury goods as companies boost efforts targeting online shoppers.
A Deeper Dive
Luxury Goods Growth to Slow to 3.5% in 2015 as Asia Normalizes
Amid subdued Asia demand for luxury goods at home, and political unrest in key countries, luxury goods sales growth may slow to 3.5% in 2015 to $351 billion vs. 3.9% growth in 2014, according to Euromonitor. The Middle East and Africa may lead with 5.6% growth. Falling from 7.9% growth in 2014, Asia-Pacific may gain 4.6%, along with a similar rate of growth for North America, Latin America and Eastern Europe. Western Europe, 33% of luxury sales, may see slight recovery of 30 basis points to 1.2%.
Affordable Accessories Buoy Luxury as High-Priced Clothing Flags
With the widest range of brands, and affordable entry price points for products ranging from leather bags to designer sunglasses, luxury accessories may again grow faster than the overall luxury market in 2015. At 17% of the $339 billion luxury goods market, accessories sales are forecast to rise 5.4% in 2015, according to Euromonitor. Jewelry and watches, 16% of sales, may add 3.7%, buoyed partly by a prolonged recovery in Asian watch demand. Higher-priced apparel, at 40% of sales, may gain just 2.8%.
Currency Impact a Sensitive Topic for Luxury Makers, Shoppers
Hefty price tags on some luxury goods mean visiting shoppers’ purchasing power will be exchange-rate sensitive in 2015. Western Europe, which has 33% of the global luxury market, is biggest by sales. Japan is the second-largest country for luxury purchases (9% of sales) and, aided by a weak yen, is drawing more tourists. Russians lead tourist shoppers globally, though, as in Japan, the weaker ruble has encouraged them to buy locally, which luxury stores focused on boosting growth at home.