Despite lingering economic weakness in Europe, a contracting domestic market in Russia and destabilizing exchange rate fluctuations worldwide, personal luxury goods sales figures in the first quarter 2014 are in line with 2013’s full year trend of 4—6 percent.
Bain & Company, a leading adviser to the global luxury goods industry, recently released a report titled, “Global Luxury Goods Worldwide Market Study, Spring 2014 Update,” the firm called the growth a potentially “new normal” pattern for the luxury category.
Claudia D’Arpizio, a Bain partner and leader of the firm’s Global Luxury Goods and Fashion Practice, said, “With luxury goods, we are seeing the emergence of a new normal: The global market is maturing, stabilizing and consolidating.” She added, “It is becoming more resilient to economic crises, more responsive to a demanding and highly mobile global consumer base, and less reliant on market booms for growth. For all these reasons, luxury brands everywhere should be focusing on how to build growth organically.”
Accessories are expected to be the strongest driver of the market’s performance, followed by jewelry, watches and other “hard” luxury goods. Men’s bags and apparel reportedly have the greatest momentum, while womenswear and beauty products are forecast to see modest growth.
Regional figures, ranging from a projected 2014 decline of up to six percent in Russia to a record 11 percent increase in Japan, illustrated the category’s sensitive nature. The report noted that currency devaluations in Russia, Japan, Brazil and Indonesia are reducing or altering shopping and spending patterns globally, with resulting weaknesses offset by promising projections for Western Europe (2—4 percent) and strong projected growth in the U.S. (4—6 percent).
Significant price differentials driving purchases overseas made Chinese consumers the top leaders the world in terms of overall luxury consumption, and that market is projected to grow 2—4 percent in 2014. Increased tourism and travel-related bargain hunting has bolstered travel retail, outlet and online shopping, which Bain named 2014’s top performers.
Traditional channels including single and multi brand stores, and department stores are not expected to fare as well, with the report citing fewer store openings and more budget cuts on the horizon.