Leading authority on retailing, Verdict Research, wholly owned
subsidiary of leading market research firm, Datamonitor plc, forecasts in a new
report that global expenditure on luxury branded products will hit $450 billion
by 2012 as the rate of growth doubles.
This report, Global Luxury Retailing
2007, focuses on the retailing of luxury, high-end non-food products, in particular
branded clothing, accessories, jewellery, watches, fragrance and cosmetics distributed
by luxury retail brands that have a strong global presence. The term "market"
denotes consumer expenditure on these goods.
As wealth increases across
the globe, the demand for luxury products will accelerate with the market, currently
worth $263 billion, boosted by high demand from emerging economies, wider demand
from mature markets and new channels.
Global expenditure will grow by 71
per cent over the next five years. In its latest report, Global Luxury Retailing
2007, Verdict predicts the global market for those typical luxury goods bought
through retailers (fashion / clothing, accessories, watches and jewellery, fragrance
and cosmetics and homeware), will more than double in growth over the next five
years as consumers in emerging markets become wealthier, and luxury brands stimulate
higher spend from consumers in mature markets.
Growth of 71 per cent between
2007 and 2012 will be more than double the 30.7 per cent growth in consumer expenditure
on luxury branded products over the past five years.
Richer consumers in
fast growing economies will account for the greatest growth.
has been a major market for luxury brands, its weak economy has dampened sales
over recent years. However, the Asia Pacific region which includes China and India
but not Japan will nearly treble in value by 2012 as newly wealthy
consumers seek to underline their status with top end goods.
will account for nearly a quarter of global spending at $113 billion overtaking
the Americas as the second largest market. Indeed, including Japan, where growth
will continue to be muted, this region is in danger of taking Europe''s crown as
the most valuable market accounting for 36.2 per cent of the total by 2012
compared with Europe''s 36.4 per cent.
East Europe to lead demand
said even though Europe, home of the majority of luxury brands, is the most mature
market, it still has high growth potential outperforming most other retail sectors.
A major factor is luxury tourism new luxury consumers want to travel and
buy from brands'' home countries.
within Europe Eastern European countries will create more demand for luxury goods
and Russia will not only become a significant market, but Russians will continue
to spend their money throughout Europe. By 2012 we expect the European market
to be worth $163 billion.
global luxury expenditure growth 2002-2007 and 2007-2012 |
excluding Japan|| |
Middle East & Others|| |
Verdict Research |
both mature and emerging markets there will be greater demand for luxury products
particularly watches and jewellery.
watches move up the ladder
Verdict forecast that watches and jewellery
will become the second largest sector after fashion and clothing. Clothing commands
the largest share of the market - 44.3 per cent in 2007, but it will begin to
lose share as other product sectors increase theirs. While accessories have enjoyed
strong growth as more and more operators exploit the demand for designer handbags,
jewellery and watches will become the next ''must have'' luxury fashion items.
have been producing new high-end pieces in both jewellery and watches, which is
stimulating interest. Additionally the high intrinsic value of jewellery and watches,
because of the high cost of their components, makes them an attractive luxury
investment to a wide range of consumers - not just the fashion conscious or ultra-rich.
Furthermore, the higher usage of precious jewellery in developing economies will
boost the sector.
2: Global Luxury Expenditure share by product 2007 & 2012 |
& Jewellery|| |
& Cosmetics|| |
& Others|| |
Figures subject to computer rounding, which may affect totals|
Further growth is being generated
by brands taking greater control of their distribution channels. Luxury brands
have brought more of their retail networks under direct control, ensuring the
appropriate delivery of the brand experience and, in the process, increasing sales.
The Internet will be another channel and driver of demand. Many brands
have introduced transactional websites over recent years, and more will follow.
This will enable brands to access consumers beyond their reach via traditional
channels, and generate new revenue streams. This channel is also highly suitable
for accessories, watches and jewellery, where fit is not an issue.
is the market leader with a 10.8 per cent share of global spending. With over
20 luxury brands in its stable, including the likes of Louis Vuitton, Donna Karan,
Kenzo, Marc Jacobs, Givenchy and TAG Hauer, LVMH has built up a formidable luxury
group that not only leads the market but enjoys high operating margins.
3: Luxury brands global market shares 2007 (estinmate)|
Dior Group|| |
Dior Couture|| |
Ralph Lauren|| |
Armani Group|| |
Market Share|| |
Christian Dior comprises LVMH and Christian Dior consolidated accounts, and excludes
wines & spirits and Selective retailing.|| |
Market shares are for calendar years, based on companies'' estimated brand
sales at full retail prices|| |
Verdict Research|| |