Its use has almost doubled in last year
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Pictured: Luxury brands like LVMH's Bulgari are performing very strongly
Despite global economic turmoil, worldwide sales of luxury goods have continued 2010’s double-digit growth trajectory and will see a 10pc increase to €191bn in 2011, according to Bain & Company.
The company’s latest “Luxury Goods Worldwide Market Study”, which was launched this week, reveals that luxury distribution has undergone a significant shift, with 14pc growth for direct-owned stores, more than 50pc higher than the growth rate of wholesale and department stores. Direct-owned retail now accounts for nearly 30pc of luxury sales worldwide.
“Top brands are now master retailers as well,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “Product still matters, but retailing strength has let luxury brands take control of their growth more than ever before.”
According to Bain, the post-crisis world of luxury goods has also proven that luxury’s mature markets are still relevant, both in absolute terms and in impressive growth rates. Bain expects 10pc growth in Europe and 12pc growth in the Americas for 2011 at constant exchange rates, although the weakening euro eats into these growth rates by 3pc to 4pc.
Japan remains luxury’s second largest market. Declines, which stabilised to result in a flat 2010, have now reversed to 5pc growth at constant exchange rates for 2011. The over 230 brands reporting 2011 revenue for the study report a much lower impact to luxury goods sales from Japan’s March earthquake; the effects on luxury sales lasted only one quarter before this year’s growth cycle restarted.
Developing market growth (China, 35pc; Brazil, 20pc; Middle East, 12pc) is still notable, according to Bain, and remains a priority for brands. When factoring in spending in mainland China and spending by Chinese tourists abroad, luxury consumption by Chinese people is now just over 20pc of the global market.
The study also shows growth across all major luxury categories. Apparel will experience 8pc growth in 2011, driven by both menswear (9pc) and womenswear (7pc). Perfumes and cosmetics consumption will grow by 3pc globally, with much of that growth found in emerging markets such as China and Brazil.
As with 2010, however, accessories and hard luxury (jewellery and watches) are showing strongest growth. Accessories (including shoes and leather goods) are forecast to grow by 13pc in 2011, as consumers often rely on these products as an entry to luxury consumption.
Hard luxury is delivering the strongest growth for 2011, however, with 18pc estimated for 2011. According to Bain, consumers are increasingly shifting their hard luxury purchasing from unbranded to branded items, and purchasing these branded products in direct-owned stores.