No Downturn for Luxury Goods Market

Despite the sluggish global economic outlook, the luxury goods industry still has a positive outlook, with double-digit sales growth predicted for 2011.

Bain & Company, a global business consulting firm, predicts growth of 10 percent for luxury goods sales, to $265 billion, according to a new report released this week.

The “Luxury Goods Worldwide Market Study” describes the consumer segment to be stable in terms of demand for products such as luxury apparel, accessories, leather goods, shoes, jewelry, watches, perfumes, and cosmetics.

The weak economy notwithstanding, “Self-indulgency has proven to be always relevant despite economic environment,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study.

“Top brands are now master retailers as well,” D’Arpizio said in the report released by Bain. “Product still matters, but retailing strength has let luxury brands take control of their growth more than ever before.” Most growth is predicted to come from the Asia-Pacific region.

The study, presented at a conference sponsored by Italian luxury goods trade group Fondazione Altagamma, said that the Asian market will lead all others with a 16.5 percent growth rate in 2012. The markets with the slowest growth will be Europe (3.75 percent) and Japan (1.75 percent). Japan is the single largest market for luxury goods, behind the United States.

One take-home message from the analysis is that technology is an important feature that spearheads innovation and enhances customer experience at all levels.

In terms of luxury brand awareness in the digital technology space, Louis Vuitton was the leading brand in terms of apparel, whereas one of its main competitors, Hermes, was top of the list in terms of accessories. Luxury jewelry retailer Tiffany & Co. remained No. 1 for jewelry and Rolex ranked the same for luxury watches.