Luxury goods sales 'to drop 20pc in H1'
Dubai, April 22, 2009
Global luxury goods sales will fall 15-20 per cent during the first two quarters of 2009, shrinking to EUR153 billion ($197.3 billion) from EUR170 billion ($219.3 billion) last year, according to a report by a global business consulting firm.
Bain & Company released a semi-annual update to its ‘Luxury Goods Worldwide Market’ study (7th edition) in response to the sharp deterioration of the global economy since October 2008.
The study estimates that the worldwide luxury market will begin stabilising in the second half of the year, resulting in a net decline of 10 per cent for 2009 overall.
“This year's declines are hitting both the top and bottom lines of luxury goods companies,” said the study’s author Claudia D’Arpizio, a Bain partner and luxury goods expert based in Milan.
“Luxury shoppers are spending less, traveling less and feeling less confident. Luxury goods producers are also feeling the additional squeeze of intense pricing pressure and markdowns from retailers and higher-end department stores.”
Bain estimates a 15 per cent decline in the Americas and 10 per cent declines in Europe and Japan. These major luxury markets account for over 80 per cent of worldwide sales.
Smaller luxury markets show more promise, with projected growth of 7 per cent in China and 2 per cent in the Middle East, but these gains will provide only a small offset against steep declines in major markets.
Among the major luxury product categories, apparel will be hit the hardest, declining by 15 per cent. Jewelry and watches will decline by 12 per cent, while leather goods, shoes and accessories will decline by 10 per cent.
Luxury cosmetics and fragrances will be the most resilient categories in 2009 with sales of EUR22.4 billion for cosmetics and EUR18.4 billion for fragrances, both comparable to 2008 levels.
The differences between categories reflect a trend among luxury shoppers to switch to lower price point items while still remaining loyal to top-of-mind brands.
“One of the biggest changes we’ve seen in consumers is that ‘price’ and ‘luxury’ are no longer synonymous,” observes D’Arpizio.
The study explores further deep changes in consumer behaviour and attitude as luxury shoppers adjust to a global recessionary psychology:
• Reaching Lower. Consumers who are newly entering the luxury market, called ‘accessible luxury’ consumers, are purchasing items at the lower end of brands’ product lines
• Seeking Intrinsic Value. The most affluent, or ‘absolute,’ luxury shoppers have begun to focus more on the intrinsic quality of materials and the durability of luxury items instead of on fashion content
• Buying the Experience. Experiences are in. Consumers who value the dream offered by luxury brands, called ‘aspirational’ consumers, are increasingly motivated by service and in-store events as much as by merchandise
• Spending Discreetly. Ostentation is out. Consumers are gravitating to more discreet products, preferring understatement in what they buy and how they shop in luxury stores
• Fleeing to Value. Many shoppers across all luxury segments now wait for deeper discounts at the end of the season, or seek out discounts at department stores and outlets
“Changing values and consumer habits are creating tremendous opportunities for brands to win new customers and strengthen their relationships with existing ones. While today’s economic turbulence is requiring a hard look at costs, luxury goods producers would be wise to also keep an eye on the future,” she concluded.-TradeArabia News Service
More Retail & Wholesale Stories
- Acer targets double digit growth in Saudi
- Origin offers a chance to win luxury doors
- Big jewellery show opens in Abu Dhabi
- Casio offers G-Shock in camouflage patterns
- AdvanTag to launch mobile app in Dubai
- Bahrain Duty Free plans $2.6m revamp
- Sennheiser unveils new microphone system
- Centrepoint opens 100th store in Dubai
- Panasonic to showcase top AV solutions in Dubai
- Alhokair eyes US, UK buys; plans debut sukuk
- 20 countries back Abu Dhabi jewellery show
- SanDisk launches 128GB memory card
- Canon launches 30x zoom PowerShot
- Bin Hindi unveils new 'Twenty20' sales plan
- Nokia tops UAE mobile handsets market
- Spinneys to set up distribution centre at Kizad
- P&G wins product innovation awards
- Xerox names MEA general manager
- India's Bharti group mulls Carrefour tieup
- Etisalat opens retail shop in Dubai Mall
- Ultra wealthy to spend more on luxury goods
- Kuwait group inks JV deal with China jeweller
- MAF in deal to set up retail academy
- Samsung, UPB sign deal to supply AC systems
- Samsung showcases latest UHD monitors
- Unilever named 'employer of choice' in Saudi
- New Nokia Asha range arrives in Bahrain
- Canon launches 2 compact B&W MFPs
- MAF to build new mall in Dubai IMPZ
- Big growth seen for Mideast retail sector