Mideast luxury goods market grows 15pc
Dubai, December 20, 2012
The Middle East luxury goods market has achieved a growth of 10 to 15 per cent this year as compared to 2011, establishing the region as the 10th largest luxury goods market in the world; according to a recent study by Bain & Company.
The 11th edition of the “Luxury Goods Worldwide Market Study,” was unveiled at a recently concluded conference hosted by Fondazione Altagamma (the Italian luxury goods industry trade association).
The report stated that personal luxury goods spending in the Middle East has reached Dh30 billion ($8.17 billion). It revealed that worldwide luxury goods market revenues will grow by 7 per cent in the final three months of the year versus the same period in 2011, culminating in full-year growth in 2012 of 10 per cent, and pushing total luxury goods revenues to an estimated €212 billion.
The 10 per cent increase estimated for the market this year represents the third straight year following the “great recession” that luxury goods revenues will grow annually by double-digits.
Asia-Pacific sales, driven by China, are projected to grow by 18 per cent, while the Americas region is also projected to post strong gains, with revenues rising by 13 per cent by year’s end.
Growth in Europe will approximately halve versus last year, expected to grow by 5 per cent this year. Bain estimates that the luxury goods market will grow, in real terms by 4 to 6 per cent per year between 2013 and 2015, pushing the market to between €240 and €250 billion by the middle of the decade.
“Concerns about market weakness are somewhat overblown,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “But we are seeing sharp disparities between brands that are not keeping up with the quickening pace of change in the market and those that are adjusting to shifts in tastes and demographics.”
Cyrille Fabre, Bain & Company partner who leads the retail & consumer products practice for the Middle East, said: “The Middle East has been a key growth market for luxury goods and will continue to attract major brands in the long term. The new Luxury Goods Worldwide Market Study has reported that the Middle East market will grow by up to 15 per cent and become the 10th largest in the world, strongly validating the immense market potential of the Middle East.”
“The robust growth outlook will certainly be a key factor in generating greater global attention towards the region’s luxury goods sector.”
Analysis and forecasts for luxury cars, hotels, in-home and out-of-home food, home furnishings, and yachts all show growth, and contribute to an overall 2012 market of €750 billion of affluent spending, up 9 per cent over 2011. The study suggests this figure will approach €1 trillion within the next five years.
“Fundamentals for growth remain strong, but it’s going to be a bumpy ride,” D’Arpizio added. “The strategies that brands relied on to win in the past simply aren’t going to connect with the segments that will matter most in the second half of the decade.” – TradeArabia News Service