GoDubai
  
  
  
  
Citylife > Press Release
  Home Contact us Add to Favourites
Most Recent Postings
More Press Releses
Featured Sections

Event Finder
A daily roundup of exhibitions, promotions and other events in Dubai and the rest of the Emirates.
Submit an Event
Latest Dubai Press Releases >>

 
  Share

United Arab Emirates, December 04, 2017 –  Luxury is back in fashion. The overall luxury market – encompassing both goods and luxury experiences – grew by 5 percent to an estimated €1.2 trillion globally in 2017. Sales of luxury cars continued to drive the market, growing at 6 percent to reach €489 billion in total. Luxury experiences remained very attractive to customers, as illustrated by sales of high-end food and wine both growing by 6 percent from last year, and sales from luxury cruises experiencing impressive 14 percent annual growth. The core market for personal luxury goods reached a fresh record high of €262 billion, boosted by a return of Chinese buying both at home and abroad as well as stronger purchasing trends in other regions.

These are the top-line findings from the 16th edition of the 'Bain & Company Luxury Study,' released in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers' industry foundation.

“On a global level, we saw some positive growth in the first half of the year, which has continued as the luxury market regains momentum.” said Cyrille Fabre, a Bain partner and the Middle East head of Retail and Consumer Product Practices. ”The Middle East market has started to stabilize and is expected to be flat in 2017 versus last year.”

Global rebound driven by sustained growth in key regions

Europe continues to bounce back, growing by 6 percent at current exchange rates and reaching €87 billion of retail sales to regain its place as the top region for luxury sales by value. Tourist flows have continued to support the market in the UK, Spain and France, and local consumption has also strengthened, particularly in Germany.

Local buying by increasingly fashion-savvy Chinese customers has boosted sales in China by a remarkable 15 percent in current exchange rates in 2017, to a total market size of €20 billion. Buying abroad has also increased, with the share of global personal luxury purchases by Chinese nationals reaching 32 percent in 2017.

The rest of Asia (excluding Mainland China and Japan) has also had a strong showing, growing by 6 percent. A recovery in Hong Kong and Macau helped push growth into positive territory with market size reaching €36 billion this year.

A currency-driven boost in the second half of the year and increasing Chinese spending propelled Japan to 4 percent growth in current exchange rates to €22 billion this year.

Going forward, detached millennial customers will pose a challenge for brands in this market.

The American (both North and South America) market has struggled but still managed to finish the year in positive territory, growing by 2 percent. At €84 billion, it remains a crucial market for luxury brands that still face with a struggling environment for department stores. Canada and Mexico are among the bright spots in the region.

In other regions, growth was flat at 1 percent, with the Middle East restrained by economic uncertainty.

How customers are buying luxury

The retail channel grew 8 percent in 2017 alone. Of that, 3 percent came from new-store openings and the remaining 5 percent came from like-for-like sales growth. Wholesale channels grew at only 3 percent, driven by a strong performance of specialty stores but partially offset by the disappointing performance of department stores globally.

The relentless march towards online sales continues, with sales jumping by 24 percent in 2017. The U.S. market makes up close to half of online sales – which represented €23 billion in total – but growth was particularly strong in Europe and Asia. Accessories remain the top category sold online, ahead of apparel; beauty and hard luxury (jewellery and watches), are both on the rise. Brands are finally starting to proactively make their mark in this channel by establishing their own websites, which now account for 31 percent of sales.

Bain estimates that online sales for personal luxury goods will make up 25 percent of the market by 2025, with stores still accounting for 75 percent of purchases.

“It's more than just the millennials – we think that it's actually about the ‘millennial state of mind',” said Fabre. “This means that while the millennial generation will continue to be important, the way that they shop has permeated other generations as well. Brands need to think about telling their own differentiated story online and in-store, and for those who manage to do that, we see growth ahead for the personal luxury goods market.”

Who are today's luxury customers and what are they buying?

Winning brands are tailoring their strategies to specific categories and creating an ecosystem where every interaction with the customer has an impact in telling the brand's story.

Shoes, jewellery and bags ranked as the three fastest-growing categories this year, but apparel, beauty and watches still account for the bulk of the market.

Luxury brands are reinterpreting streetwear in an attempt to appeal to younger consumers, with T-shirts, sneakers and down jackets among the standout categories.

The main growth engine of the luxury market is a generational shift, with 85 percent of luxury growth in 2017 fuelled by Gen Y and Gen Z.

The future of luxury

Bain expects this positive growth to continue at an estimated 4 to 5 percent annual growth rate in the next 3 years, with the market for personal luxury goods reaching €295-305 billion by 2020.

While the industry remains polarised between winners, who are experiencing growth, and the losers, are challenged by sales declines, the market conditions are evolving in a positive direction. Nearly two-thirds of brands (65 percent) experienced growth in 2017 – up from only 50 percent in 2016.

Profitability levels remain high on average (around 19 percent of operating profits in 2017). However, the polarization phenomenon is even more skewed for profitability than for revenue growth: among the winning brands in 2017, only one third was able to also grow their profits.

“The Middle East market has reached an inflection point. Many brands have now reduced the price gap versus Europe and sales have started growing again. But the growth is still very volatile across categories and brands, not everyone wins. With the entry of Amazon, the launch of Noon, Ounass, Net-a-porter and others, the ecommerce penetration will quickly catch up with European levels thus absorbing a large part of the market growth” said Fabre.



Posted by : GoDubai Editorial Team
Viewed 2836 times
Posted on : Monday, December 4, 2017  
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of GoDubai.com.
Previous Story : Abu Dhabi-based sustainability initiatives pledge to make a difference at Women's Economic Empowerm...
Next Story : Sharjah Ruler Attends the First Women's Economic Empowerment Global Summit Inaugural Ceremony
Email this article Print this article

Share this article with your friends and followers
NewsVine

Comments

Back to Top  
Most Viewed Press Release posted in the last 7 days
Mouawad Acquires The 51.38 Carat Dynasty Diamond From ALROSA
Panasonic's latest LUMIX DMC-TZ220 is the Ultimate Travel Companion
Summer Spirit
Introducing the GUESS Jeans Fall 2018 Collection
Instantly Refreshed Hair with HASK
Build Your Perfect Skincare Routine with Essentials from Glambeaute.com
Joyalukkas brings joy to hundreds around the world with summer gold bar giveaway
How to choose the right mascara
Cerruti 1881 MOLVENO timepiece and cufflinks
Kaya Skin Clinic's Expertise is pushing the Boundaries of Botox
Tissot Chrono XL NBA Team Collection Sporty Gets Smart
Hour Choice presents Coach Astor Collection
Transform your look with the ‘Perfect Brows'
Creating #futureclassic: Swatch Launches Skin Irony Collection
Joyalukkas adds a new destination for jewellery lovers in Al-Balad, Jeddah, KSA
Head to Modhesh World for Summer Fun Before the School Run
Delicious Whole Cakes at Sophie's Café from AED99
Carl F. Bucherer Presents Adamavi Collection
13 Emirati Authors Launched into the Portuguese Book Market
Never Run Out of Space for Those Joyful Summer Holiday Memories With Western Digital
Favourite florals: Bloom with our top floral picks from bebe
Business Wear by Hugo Boss
Ferrari introduces the world's first low-bake paint technology
The new Rado HyperChrome Chronograph in bronze and high-tech ceramic
Scuderia Ferrari presents ASPIRE collection
“The world is thirsty for an Arab superhero"
Carl F. Bucherer's Global Brand Ambassador Li Bingbing and Her Carl F. Bucherer ...
The Marriott International cyclist team completes 600km R2A cycle challenge
Joyalukkas opens newest showroom in Kuwait at Farwaniya
New Addition to the HUAWEI Nova 3 Series: On-trend and fashionable HUAWEI nova 3...
Calligraphy, etching and Palestinian embroidery: Learn it all at Tashkeel this S...
Nazih Introduces New Dr. Renaud Skincare Range
Big Android Breakthrough: Huawei's power packed GPU Turbo upgrade will turn you...
‘The Little Things' That Makes Summer All The More Enjoyable
XTouch Announces the Launch of the Robot Family Range of Rugged Mobile Phones
Let your kids enjoy some dancing at James & Alex Dance Studios
MEFMA reaffirms commitment to promote entrepreneurship & innovation across local...
The 2nd Edition of the Phanes Group Solar Incubator set to kick off 7th August 2018
du LaLiga HPC Top Talents Arrive in Spain for 21-day Annual Scouting Camp
Picking the Perfect Coffee Table with Home and Soul Dubai
Hilton Launches New Platform Dedicated to Offering Guests Bespoke, Unforgettable...
Danube Properties' Dh550 million Lawnz project at International City, sold out i...
VIP Golf Austin Offers Golf Packages For the Avid Tourist
Traditional Thali Indulgence at Antique Bazaar
Celebrate India's Independence Day with Sparkles of India
Dubai Judicial Institute collaborates with Union Coop to support the 7th Dubai J...
Advanced Treatment to Tackle Orthopaedic Issues in Adults Take Center Stage at C...
FREE DANCE WEEK is back at James & Alex Dance Studios
Dubai Tourism Publishes ‘12 Steps Towards Sustainability' Manual to Guide Hotels...
Fitness in DXB to Launch ‘the Pursuit of Happiness' Evening for Yoga and Inspiration