According to forecasts by Bain & Co., global luxury sales will grow 10% this year to 168 billion euros (about $235 billion) nearly eclipsing the historical market peak of 170 billion euros in 2007.
While Bain says the recovery is proving stronger than the 4% increase the consultancy predicted in April and is comparable with 2008 sales, Bain expects growth to cool some what next year–partly due to the dollar continuing to weaken against the euro and because of the strength of sales in 2010. For 2011, Bain expects sales to rise by 4 to 5% which is more in line with historical rates.
Nonetheless, the forecasts show that the luxurygoods market has bounced back sharply after last year’s 8% fall in sales–the worst ever in the luxury market. The luxury market rebounded due to several key sales drivers: double-digit increases, on average, in the second and third quarter; a rapid return of consumers to brands’ direct-owned stores; continued strong growth in China; a rebound of sales in the U.S. (largest single market); and particularly strong sales of leather, shoes, and accessories.
“The main drivers are China and Asia but the real surprise has been the rebound in the United States,” said Claudia D’Arpizio, a Milan-based Bain partner, who addressed Monday the annual Fondazione Altagamma conference, where the global business consulting firm and leading adviser to the global luxurygoods industry released the 9th edition of its bellwether “Luxury Goods Worldwide Market Study.”
In spite of fears about the health of the U.S. economy, the most recent data for September show U.S. luxury department stores outperforming the rest of the retail sector. The United States grew by 12%, while the recovery in Europe was slower at 6%. Only Japan continued to contract, with a 1% fall in sales.
Luxury sales once again grew more strongly this year in China than any other part of the world, at 30%. China is set to become the world’s third biggest luxury market in five years, according to Bain.
“While the sector is not entirely out of the woods, we see strong growth signals in key markets and channels that suggest a full rebound in luxury goods sales to pre-recession levels,” said D’Arpizio.
Rise of Accessories
Although 40% of the sales revenue increase stems from the depreciation of the euro–even at constant exchange rates versus last year–the projected 2010 growth constitutes a 6% year-over-year increase. The final quarter of 2009 saw an end to a six-quarter long decline in year-over-year luxury sales, and was flat compared to the same quarter in 2008. Starting in 2010, luxury sales increased 6% in the first quarter, 16% in the second quarter, 13% in the third quarter, and is projected to grow 5% in the fourth quarter. Bain
Bain’s analysis shows the luxury rebound in 2010 hinges largely on the performance of retail stores owned and managed directly by luxury brands. Sales in this channel increased by 20%, compared to 6% increases in the department store and wholesale channels.
“The shift from wholesale to retail shows that luxury brands have much more control over their own fates, but also much more responsibility,” said D’Arpizio, lead author of the study. “We are going to see a decade where the balance shifts to brands that have the best retail management, the best shopping experience, and the greatest capacity to invest.”
Other channels are also increasing their impact. Luxury sales online are out performing overall web sales, and will grow at 20% in 2010, to 4.2 billion euros. Off-price sales account for 30% of online, versus 70% of online purchases made at full price. Discount luxury outlet stores will grow to 8.2 billion euros in 2010, having grown an average of 12% each year since 2007.
Reversal of Recession Trends
The study finds this year’s luxury rebound lifting all core product categories in the sector with accessories particularly strong. Accessories, footwear and leathergoods will expand by 16% coming close to exceeding the revenues of apparel, traditionally the largest luxury goods sector. Apparel is forecast to grow 8% for the year. Hard luxury (including watches and jewelry) is projected to grow by 13%. Perfume and cosmetics are forecast to grow at 4% for 2010.
“The rise of accessories will continue as consumers seem unwilling to compromise on bags and shoes, even when they may mix and match luxury and non-luxury items in their wardrobes,” added D’Arpizio.
Bain also predicted that purchases by men were growing faster than those by women, as men returned to buying watches, formalwear, shoes and more fashion.
“We’ve seen a number of new behaviors and trends emerge now that the crisis is reversing,” concluded D’Arpizio. “The luxury shopper of this decade is more likely to be Chinese, more likely to be male, and more likely to be young. Brands that meet the needs the needs of these new segments will be in the best position to keep growing for the next ten years.”
For commercial purposes, extract supplements can be obtained from the fruit of the pericarp. Garcinia cambogia reviews is performed by a physician Chen and Oz to prove that it is an herb for weight loss, a lot of research has been done. Studies, Garcinia cambogia extract supplementation decreases the weight of the body fat accumulation, was shown to have a positive effect on prevention. We are important substances such as cholesterol (LDL), reduces the serum leptin and triglycerides. In addition, it will increase the level of serotonin and cholesterol (HDL). The study also, Garcinia cambogia extract supplements, has proven that there are no significant adverse effects on many of the eight weeks, such as its use.