Luxury retail to grow 3.4 percent annually

The global luxury goods market is predicted to be valued at 374.85 billion dollars by 2020, according to a new report by Transparency Market Research.

The report suggests that the luxury goods sector is expected to experience a compound annual growth rate of 3.4 percent from 2014 to 2020, however it does add that the European and US luxury markets will experience slower growth compared to the rest of the world, yet in terms of revenue, Europe will remain the largest.

Assistant manager of consumer goods at Transparency Market Research, Gaurav Bhushan, said: “At present we believe that the market in US is bit sluggish and we believe that increasing trend towards middle class and increasing bandwidth of products with prices will help luxury goods manufacturers to sustain in US market.”

It is the mix of both evolving and developed countries in Europe that has created alternatively opportunities for both major and local players of the industry. It means that businesses can target developing markets and untapped regions.

Bhushan explains: “Europe has a mix breed of developing as well as developed countries. Local players have dominated the market in developing regions but major players such as LVMH and Kering have targeted Scandinavia, and other untapped regions in Europe.”

The report also revealed that Europeans are changing their luxury spending habits, switching from physical luxury goods to experiences instead. It is the younger affluent individuals that the report suggests should be targeted by the sector and the boost in consumer confidence will help fuel additional growth in developed markets.

Another strong driver of growth for the luxury industry continues to be tourism, as travellers from China, Brazil, Russia, South Africa and India spend money in duty free stores, as they have become increasingly brand conscious and aware that spending overseas will mean smaller duties and taxes.