Has the luxury market turned a corner, helped by a recovery in sales in mainland China and elsewhere? After decreasing by around one percent in 2016 – the first decline in seven years – the personal luxury goods market appears to be turning around, according to new research from the business consultancy Bain & Co.
The first quarter of this year has seen growth of around 4 percent – albeit aided by weak comparisons from the same period last year when acts of terror combined to batter sales. Nonetheless, Bain & Co forecasts a 2-4 percent growth rate for 2017, and sales rising to €254 billion-€259 billion. Further afield, Bain expects luxury sales globally to reach $290 billion within three years.
Growth this year has come about as a result of renewed appetite for luxury goods on the part of consumers in mainland China at home and on overseas trips. Chinese consumers account for one in three luxury purchases globally and will continue to comprise a major source of overseas tourist flows. A corruption crackdown over the past two years or so has had a noticeable impact on sales to Chinese buyers, but the increasing tendency for Chinese buyers to acquire luxury goods at home is seen driving growth of 6-8 percent this year for the mainland China market. Meanwhile, sharp declines in sales in Hong Kong and Macau in the past several years appear to have been curbed, although the situation remains fragile.
China continues to play a leading role in the global luxury market, writes Federica Levato, partner at Bain & Company. “The relevance of Chinese consumers, locally as well as abroad, will still be high in the market and will continue to deeply shape the industry in the coming years. The mainland China market is on a positive trend and we expect it to be maintained throughout this year, fuelled, among other factors, by the repatriation of local consumption,” she commented. Apart from mainland China, however, Bain predicts the Asian luxury market will shrink by 2 to 4 percent because of falling tourism numbers in Taiwan and Southeast Asia.