NEW DELHI :
Shoppers in Mainland China continued to lead growth of the luxury industry globally helping the market for luxury goods and services grow 4% at constant exchange rates in 2019 to touch an estimated €1.3 trillion, according to findings of the 18th edition of the Bain & Company Luxury Study released in collaboration with Fondazione Altagamma.
“The global luxury market confirmed this year the moderate growth rate associated with the ‘new normal’ era, mainly driven by Asian buyers," Claudia D’Arpizio, a Bain & Company partner and lead author of the study, said in a media statement on Nov. 28.
Chinese shoppers accounted for 90% of the constant growth of the market in 2019, and now account for 35% of the value of luxury goods sold. The market registered a 26% growth (at constant exchange rates) to touch €30 billion, the study said.
By 2025, the luxury customer base will expand to 450 million, up from 390 million in 2019, backed by the growing middle-class, especially those emerging from Asia. “This will further stimulate the entry-price segments, which in 2019 already represent a sizable part of the market, as well as the off-price channel, which grew by 11% at current exchange rates in 2019," the statement said.
The year that saw Chinese shoppers spend on everything from pricey shoes to jewelry, also saw sluggish growth in markets of United States and Europe.
Europe experienced a slow growth of 1% at constant exchange rates with the market reaching €88 billion in size, the statement said. In the Americas, “growth has been sluggish across the region but with an overall market size of €84 billion, it remains a core region for personal luxury goods."
Japan grew by 4% at constant exchange rates to €24 billion; while the rest of Asia grew by 6% at constant exchange rates, reaching €42 billion. The market in Hong Kong was adversely impacted by the ongoing protests that started in March this year. “The market fell by 20% in 2019 to €6 billion," the statement said.
Interestingly, younger shoppers delivered the entire market growth for luxury goods and services in 2019 and are likely to continue shaping how luxury goods are bought and sold. Specific traits such as being more socially conscious, moving to a more online-offline experience, and experiencing products as reflected by Gen Z are likely to shape the market going forward.
Millennial customers have been steady buyers of luxury, the statement said, these shoppers account for 35% of consumption in 2019 and by 2025 could make up for 45% of the market. But it’s the even-younger Generation Z that is poised to reshape the industry: by 2035 they could make up 40% of luxury buyers, the release added. “Gen Z customers are the new frontiers of tomorrow’s luxury market--and they already represent a growing portion of luxury consumption in Asian markets," said Federica Levato, a Bain & Company partner and co-author of the study. “They see themselves as critical actors of the creativity and conversations with luxury brands; they are returning to products, stores and physical interactions with brands to truly connect and engage emotionally with them."
Among personal luxury goods, shoes and jewelry were outperformers, both growing by 9% at constant exchange rates in 2019, followed by leather goods, and beauty products. Watches demonstrated a sluggish performance, declining by 2% at constant exchange rates, according to findings of the study.