Watch sales lead boom in luxury trading

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LVMH watch sales up as consultant identifies market as growth spot.

Luxury watch and jewellery sales are set to increase 18% by the end of the year as brands enjoy a surge in sales that is far outstripping other areas of luxury retail goods.

A new report from consultancy firm Bain & Co. revealed that sales of high-end brands will peak at £166.26bn this year. In the 10th edition of Bain’s Luxury Goods Worldwide Market Study, the company claims that watch and jewellery brands have the strongest sales growth within the luxury sector, outselling fashion, accessories and cosmetics.

Bain & Co. forecasts growth of 18% for watches and jewellery in 2011 as consumers migrate to branded luxury purchases, trusting that brand names mean quality of product. This is said to be especially true in Asia, where luxury goods from the likes of Louis Vuitton and A. Lange & Sohne have been soaring.

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Luxury conglomerate LVMH’s watch and jewellery sales have increased 26% in the first nine months of 2011, with total group sales increasing 15% in the same three-quarter period.

LVMH said that it is enjoying encouraging sales momentum driven by strong sales in Europe, Asia and the US. It added that sales in Japan have now started to bounce back as the country recovers from the damage wrecked on it by this year’s tsunami.

The watch and jewellery division at LVMH hit turnover of £1.05bn. Despite being the smallest sector of the group, it showed the largest percentage growth.

Bain & Co.’s report described a shift in the retail distribution of luxury goods from wholesale channels to own-store boutiques and forecasts 14% growth for brand-owned stores, which is 50% higher than the growth forecast for third-party retailers. Bain & Co. also estimates that own-store boutiques now represent 30% of luxury sales worldwide.

LVMH’s TAG Heuer has said it will focus on building its female offer with an extension to its Formula 1 jewellery line as well as bolstering its presence in Asia, again a key market for luxury and one continually mentioned in watch brands’ growth plans.

LVMH gave a positive outlook for the remainder of the year and said that it will continue its “proactive strategy focused on innovation and targeted geographical expansion in the most promising markets”.

Claudia D’Arpizio, Bain & Co partner and lead author of the Luxury Goods Worldwide Market Study explained: “Top brands are now master retailers as well. Product still matters, but retailing strength has let luxury brands take control of their growth more than ever before.”

The report’s findings were published in the same week that the leading 35 luxury watch and jewellery brands were listed as part of a digital intelligence survey lead by L2, which named Jaeger-LeCoultre, Cartier (below) and Omega as leaders in the online watch retail market. The brands were praised for innovation online with regards to marketing products and use of social media.

Watch sales also seem to be robust at the fashion end of the market with some encouraging figures released this month. Middle market fashion-led watch retailer Shade Station posted impressive results with watch sales up 45% this year. It has now opened a larger shop space to accommodate incoming watch brands as it expands.

Shade Station co-managing director David Allen said: “I would be highly surprised if watch sales didn’t continue to grow and more traditional jewellers look to switch over to fashion brands.”

Shade Station sells a number of watch brands including D&G, Marc by Marc Jacobs and will welcome U-Boat to its collections in the coming weeks. “U-Boat will be the top-end of what we’re about,” said Allen. “It will be niche for us, not high volume but a natural progression for consumers who have previously bought into brands such as Welder, U-Boat’s younger brother brand.”

Allen said the company will expect to start recording a Christmas sales boost from mid-November as shoppers start gift buying from its range of 15,000 SKUs. “People want to buy into a brand and fashion watches sit perfectly with luxury watch brands as more so than ever people want not one watch but several with different styles of colours that they can wear to match what they are doing,” he said.

 

 

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