Data by Euromonitor International focuses on China and BRIC economies.
Market research company Euromonitor International has launched its latest global data on the luxury goods industry, with sales predicted to reach US$405 billion (£319bn) by 2019.
The new research indicates that, despite Asia’s slowing growth rates, Japan’s luxury market is witnessing a long-awaited revival thanks to its favourable exchange rates.
Similarly, Euromonitor International points to income inequality in Southeast Asian and Sub-Saharan African countries as the reason for increased spending among higher-income groups in these regions.
Euromonitor International’s head of luxury goods, Fflur Roberts, commented: “Aside from the US, which, at number one, increased by US$18bn (£11.2bn), no other market came even close to that growth. However, this impressive growth fizzled out towards the end of the review period, leading many luxury brands to question their strategy for China and other emerging markets.”
Results from this year’s global data suggests China’s luxury goods market will drop from third to fourth place in worldwide rankings for 2014, especially considering slowing economic growth teamed with the government clampdown on consumption and luxury-gifting. Despite this, luxury sales in China did increase by US$9.6bn (£5.9bn) in the five years to 2014.
Luxury expenditure in China is expected to increase by 52% in real terms in the five years to 2019, driven by gains in the disposable income of 64% of the population during the same time period.
China is still on course to overtake Japan as the second biggest luxury market in the world, but this shift will now be delayed until 2019 as opposed to the previous prediction of 2016.
Additionally, Euromonitor International’s research suggests luxury markets in Asia Pacific will be hit by a new wave of consumers switching from aspirational products to more affordable items. The report argues: “Putting too much emphasis on one area might have short-to-medium-term benefits, but is likely to lead to longer-term difficulties.”
Real growth in the luxury goods market worldwide is expected to come in at 4% year-on-year in 2014, with a more positive outlook of 6% for 2015.
A similar report by the market research company in 2013, argued that the strength of emerging BRIC (Brazil, Russia, India and China) economies will account for more than 35% of projected global sales over the next five years.
Despite Euromonitor forecasting that by 2018, the United States, with a projected 34 million high-income earners, will continue to lead the luxury industry, countries with rapidly growing populations of high earners such as India, Malaysia, Indonesia, Mexico and Brazil, will offer the greatest opportunities for businesses and brands offering luxury goods and services.
Commenting on the 2013 data, Roberts commented: “According to our latest research, luxury spending in the BRIC countries experienced a massive increase of 104% over the last five years, compared to just 18% in developed markets.”
“Luxury spending in China is rising steeply despite a government clampdown on extravagant consumption. At the same time, a weaker yen is bolstering Japan’s penchant for premium brands and affordable luxury is still breaking new ground in Western Europe and North America."
India was by far the most dynamic luxury goods market over the 2008-2013 period and was forecasted to grow by a further 86% in constant value terms over the five years to 2018, followed by China at 72%, Brazil at 31% and Russia at 28%.
In 2012, Mexico overtook Brazil as Latin America’s biggest luxury goods market. With a total GDP of US$1.2 trillion in 2012, Mexico is the world’s fifth largest emerging market economy behind the BRIC countries – Brazil, Russia, India and China – and the second largest in Latin America.