According to a new study, sales growth in the global luxury market will slow this year to 5 percent from 13 percent in 2011 at constant exchange rates due to lower spending rates among Chinese customers and concerns about the global economy.
Consultancy Bain & Co published a report on Monday together with the Italian luxury goods trade body Altagamma. The report showed that the first signs of a weakening began to appear in 2012, in the luxury industry’s main engine of growth – China.
According to the report, a change in government in China and a crackdown on corruption have impacted negatively luxury spending by its consumers.
The report indicated that this year, the Chinese luxury goods market is about to increase by 8 percent at constant currencies and 20 percent at current currencies to amount to 15 billion euros ($19 billion), while last year it gained 30 percent using both measures.
According to the study, Chinese consumers, many of whom shop abroad, have become No. 1 buyers of luxury goods in the worlds, getting ahead of the Japanese, the Americans and the Europeans.
Half of luxury customers in Asia and nearly one-third in Europe are Chinese purchasers.
Generally, tourists make up 40 percent of total luxury sales and in some countries, including France, they represent 60 percent. After the introduction of new and simpler visa rules, the country has turned into a top destination for Chinese tourists.
The euro zone debt slump has hit Europe hard and luxury spending growth will approximately halve in 2012 from last year to 5 percent. Moreover, the report said that Italy and Spain will go through the biggest crises.
Nevertheless, the Americas region is expected to post strong gains, with revenue growing 13 percent by year’s end.
According to the report, at current exchange rates global sales growth in the luxury market will slow this year to 10 percent from 11 percent in 2011. However, it predicts a strong fourth quarter.
Claudia D’Arpizio, a Bain partner in Milan and lead author of the study, said that concerns about market slowdown had been overstated. However, she noted that her team was noticing the sharp disparities between brands that are not keeping up with the quickening pace of shift in the market and those that are adjusting to changes in tastes and demographics.
Bain estimates that the luxury goods market will grow at constant exchange rates by 4 percent to 6 percent a year between 2013 and 2015, bringing the market to over 250 billion euros.
More data about the state of the global luxury sector will be released later on Monday when LVMH, the world’s biggest luxury group and owner of brands Louis Vuitton, Celine and Kenzo, publishes its third-quarter sales figures after market close.