Asia becomes no 1 priority market for luxury brands, while the U.S. will take years to recover
A recent study by US based BAIN consultancy reveals that out of 300 openings of luxury stores in 2009, Bain said, 15 percent will be in China, 25 percent in other Asian countries, 30 percent in the Middle East, 15 percent in Eastern Europe and 15 percent in the U.S. While luxury product sales dropped by 16%, sales in Asia increased by 10% in 2009. China and Korea remain the top Asian markets to attract luxury brands, yet smaller markets such as Mongolia and Kazachstan are drawing more interest from luxury brands. Last month, Louis Vuitton and Ermenegildo Zegna opened their first stores in the Mongolian capital of Ulan Bator, other brands are reported to follow suit.
Oliver Petcu of CPP Management Consultants Ltd, a luxury industry consultancy, believes Asia has become the number one worldwide market for the luxury industry not only because of the increasing wealth of its people but also because over 50% of luxury branded products are bought by first time customers. Many wealthy Chinese, especially from the major provinces have not travelled internationally, therefore they discover the brands once a store is opened in their city.
As for the U.S. market, the President/CEO of RICHEMONT Group, Mr Norbert Platt declared in a recent interview to the German media that it will take years to recover from the current crisis. Mr Platt explained that the attitude of many wealthy Americans has changed dramatically during the current crisis. Americans regard purchases of luxury products as ostentatious and inappropriate given the current economic conditions.