Emerging markets still drive growth for luxury worldwide
According to Euromonitor International’s latest research on the global luxury goods market, luxury industry growth in 2013 came from the emerging markets of China, India, Indonesia and Malaysia, where continued urbanisation, economic development and the overall love of luxury have continued to bring a large proportion of consumers into the mainstream luxury market. t.
From Mexico City to Shanghai to London, men are paying more attention to their appearance. This is especially visible in the emerging markets of Asia Pacific and Latin America. Whilst the world’s wealthiest consumers may be more discerning in their brand preferences, the emerging middle class tends to view premium brands as badges of social standing. Surprisingly, this is especially visible among male consumers, with categories like men’s luxury accessories and jewellery growing faster than women’s.
However, it is not just the emerging markets that have been attracting male attention; fashion brands have also been focusing on developing their menswear offer to include menswear-only stores in the US, with New York City being the obvious location of choice. Men in the US have been relatively underserved in designer clothing. To date, they are not being targeted by the likes of Michael Kors or Tory Burch, both affordable luxury-positioned labels. Whilst J Crew has performed well in this area, it is a premium and not a luxury brand, and Coach, despite its best efforts, has not been particularly successful with its own affordable luxury range and has no major presence in clothing and footwear.
Affordable luxury has been one of the main business trends in luxury in 2013, especially in North America, Western Europe and Japan. Rising demand for affordable luxury in developed markets is linked in part to the industry’s strategic obsession with China. Retail prices of many European luxury brands have risen sharply over the past year as part of a deliberate plan to align more closely with China, where heavy import duties push prices up. The rationale is that higher prices in Europe will encourage Chinese consumers to do more of their luxury shopping at home rather than on foreign trips.
On a global level, luxury goods sold online account for 5% of total sales; this falls heavily short of the 10% mass retail average, meaning there is much room for growth in this area, especially in emerging markets.
The impact of internet retailing is still being mostly felt in developed markets. For example, the internet accounted for 14% of all luxury retail value sales in the UK in 2013, 10% in Germany and 9% in Japan. In contrast, only 2% of retail sales in emerging and developing markets were generated through the internet on average in 2013, although the level and speed at which internet retailing has evolved in developed markets is an indication that a similar transformation is about to happen elsewhere.