Global luxury market to grow less in 2016
The forecasts for 2016 are less positive than six months ago: it is estimated a performance similar to 2015 with a growth rate between 0 and + 2% (at constant exchange rates).
The first quarter ended with a + 1% growth in Japan and Europe, it was stable in Asia and America, while the best performing categories have been leather accessories and beauty.
“For some time we have been speaking of a luxury market under a” new normal “, which seems to have created some “abnormal” reactions visible in the changes of CEOs and designers in various luxury companies’ said Armando Branchini, vice president of Foundation Altagamma.
“The reality is that after 30 years of growth at a rate of 8-10% per year, the global luxury market has to deal with major changes taking place – explains Branchini -. It is imperative that new strategies are implemented to seize new opportunities for development. “
“The market for personal luxury goods, which in 2015 amounted to a value of 253 billion euro, with a + 13% at current exchange rates (+ 1% at constant rates), through a consolidation phase,” emphasized Claudia D ‘Arpizio, partner at Bain & Company and author of Altagamma Monitor on World Markets.
According to the Altagamma reports, the global luxury market will continue to grow in the next five years at an average annual rate of of 2-3% rate, mainly driven by China and by Chinese consumers, who are expected to represent approximately 34% of consumption in 2020, boosted by over 40 million new clients, mainly from the middle class.
The recovery of local consumption as a response to the brand strategies will also have a positive impact.
The Altagamma Consensus developed this year in collaboration with 27 international analysts, revised its forecast for 2016 downwards. Asia, North America and Latin America are expected to remain stable. By contrast other markets will grow: Japan (+ 5%), Europe (+ 2%) followed by the Middle East and the rest of the world (+ 1%).
Accessories (mainly leather-wear and footwear) and beauty products (perfumes and cosmetics) will grow by 4%. The apparel business will increase by 1%, while the art de table and hard luxury (watches and jewelry) will stagnate in 2016.
“All eyes are turned towards China, key in guiding the relaunch (of the sector), and on the recovery of the United States, where currently local consumption is not able to counterbalance the absence of tourism spending,” Bain and Co partner Claudia D’Arpizio said.