U.K. luxury market set to grow
All signs point to growth in the UK luxury sector, bolstered by the rise of American tourist sales, according to a recent study by Wealth-X and Walpole, an alliance of 170 of Britain’s finest luxury brands.
The fifth annual UK Luxury Benchmark Study involved the participation of 68 senior luxury market professionals within Walpole’s membership, 62% of whom are either C-Suite executives or company owners. Of the respondents, 75% stated that they expected to see full year sales increase from 2014. Up to 56% said that they have increased their workforce since 2014.
London remains the country’s luxury hub, and luxury brands continue to invest in the city. Rapid wealth creation in the North of England, as well as the government’s significant infrastructure investment plans will provide further opportunities for luxury brands to expand their footprint; 34% of respondents cited Manchester as the strongest growth city outside of London, anticipating further luxury spending in the region.
“We see the UK and moreover London retaining its status as the “go-to” luxury hub for the world’s wealthy,” Madelaine Ollivier, Senior Luxury Analyst, Wealth-X, commented. “The central location of the UK and its attractive business and fiscal environment – barring a potential exit from the EU — continues to appeal to a diverse cross-section of nationalities. London remains one of the world’s most established luxury cities and its luxury infrastructure continues to make it an exciting and dynamic place to be for both brands and consumers.”
The United States has overtaken China to become the fastest growing source of tourist sales in the UK. However, Chinese shoppers remain important to the UK’s luxury sector, and brands are pressuring the UK government to simplify visa policies for Chinese visitors. Obtaining visas and exchange rate volatility are seen as key challenges to attracting international shoppers. In January 2016, the British government launched the two-year visitor visa scheme, adopting recommendations by the UKCVA (of which Walpole is a founding member) to encourage Chinese visitors.
Brands continue to increase their investment in digital capabilities and their creation of engaging digital luxury narratives in order to appeal to a new generation of luxury consumers. On average, 20% of respondents’ marketing budgets are allocated to digital. In the survey, 74% of respondents stated that the biggest impact of digital marketing was the ability to attract new customers. This was followed by brand building (56%) and driving online sales (41%). However, a store presence is still essential, and having an effective integrated digital and physical retail strategy will be a focus for many retailers throughout 2016 and beyond.