Tourism in Spain and the UK is expected to lead a rebound in European luxury spending this year, while Chinese domestic consumption also increases, Bain & Co said yesterday, raising its forecast for global growth this year.
Sales of items such as designer handbags and fine jewelry are forecast to rise between 2 percent and 4 percent to as much as 259 billion euros (US$290 billion), Bain said in a report.
High-end labels, such as Burberry and Prada, found it hard to keep up the momentum last year amid flagging consumption in China and a terror-related downturn in European tourism.
Since then, the outlook has become rosier after market leaders like LVMH Moet Hennessy Louis Vuitton SE and Gucci-owner Kering SA reported first-quarter sales growth that beat expectations.
While sales should grow faster than expected overall this year, performance between brands is to become more polarized, lead author Claudia D’Arpizio said.
“Consumers are asking for more innovation and more creativity,” she said. “We are seeing a bigger gap between winners and losers, driven by the ability of brands to understand the way the consumers are changing.”
Brands across the sector have increased e-commerce investment and reinforced their offer at entry-level price points in an effort to hook younger consumers.
Through 2020, sales of personal luxury goods should grow between 3 percent and 4 percent per year at constant exchange rates, Bain said.
In Europe, recovering tourist flows and increased consumer confidence should drive growth by 7 to 9 percent at constant exchange rates this year, Bain said.
Sales should grow between 6 and 8 percent in China, Bain forecast, as efforts to bring prices in line with other regions encourage consumers to make more luxury purchases at home.
Struggling department stores and slumping tourism in the US are expected to curb luxury sales, which are forecast to decline as much as 2 percent, the study said.
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