June 6, 2012

How Much Do We Spend On Luxury Products?

 

The global market for luxury products is growing rapidly, bringing in annual proceeds of approximately €1.200 billion, with Europe as the leading force in providing such goods. The European luxury branch generates 3% of the GIP, but a study published by Boston Consulting Group (BCG) states that emerging countries with rapid developing economies may not be far behind, representing a latent danger for Europe.

European exports currently account for 70% of the luxury product market and along with mature clients, such as the United States or Japan, a new clientele niche is starting to develop, including countries like Brazil and China. The associate director of the French branch of BCG, Olivier Abtan, believes that the consumers’ habits are starting to change, and that currently, a big part of luxury products are being sold mainly to tourists. To illustrate this, Abtan offers China’s example, which he divides into two parts – the in-country consumers and the outside-consumers (Chinese tourists), showing that both sides are equal buyers of luxury goods. In addition to this, he points out that the latter group may already have the balance shifting towards its position.

Moreover, aside from luxury products, consumers seek more and more to enjoy luxury experiences, such as an extravagant voyage, an exclusive restaurant, an exquisite hotel or an elite event. The luxury service market is currently growing by a 50% higher rate than that of luxury goods, bringing in $770 billion annually, according to BCG reports.

This phenomenon is starting to be exploited by a series of multinational companies, such as the LVMH group, which is no longer dealing with just the luxury products market, but has also dabbed into the luxury hotel business, under the brand name of Cheval Blanc.

Paradoxically, this whole behaviour might have been triggered by the recent economy crisis, which had both the price and the value of luxury goods and services skyrocket, so that they could maintain their exclusive status.

According to a BCG study, the luxury goods market (which includes clothes, jewelry, accessories, etc.) will have risen from 3% to 7% by 2014, while the luxury services business will have reached a 12% growth by that same deadline.

 

Source: fr.fashionmag.com

Photos courtesy of: fantasticcoach.com, cdclifestyle.com, pursuitist.com