3 Key Trends in Global Luxury
The nature of global demand for luxury is changing, and changing perhaps faster than ever before.Three studies released in the past month, from Boston Consulting Group (BCG), Altagamma/McKinsey and Altagamma/Bain & Co, have identified 3 key trends and attempted to forecast their future impact:1. The Geo-Centre of Global Luxury Demand is Shifting EastA study released in early May by the trade body Altagamma and Bain & Company predicts healthy growth for the sales of luxury goods over the next 3 years, with forecast growth of 6-7% in 2012, 7-8% in 2013 and 8-10% in 2014. But the engine of this growth will not be traditional luxury markets in the West but emerging markets in the East.Growth of 2-4% is expected in Europe in 2012, 5-7% in the Americas but 14-16% in Asia-Pacific (excluding China and Japan). In China alone, sales of luxury goods are predicted to rise from 12.9bn euros in 2011 to 16bn euros in 2012 - an increase of 24%.By 2014, Asia is forecast to account for 27% of global luxury sales, up from 19% in 2011. By contrast, the US market share is forecast to fall from 30% to 27% in the same period, Europe's from 36% to 32% and Japan's from 10% to 8%.2. The Definition of Luxury is Becoming Less About 'Ownership' and More About ExperiencesA survey of 1,000 affluent shoppers in 12 markets - including Brazil, China, France, India, Germany, the UK and the US- conducted by BCG uncovered a shift in the emphasis of luxury demand from luxury goods to luxury experiences.Of the estimated $1.4tr market for luxury goods and services, $770bn was attributed to luxury experiences such as bespoke luxury holidays. In addition, the 4% p.a. growth rate logged for personal luxury items was comfortably outstripped by the equivalent 6% expansion delivered by luxury experiences.3. Luxury Demand is Moving OnlineA study by Altagamma and McKinsey estimates that global online sales of high end offerings now accounts for 3.3% of the overall market (6.2bn euros out of a 190bn euro market).This may not sound impressive, but Altagamma/McKinsey estimated that online sales had increased at 3 times the rate of the market as a whole. In addition, online sales are expected to more than double to 15bn euros by 2016.Online activity was found to be increasingly influential on offline purchasing too. 15% of offline demand (25bn euros) was found to be directly generated by online experiences, with a further 34bn euros influenced by online activity.And there's plenty of potential too - the study found that 20% of internet users abandoned their purchases as they reached ecommerce checkouts because they were not happy with elements of the purchase process or the delivery fees demanded.The study also noted the increasing influence of social media in digital luxury marketing, with the number of brands actively using Facebook up 63% year on year and those using Twitter up by 300%.However, it was noted that despite some brands - notably Burberry, Gucci and Dior - having millions of followers, this had not yet translated into sales. The report conjectured that this may be because social media audiences were more likely to aspire towards the brand than be regular purchasers.