Monday, 20 June 2011

The Luxury Market is Turning Red

You might be forgiven for thinking we are living in a recession. Yes, that’s the time when you have to cut out the luxuries, make sacrifices and lead a meaner and leaner life. But there are people who live amongst us who are enjoying life to the full, buying luxury goods, and having a wonderful life.

Who on earth are these people? They may look like you or me, but they must really be aliens. Let’s see where they might be.

The global luxury market is estimated at £160 billion in 2011 composed of 37% in Europe, 27.4% USA, 11% Japan and 10% China, with the remainder from the Rest of the World. The overall market is predicted to double to £344 billion by 2020.

In the UK the luxury market is expected to grow 10% to £6.5 billion and will grow by a further 57% to £9.4 billion by 2015 according to a report by Walpole and Ledbury Research. A quarter of all sales of luxury goods in the UK are sold to foreign tourists who visit the country, with the Chinese being most avarious purchasers.

It is the Chinese who are set to set the luxury market alight over the next few years. Although the Chinese make up only 10% of the luxury market in 2011, they are predicted by Hong Kong Research company CLSA to grow to 44% of the market which will total £344 billion by 2020.   

Many of the top brands already have a significant amount of their sales coming from Greater China, which includes Hong Kong, Taiwan and Macau. These account for 28% of sales for Swatch, 22% for Richemont, 14% for Bulgari and 11% for Hermes. Top British brands such as Burberry and Mulberry also have significant sales figures from China.

So, the luxury markets are veering east, and the future is red. The Chinese are setting the luxury markets alight. Roll out the red carpet…..

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