Weakness in Europe and Russia to slow global luxury goods market
Cosmetics and fragrance are key categories within the luxury market, alongside clothing, and sales of such high end goods are expected to rise a maximum of 6% in the coming year.
This figure could be as low as 4%, comparing unfavourably with 2013’s growth of 6.5% - already a fall on the previous year which, despite the global recession at the time, saw double digit growth of 10%.
In a recent study presented with Italian luxury industry association Altagamma, Bain noted that European issues have been called up as a key reason behind the continued global slowdown for luxury.
Russian consumers, historically a key source of luxury sales from tourism within Europe, are travelling less to the continent due both to the political crisis and a weakening rouble, according to the study.
Russia is set to slow domestically too, with Bain forecasting a 4-6% drop in luxury sales within the country in 2014.
It’s not all bad news for the European region though: Germany was highlighted in the study as one of the few European markets where local luxury consumption is rising.
A new normal
China was positioned alongside Europe and Russia as a cause of the global slowdown, with the local market set to grow a maximum of 4%, down from 20% in 2012.
Although a drop in global growth has been seen in the last two years, Bain analysts suggest this is more due to the unusual strength of sales in 2012, with the slower growth now likely to be maintained by the market.
Claudia d'Arpizio, Bain partner, noted: "We are entering a new phase for the sector, call it a new normal.”
"There are unlikely to be more booms like the recent one in China soon, and mature markets can cope better with economic crisis, so growth should be more stable," she concluded.