According to Deloitte’s recent ‘Global Powers of Luxury Goods’ report, the economic environment for luxury brands continues to face “slow growth in major developed economies”.
A backdrop of uncertainty has influenced several key international luxury markets, with reluctance from some luxury tourists to travel to key shopping destinations in the USA and Europe due to political factors and perceived threat of terrorism.
In contrast, Australia has continued to experience a myriad of positive economic conditions; robust and enduring population growth, heightened economic outlook and increased tourism visitation and spend underpinned by international traveller confidence.
When coupled with the range of international luxury brands able to enter or expand in the Australian market, and the attractiveness of Australia to both retailers and consumers means Australia may indeed outperform predictions and the performance of other developed countries.
Overall, growth is forecast for the luxury market 2017-2018. A firm rebound of Chinese purchasing power, both at home and overseas alongside increasing consumer confidence is predicted to boost the global personal luxury goods market in 2017 [GS1] to $254-259 billion.
So, what’s next for luxury retail?
- Off-price and digital – Online sales is expected to be the channel with highest growth in the coming years, followed by off-price stores. Physical monobrand stores will be the real playground for luxury brands, although their footprint may be approaching saturation.
- Red, white and blue – While the USA remains the largest market for personal luxury goods, a combination of factors are all likely to influence growth.
- A millennial state of mind – Millennials and Gen Z will represent 45% of the global personal luxury goods market by 2025. From a consumer behaviour perspective, a millennial ‘state of mind’ is more accurate than a demographic view defined by age alone and must be incorporated in to a savvy retail strategy.
For more information and current opportunities, click below for contact details.
National Director, Head of retail leasing
Like what you see? Check out The Retailer: Focus on Food and Beverage