Bain projects global luxury goods market will grow overall by 10% in 2012, though major structural shifts in market emerge

FOR IMMEDIATE RELEASE

 BAIN PROJECTS GLOBAL LUXURY GOODS MARKET WILL GROW OVERALL BY 10% IN 2012, THOUGH MAJOR STRUCTURAL SHIFTS IN MARKET EMERGE

Strong Holiday Sales Will Cap Off Strong Performance in 2012

Milan, October 15, 2012 – Worldwide luxury goods market revenues will grow by seven percent in the final three months of 2012 versus the same period in 2011, culminating in full year growth in 2012 to 10 percent, and pushing total luxury goods revenues to an estimated €212 billion; this according to Bain & Company, the leading advisor to the global luxury goods industry, in the 11th Edition of its industry bellwether “Luxury Goods Worldwide Market Study,” which was unveiled at a conference today hosted by Fondazione Altagamma (the Italian luxury goods industry trade association). 

The 10 percent increase estimated for the market in 2012 represents the third straight year following the “great recession” that luxury goods revenues will grow annually by double-digits.  Asia-Pacific sales, driven by China, are projected to grow by 18 percent, while the Americas region is also projected to post strong gains, with revenues rising by 13 percent by year’s end.  Growth in Europe will approximately halve versus last year, expected to grow by 5 percent this year.  Bain estimates that the luxury goods market will grow, in real terms (i.e. using constant exchange rates) by four to six percent per year between 2013 and 2015, pushing the market to between €240 and €250 billion by the middle of the decade.

“Concerns about market weakness are somewhat overblown,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “But we are seeing sharp disparities between brands that are not keeping up with the quickening pace of change in the market and those that are adjusting to shifts in tastes and demographics.”

While overall growth in revenues finds its new level, however, the nature of that growth is shifting substantially in several key ways.

  1. Chinese consumers have further transformed the luxury market, with growth in domestic sales and continued voracious spending as tourists.  Greater China has bypassed Japan as the sector’s second market, behind the United States.  Chinese consumers now make half of the luxury purchases in all of Asia, and nearly one third of those in Europe.  Globally, one in four purchases of personal luxury goods comes from Chinese consumers
  2. Ecommerce is continuing to grow at 25 percent growth a year, while sales at off-price (i.e., discount) outlets will see 30 percent growth.  Together, these emerging channels amount to €20 billion, effectively the equivalent of sales in Japan
  3. The study finds a generational shift under way as young consumers seek significantly different experiences from luxury consumption, seeking uniqueness over heritage, 24/7 access over exclusivity, and entertainment over mere shopping
  4. Accessories have become the core category in personal luxury goods.  For the first time, leather goods and shoes have become the largest piece of the market, now at 27 percent of sales.  The category is seeing increasing levels of male spending, and increasing interest in higher quality, higher price items
  5. Tourists now account for 40 percent of global luxury spending.  As tourism and luxury spending become more tightly intertwined, the experiential dimension of luxury consumption becomes as critical for brands to deliver as their products

In addition, Bain’s “Luxury Goods Worldwide Market Study,” includes a wide range of additional areas of luxury goods.  Analysis and forecasts for luxury cars, wine and spirits, hotels, in-home and out-of-home food, home furnishings, and yachts all show growth, and contribute to an overall 2012 market of €750 billion of affluent spending, up nine percent over 2011.  The study suggests this figure will approach €1 trillion within the next five years.

“Fundamentals for growth remain strong, but it’s going to be a bumpy ride,” concluded D’Arpizio.  “The strategies that brands relied on to win in the past simply aren’t going to connect with the segments that will matter most in the second half of the decade.”

For a copy of Bain’s “Luxury Goods Worldwide Market Study, 11th Edition” or to schedule an interview with Claudia D’Arpizio, please contact Cheryl Krauss at email: cheryl.krauss@bain.com or +1 646-562-7863, or Frank Pinto at email: frank.pinto@bain.com or +1 917-309-1065.

Key Figures
Category                                Revenues        Growth Forecast
2012 (est)        2012

Leather Goods                          €33 bn             16%
Shoes                                      €12 bn             13%
Men’s Apparel                           €26 bn             10%
Women’s Apparel                      €27 bn             9%
Fragrances                               €20 bn             4%
Cosmetics                                €23 bn             5%
Jewelry                                    €11 bn             13%
Watches                                   €35 bn             14%

Total                                    €212bn             10%

Other Categories
Cars                                       €290 bn             4%
Wine and spirits                       €51 bn             12%
Hotels                                   €127 bn             18%
Food                                       €38 bn              8%
Home furnishings                     €18 bn              3%
Yachts                                      €7 bn              2%


Market                       Revenues        Growth Forecast
                                    2012 (est)        2012

Europe                            €75 bn                5%
Americas                        €65 bn               13%
Japan                             €20 bn                 8%
Rest of Asia                    €42 bn                18%
Rest of World                  €10 bn                 5%

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About the Bain 'Luxury Goods Worldwide Market Study'

Bain & Company, in cooperation with Altagamma – the flagship trade association for the Italian luxury goods industry – has analyzed the market and financial performance of more than 250 of the world’s leading luxury goods companies and brands. The database of companies, known as the ‘Luxury Goods Worldwide Market Observatory,’ has become a leading and much studied source for the international luxury goods industry. Bain publishes its annual findings in its ‘Luxury Goods Worldwide Market Study,’ which was first published in 2000. The study’s lead author is Claudia D’Arpizio, a Bain partner in Milan. Altagamma is led by Andrea Illy, who took on the foundation’s presidency in 2013.

About Bain & Company, Inc.

Bain & Company, a leading global business consulting firm, serves clients on issues of strategy, operations, technology, organization and mergers and acquisitions. The firm was founded in 1973 on the principle that Bain consultants must measure their success by their clients' financial results. Bain clients have outperformed the stock market 4 to 1. With 50 offices in 32 countries, Bain has worked with over 4,900 major multinational, private equity and other corporations across every economic sector. For more information visit: www.bain.com. Follow us on Twitter @BainAlerts.