The luxury apparels market, by nature, is quite fragmented, with the top three companies accounting for less than 40.0% in the global market in 2015. Although Louis Vuitton Malletier SA, Kering SA, and Hugo Boos have been identified as the leading luxury brands in the world, the market continues to be fiercely competitive with local as well as multinational firms constantly trying to gain a strong foothold in this market.
Transparency Market Research (TMR), in a recent report, makes an interesting observation when it comes to companies in the luxury apparel market. Although the emergence of e-commerce has taken the retail sector by storm, luxury brands stand out as an exception to this. The nature of the luxury market is such that companies in this space have the ability to sustain themselves on their own, with little to no help from the online retail industry. A case in point would be market leader Louis Vuitton. The Paris-based luxury conglomerate, in October 2016, refused to do business with Amazon.com, saying it “did not fit” with the company’s brand.
The one strategy that does work for all companies in the luxury apparel market, however, is expansion of their brand portfolio. Taking into consideration just the top two players, each of them have to their credit a number of well-known and well-established brands. Louis Vuitton Malletier SA has Louis Vuitton, TAG Heuer, Fendi, and NUDE amongst many; Kering SA boasts of brands such as Gucci, Puma, and Christopher Kane.
TMR finds that the global luxury apparels market will amount to US$60.7 bn by 2024, rising from a value of US$1.8 bn in 2015, registering a strong CAGR of 13.2% therein.
Men and Women Account for Significant Share in Luxury Apparel Market
The global luxury apparels market includes materials such as cotton, leather, silk, and denim. Cotton leads the global market with a share of almost 36.0% in 2015 and the demand for the same stems primarily from regions such as Asia Pacific and the Middle East and Africa. Denim is anticipated to emerge as a highly lucrative segment during the forecast period, registering a CAGR of 13.8% from 2016 to 2024. As far as gender is concerned, women dominate the luxury apparels market; however, the men are not far behind. Both the segments accounted for an almost equal share in 2015.
From a geographical perspective, Europe accounts for a massive share in the global luxury apparel market thanks to the strong presence of numerous luxury brands across the region. On the other hand, Asia Pacific holds immense promise, exhibiting a healthy CAGR of 14.5% over the course of the forecast period.
Increased Presence of HNWI with a Tendency to Splurge on Luxury Items a Major Growth Driver
One of the most significant factors that drives the demand for luxury apparel across the globe is a change in the standard of living of the people. Studies have shown that the number of people living in extreme poverty has declined to a certain degree and this factor, supplemented with a rise in disposable income has had a positive impact on the luxury apparel market. Moreover, there has been an increase in the number of high net worth individuals, mainly across Asia Pacific. Asia stands out as a region with the highest number of HNWIs, in terms of both population and wealth, with China and Japan emerging as big spenders. This gives the luxury apparels market a major boost.
On the down side, high entry-level barriers are likely to blemish the progress this market has made thus far. The amount of capital required to be invested in this market is exceptionally high and companies need to constantly innovate in order to stay on top. Investments could mean in terms of maintaining the quality, history, craftsmanship, and heritage of the brand. They could also mean developing newer distribution networks and marketing channels.
This review is based on the findings of a TMR report titled “Luxury Apparels Market (Material - Cotton, Leather, Silk, and Denim; Gender - Men and Women) - Global Industry Analysis, Trend, Size, Share and Forecast 2016-2024.”
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