Published: Aug, 2016
The global luxury goods market is moderately fragmented with top twelve companies holding less than 50% of the market in 2013, according to a new research report by Transparency Market Research (TMR). Some of the key players in the global luxury goods market are LVMH, Prada S.p.A., Kering Group, Coty Inc., Rolex SA, Hermes International S.A., Compagnie Financière Richemont SA, Tiffany & company, and , The L’Oreal Group.
A TMR analyst says, “The demand for luxury goods is on the rise globally due to increasing number of high net worth individuals (HNWIs) globally.” This class of individuals is spending heavily on a range of luxury goods such as apparel and leather goods, watches and jewelry, and fragrances. While developed regions are increasingly becoming saturated for the sales of luxury goods, developing regions are exhibiting an increasing demand for luxury goods due to increasing disposable incomes and rising living standards in these regions.
Emergence of New Marketing Channels Fuels Market Growth
Within developing regions, countries such as China, India, Thailand, Indonesia, Vietnam, South Africa, and Singapore are promising regional markets for luxury goods. The steadily increasing high net worth individuals in these nations, along with the increasing GDP in these nations is opening lucrative growth opportunities for the luxury goods market. The expanding sales network of luxury brands in these countries has also made the purchase of these goods espalier for consumers.
The advances in online marketing and increasing use of digital marketing for the promotion of luxury goods is contributing to the growth of the global luxury goods market. The resilient economy of some of the major developed markets will also contribute to the healthy growth of this market.
Lack of Knowledgeable Personnel Hampers Market Growth
“Uncertain economic scenarios is one of the foremost factors impeding the growth of the global luxury goods market,” says a TMR analyst. The economic slump of 2007-2008 had a profound impact on the sales of luxury goods across the world. Currency devaluation and an inadequate number of highly-trained and knowledgeable store personnel is also hampering the growth of this market. Savvy consumer-facing marketers can decide the fate of luxury brands in nearly every market – their dearth is costing brands dearly in several promising countries.
Due to the difference in cultural leanings between consumers in emerging economies from those in developed economies, luxury brands are facing challenges in modifying their product offerings to keep up with the needs of newly-affluent consumers.
Europe Leads Luxury Goods Market in Terms of Revenue Contribution
The global market for luxury goods is expected to be worth US$374.85 bn by 2020, states TMR. Europe is expected to be the leading regional market with a revenue contribution of 31.3% to the overall market in 2020. Europe is home to some of the top luxury goods manufacturers, due to which the region has an extensive network of marketing and selling of luxury goods. The dominance of this regional segment is also attributed to its vast travel retail network and abundance of duty-free shops.
However, Rest of the World and Asia Pacific are expected to display the highest growth rate in this market in the coming years. Apparel and leather goods stood as the leading product type segment in 2013 and is expected to dominate in the coming years as well. This is followed by luxury watches and jewelry.
The information presented in this review is based on a Transparency Market Research report, titled “Global Luxury Goods Market - Industry Analysis, Size, Share, Growth, Trends, and Forecast 2014 - 2020.”
The global luxury goods market is segmented as follows:
Global Luxury Goods Market by Product Type
- Luxury Watches and Jewelry
- Apparel and Leather Goods
- Luxury Personal Care Products and Cosmetics
- Wines and Spirits
- Fragrances and Perfumes
Global Luxury Goods Market by Region
- North America
- Asia Pacific
- Rest of the World
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