Luxury market to grow 7% in 2018
Bain & Company has confirmed its outlook for 2018, at least in constant currencies. At the Vogue Fashion Festival, taking place from 9th to 10th November in Paris, Joëlle de Montgolfier, senior director of the management consultancy's EMEA practice, also announced that this year's annual report, which will be released later this month, will reveal global revenues of around 280 billion euros made through personal luxury items, such as fashion, jewellery, leather goods and beauty, among others.
It's a figure which falls comfortably within the guidance issued by the consultancy earlier this year and which corresponds to global growth of 7% in constant currencies. "However, due to the particular volatility seen in currencies this year, we will be below the 6-8% range at current exchange rates," explained Montgolfier.
2018 will therefore maintain the momentum established by 2018, incorporating a notable upturn highlighted by Montgolfier. "The recovery of the continental Chinese market has been confirmed in 2018, and is even accelerating," she said.
The health of the sector could, however, prove to be a pitfall for companies working in the luxury industry. "We're lucky that the sector is working so well, but it's also a danger. Some brands fail to gauge how urgent it is to overhaul their models," Montgolfier pointed out on the Vogue Fashion Festival stage. "We can continue to surf the wave but we have to understand that the wave won't carry everyone forever," she added, hinting at questions related to digital channels, knowing one's customer, millennials and the agility of big historic luxury houses, but also to sustainable development.
"We still haven't had a big scandal at luxury houses in terms of sustainable development. For the moment, there are relatively few questions that have been brought up, such as animal welfare, for example. And I think that brands have generally reacted quickly to this issue. But be careful, we can quickly become overwhelmed by certain controversies, in the leather and precious stones industries, for example. But clearly the potential for damage is compounded nowadays," Montgolfier explained.
It's also worth noting that, as well as having a potentially negative impact on a brand's image, these kinds of issues are also closely scrutinised by luxury industry investors in their risk assessments.
Following this year, when growth should be around 7% in constant currencies, Bain & Company estimates that progress will slow to 4% or 5% over the coming years. "We will no longer be looking at a double-figure dynamic," warned Montgolfier.
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