Tourism and emerging countries the driving factors in luxury market
Luxury labels will continue to reap rewarding harvests outside of their predominantly European borders. These are the conclusions of the 'Global Powers of Luxury Goods 2017' report by auditing and consultancy firm Deloitte, which shows how, once again, international tourism and consumption in emerging countries are the crucial growth drivers for the luxury industry.
"The tourist market still represents a huge growth opportunity for the luxury sector. Nearly half (47%) of luxury goods purchases are made by travelling consumers, whether in a foreign country (31%) or while they pass through airports (16%)," said to FashionNetwork.com Bénédicte Sabadie, the partner in charge of the luxury sector at Deloitte France.
The figure is actually as high as 60% if luxury purchases by consumers from China, Russia and the UAEs only are taken into account. In these countries, the share of consumers who have increased their expenditure in the last five years is 70%, compared to 53% in more mature markets such as Europe, the USA and Japan.
"These customers are consuming more, especially when they travel, because at home they do not have access to the same broad range of products, or even to the same products and brands available in more mature markets. In addition to this, the price differential still remains significant, despite the harmonisation policies adopted by some labels last year," said Bénédicte Sabadie.
The report revealed that prices can vary and, depending on the brand, they were found to be between 20% and 70% higher in China than in France. These differences explain how the luxury sector's geographical borders are being redrawn, as customers are increasingly volatile and adapt rapidly to the new opportunities offered by the market.
Another significant trend is the growing importance of digital tools. Luxury is essentially experiential, but quality remains one of its cornerstones. Though consumers, especially younger ones, have a thirst for technology and innovation, and are keen to replicate on the web the exclusive experience they enjoy in brick-and-mortar stores, high product quality remains a must, and artisanal and hand-made products are becoming increasingly captivating.
"Quality continues to be the main purchasing driver for luxury goods, in all the markets we have surveyed. Affluent Chinese consumers are the savviest in this respect: 93% of them buy luxury goods because of their high quality, 90% of them are attracted by hand-made products and 89% of them avoid buying luxury products that aren't eco-sustainable," stated the report.
"In a nutshell, this is the paradox inherent in the new purchasing behaviour of luxury consumers: while they are extremely keen on innovation, they are also strongly attracted to craftsmanship and tradition. In fact, 37% of interviewees reckon that luxury products and technology will be even more closely linked in the future," noted Bénédicte Sabadie.
In this context, consumers are expecting increasingly personalised products, thanks to the opportunities offered by the internet and by new technologies. Nowadays, luxury consumers are no longer content with finding the same type of store offering the same product range anywhere in the world. Expectations have radically changed: 39% of consumers require home delivery, 44% of them expect to receive thank-you gifts and 45% of them are asking for customised products and services.
The new challenge facing luxury brands is therefore the creation of personalised products on an extensive scale.
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