In October 2016, consulting firm Bain & Company, in collaboration with Fondazione Altagamma (an association of high-end Italian companies), released the 15th edition of the Worldwide Luxury Market Monitor.
According to the study, global luxury consumption has reached €1,081 billion (~$1,190 billion) in 2016, which is 4 percent higher than consumption in 2015. The largest driver of growth were sales of luxury cars (+8%) which account for €438 billion (~$482 billion) or 41 percent of the entire luxury market.
The second largest category was personal luxury goods, which have a market size of €249 billion (~$274 billion) and a 23 percent share. This category was flat at constant exchange rates compared to 2015. Consumption in Europe is rebounding but has been affected by terrorism fears and the impact from the Brexit referendum in the UK. In North America, the consumption remains depressed and was affected negatively by the uncertainty due to the US election. The Japanese market remains uneven.
Lead author of the study, Claudia D’Arpizio, predicts that the luxury market will grow at a Compound Annual Growth Rate (CAGR) of 1 to 2 percent in 2017, and then at a CAGR of 3 to 4 percent through 2020 (at constant exchange rates). Key trends driving growth through 2020 are expected to be:
- A rising Chinese middle class
- Recovery of consumers in Europe, North America, and Japan
- Generation X and Y consumers becoming more relevant
- Less sales cannibalization due to a healthier mark-down market
- Growth of e-commerce
With respect to route to market, retail and mono brand stores remain the favorite with a 29 percent share, but the rate of retail expansion is slowing dramatically. Online is the fastest growing channel globally with a CAGR of +26 percent between 2013 and 2016, and reaching a market share of 19 percent in 2016.
Source: Worldwide Luxury Market Monitor, 15th Edition – 2016
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