Lifestyle brands have overtaken luxury brands as the best prospect for growth in the retail sector, according to research by retail analyst, Conlumino.
Conlumino found that consumer spending on lifestyle brands is likely to grow by some 277 per cent in Asia Pacific by 2018, highlighting the potential for growth of lifestyle brands at home and overseas, particularly as the product category has overtaken luxury brands as the next key battleground in the international retail market.
Lifestyle brands tend to offer premium products priced to be more accessible to mid-market consumers. These brands appeal to shoppers by suggesting a certain identity, embodying an attainable lifestyle for consumers with increasing levels of disposable income. Examples include Mulberry, Nespresso, and Cath Kidston.
However, law firm Pinsent Masons warns that brands looking to capitalise on potentially lucrative markets must exercise caution.
“What is more challenging is getting the entry strategy right. As the Hong Kong market amply demonstrates, luxury brands have established relationships with many of the biggest local players who can open doors and, for instance, plug brands into the right shopping outlets,” said Peter Bullock, partner at Pinsent Masons.
“Lifestyle brands will need to carefully examine access points, contractual arrangements, intellectual property, financial, and potential equity investment to tap into international opportunities without diluting their brand and losing control.”
There is also a growing appetite for British lifestyle brands at home and abroad. For example, Hong Kong and Japan listed Fast Retailing has approached UK-brand Cath Kidston’s private equity backers to acquire its 65 per cent controlling stake in the company. With 75 outlets, most of which outside the UK, Cath Kidston has an established presence in Malaysia, Hong Kong, Indonesia, Singapore, Japan, Taiwan, Thailand, Korea, and China.
Cath Kidston sells home furnishings and related goods with an emphasis on floral prints.
“Lifestyle businesses tend to be more nimble compared to the luxury sector as the market is bigger and fast moving. Luxury brands require significant financial backing to develop and maintain, meaning that associated marketing and store costs are hefty. There is every indication that luxury sub-brands or diffusion lines will appear to break into the lucrative lifestyle sector,” said Bullock.