Luxury retail sales are expected to grow 6 to 8 per cent annually through 2024, at least twice as fast as the 3 per cent annual growth predicted in the broader retail sector, according to market research firm Deloitte.
A new report says several emerging trends are driving growth in the market, which is seeing strong online growth and increased competition as more international brands enter the market.
“Australia has experienced an acceleration of new brands either entering our market, or expanding their existing operations in recent years,” Deloitte national retail leader David White said.
Eighty-three per cent of the top 100 luxury goods companies are international, coming from China, France, Germany, Italy, Spain, Switzerland, the UK and the US. Italy has the highest number of luxury goods companies, while France has the highest share of sales.
In Australia, the luxury market will continue to be defined by two key segments – tourists from Asia, and local domestic consumers – according to Deloitte.
“Our close proximity to Asia and, in particularly China, has seen significant growth in purchases from high spending tourists visiting and shopping in Australia,” White said.
“Retailers have responded by opening new stores in peak tourist areas, as well as ‘sixth continent’ international airports, where retailers are targeting consumer segments based on travel times, destinations and even language.”
Chinese tourists make up approximately 30 per cent of Australia’s luxury market sales, with domestic consumers contributing to the forecasted growth trajectory.
White noted the increasing influence of younger consumers and the potential for brands to go from “hero to zero” in a short period of time.
“We can expect to see more disruption, as well [as] more opportunities, for those operating in the Australian market, all of which will be good news for the Australian consumers,” White said.
According to Deloitte, the top 100 luxury goods companies generated a total sales figure of US$217 billion (AU$301.89 billion) in FY17, with LVMH Moët Hennessy Louis Vuitton SE, The Estée Lauder Companies Inc, Compagnie Financière Richemont SA, Luxottica Group SpA and Kering SA remaining the top five fashion and luxury players in the market.
Fifty-seven of the top 100 businesses increased sales year-on-year, and 22 achieved double-digit growth.