The luxury retail sector will grow next year – but at a disappointingly slow rate, according to the latest data from Euromonitor.
As tough global trading environments continue to prevail – social and political unrest in Asia Pacific, economic slowdown in Latin America, and conflict in Eastern Europe will conspire to restrain growth in both key emerging and developed markets, the research house says.
“Indeed, the market continues to face headwinds from major luxury goods markets, such as France and Hong Kong, as well as other large emerging markets, such as Russia and Brazil, while instability in the Middle East continues to cloud the horizon.”
Whilst 2017 will not be a stellar year for the global industry overall, “we will see some tailwinds, with markets such as India and Mexico in a much stronger position,” Euromonitor concluded.
“At the same time, luxury brands and retailers continue to seek ways to harness social media and tap into the psyche of the digital consumer, as connectivity continues to drive new opportunities in digital innovation and growth in the omnichannel continues to reach new frontiers.
Divergence remains a key theme across the luxury markets for the year ahead with strong regional disparities in Asia Pacific appearing strong with 5 per cent growth, a marked difference to 2015, with a regional growth of just 1 per cent, reflecting the significant economic slowdown in China.
The developed regions of Western Europe and North America were significantly weaker, with both regions showing a slight downturn in 2016 with a weak Eurozone continuing to hold back regional performance and the added concerns over terrorist attacks, as well as the more recent Brexit vote, have also dampened sales. In the next five years, the US is predicted to lose its top spot in the ranking to China.
However, the disappointing data for the developed regions should not obscure the importance of these high-value luxury goods markets. These regions remain amongst the most powerful in the world and together account for over half of all luxury goods sales in 2016.
Watch Fflur Roberts, head of luxury goods with Euromonitor International, share more about the luxury sector.