Global Luxury Goods Market to Cool in 2013, Says Bain & Company

Gucci store in Beijing | Source: Maosuit

PARIS, France — Growth in sales of luxury goods is expected to ease slightly this year, hit by subdued spending in Europe and slower growth in China, consultancy Bain & Co said in a study on Thursday.

Bain, whose forecasts are closely watched by the industry, sees luxury goods growth cooling worldwide to 4 to 5 percent in 2013 from 5 percent last year at constant exchange rates.

The consultancy, which conducted the study with Italian luxury trade body Altagamma, forecast global luxury goods sales would rise at a compound annual growth rate of 5-6 percent between 2013 and 2015 at constant exchange rates.

The total size of the market, which was 212 billion euros ($273 billion) in 2012, would reach 250 billion by mid-decade.

The study covers worldwide spending on luxury ready-to-wear, perfume and cosmetics, watches, jewelry, and accessories such as belts, ties and shoes.

In the first quarter of 2013, global luxury sales rose 3 percent at constant exchange rates and 1 to 2 percent at current exchange rates, against 10 percent in 2012 at current rates.

Bain forecast luxury goods sales would remain sluggish in Europe this year, rising by a maximum of 2 percent at constant currencies compared with 3 percent in 2012

Chinese tourists were spending less in Europe due to narrowing price gaps with goods at home and were travelling to new destinations such as Australia, it said, while local demand in Europe, particularly in the south, remained depressed.

Bain forecast growth in the Asia-Pacific region, excluding mainland China, would reach 7-9 percent this year, down from 10 percent last year at constant currencies. For mainland China, it forecast growth of 6-8 percent at constant currencies.

Watch demand in China, the industry’s biggest growth engine, dropped sharply in 2012, Bain said, as the government stepped up its campaign against corruption and conspicuous consumption.

Richemont <CFR.VX>, the world’s second-largest luxury group, which owns Cartier and Montblanc, said on Thursday that growth in the Asia-Pacific region slowed to 5 percent in the year to March from 46 percent in the previous 12 months.

Bain predicted high consumer confidence in the United States combined with store openings would help drive growth there, while demand in Brazil would remain strong. It also saw a pick up in Japan, helped by its efforts to stimulate its economy.

Editing by Mark Potter; Copyright (2013) Thomson Reuters. Click for restrictions