UK Luxury Market Set to Double Over the Next 5 Years, Says Study

Bond Street London | Source: Planet Go Round

LONDON, United Kingdom — A study of the UK luxury sector expects the industry to nearly double in size over the next five years to £12.2 billion in 2017 from £6.6 billion in 2012. The 2013 UK Luxury Benchmark was jointly produced by Walpole, a non-profit industry group representing the British luxury industry, and Ledbury Research, a market research firm specialising in the luxury sector. Researchers surveyed senior management and executives of companies spanning the luxury industry, including apparel and accessories, travel and hospitality, and jewellery.

“Despite the backdrop of the Eurozone crisis and a difficult economic environment, the UK luxury industry remains extremely robust and is forecast to grow significantly in size,” said Julia Carrick, chief executive of Walpole, in a statement. Optimism is the prevailing sentiment — a full 83 percent of the brands surveyed for the study expect sales to rise in 2013.

Sales to tourists remain crucial for the industry; 64 percent of surveyed brands said they would specifically target shoppers traveling from abroad with initiatives like implementing foreign payment methods and hiring salespeople with language skills. Chinese visitors are the fastest-growing group of luxury shoppers, although Americans still comprise a considerable portion of tourism sales.

Brands are also looking to push into emerging economies. As the site of the next Summer Olympics and the World Cup, Brazil has become a key geography for luxury brands in the UK; while only 13 percent of brands surveyed currently have operations there, 52 percent have plans to enter the market. While India remains an important market, brands are finding the lack of infrastructure and navigating the regulatory bodies challenging. South Korea, Mexico, and southeast Asia were also mentioned as areas of interest.

In the UK, London is still the main centre of activity for luxury brands, although a vast majority (81 percent) have locations outside the capital. Notably, Manchester had the strongest sales outside of London, followed closely by Edinburgh.

“Behind some buoyant numbers, this year’s results reveal the key theme of innovation for the British luxury market,” said James Lawson, director of Ledbury Research, “Innovation from the brands — including their use of technology and social media — and a next generation of new and inquisitive luxury consumers who are voracious users of these new platforms.”

Indeed, growing digital capability is the highest priority for brands this year, including investing in e-commerce platforms, social media and, increasingly, mobile commerce. However, nearly all the brands surveyed (98 percent) believe that engaging the ‘next generation’ of shoppers will pose a challenge.