Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Luxury Market Heading for Weakest Year Since Lehman Crash

The global market for personal luxury goods is heading for its weakest year since 2009 as a combination of stock market turmoil, a strong dollar and a commodity-price rout curb demand.
Louis Vuitton store | Source: Shutterstock
By
  • Bloomberg

PARIS, France — The global market for personal luxury goods is heading for its weakest year since 2009 as a combination of stock market turmoil, a strong dollar and a commodity-price rout curb demand.

Sales of items such as designer dresses and shoes will rise as little as 1 percent to 253 billion euros ($280 billion) in 2015, according to Bain & Co., which in May forecast growth of 2 percent to 4 percent. The projection, on a basis that excludes currency swings, would be the weakest gain since sales fell 11 percent in the year after Lehman Brothers' collapse.

Luxury labels such as Louis Vuitton and Burberry are finding life tougher in China as a slowing economy exacerbates the effect of the government's anti-extravagance drive, hurting demand for handbags and coats. U.S. growth, meanwhile, has softened as stock market volatility and a strong dollar curb purchases by locals and tourists. Luxury sales will fall for the second straight year in China, while the U.S. won't grow, Bain said.

“It’s getting harder to compete,” Bain partner Claudia D’Arpizio, the study’s lead author, said by phone. In a best-case scenario, the market will expand 2 percent, assuming strong demand over the holiday period, she said.

ADVERTISEMENT

At least a weaker euro is helping. Currency movements will boost the value of luxury sales by 26 billion euros this year, Bain estimates. And Chinese consumers are still shopping where weak currencies give them pricing power, particularly in Europe and Japan. The researcher expects Chinese shoppers to account for almost a third of global luxury spending, up from 28 percent in 2014.

Russians, on the other hand, are conspicuous by their absence, cutting tax-free shopping in Europe by more than a third between January and August, the consultant said.

Bain expects jewelry to be 2015’s best-performing category, rising 6 percent, contrasting with a slump in watch sales caused by weakness in Asia. Items such as diamond necklaces are increasingly seen as a safe investment in an uncertain economic and financial environment, according to the consultant.

D’Arpizio said she expects growth to strengthen from the second quarter of 2016. The “new normal” for the luxury market is growth of 3 percent to 4 percent, she said. That estimate excludes the wave of Chinese middle-class consumers who could boost consumption.

Total luxury spending will surpass 1 trillion euros in 2015, led by accelerating sales of luxury cars, hotels and fine art, Bain said in the study, which it publishes twice a year with Italian luxury lobby Altagamma.

By Andrew Roberts; editors: Matthew Boyle, Paul Jarvis, Thomas Mulier.

In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Financial Markets
A financial lens on the fast-changing fashion sector, including markets, investors and deals.

The Best of BoF 2023: Diversity’s Litmus Test

In 2020, like many companies, the $50 billion yoga apparel brand created a new department to improve internal diversity and inclusion, and to create a more equitable playing field for minorities. In interviews with BoF, 14 current and former employees said things only got worse.


The Year Ahead: The Future of Fashion Deal-Making

For fashion’s private market investors, deal-making may provide less-than-ideal returns and raise questions about the long-term value creation opportunities across parts of the fashion industry, reports The State of Fashion 2024.


The Investment Giant Behind Some of Fashion’s Biggest Deals

L Catterton, the private-equity firm with close ties to LVMH and Bernard Arnault that’s preparing to take Birkenstock public, has become an investment giant in the consumer-goods space, with stakes in companies selling everything from fashion to pet food to tacos.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections