default-output-block.skip-main
BoF Logo

The Business of Fashion

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

Luxury Goods Market Hampered by Terror Threats, US Election

The terror threat in Europe, a strong dollar and uncertainty over the US presidential elections have eroded the confidence of the globe's big-spenders.
Source: Shutterstock
By
  • Associated Press

MILAN, Italy — The terror threat in Europe, a strong dollar and uncertainty over the US presidential elections have eroded the confidence of the globe's big-spenders, holding luxury purchases flat in 2016, according to a study released Thursday.

Spending on luxury apparel, accessories and other personal items is expected to hold steady at €249 billion ($273 million) this year, a study by Bain Consultancy for the Altagamma association of Italian high-end luxury producers. Add in spending on luxury cars, yachts, jets, cruises, hotels, fine art, design and food, and the market tops a stunning €1 trillion.

As political events and monetary policy exert greater influence on luxury spending patterns, brands have turned their focus to wooing buyers in their home countries rather than counting on tourist arrivals to buoy sales, said Bain partner Claudia D'Arpizio.

"This is not happening by default," D'Arpizio said. "Brands are refocusing on the local customer base and working to develop products that are more affordable and more inclusive to meet their needs."

For the first time, spending by China's super consumers shrank, albeit slightly from 31 percent of the total to 30 percent of the total. Part of the shift was due to an increase in the number of middle-class Chinese travellers, who collectively spend less than higher rollers, she said.

While US presidential elections always put the freeze on consumer spending, D'Arpizio said this year's squeeze was a little tighter due to a strong dollar, which also hurt tourist spending, and higher oil prices.

In Europe, brands are also working to cultivate local buyers as the threat of terrorism has hurt tourism. They are seeing local consumption recover in Italy, Germany, Spain and Britain. But spending remains soft in France, with terror attacks impacting both tourists' and locals' sentiment, D'Arpizio said.

Britain's decision to exit the European Union so far has proven a boon for luxury spending, with the falling pound encouraging both domestic consumption and travellers to spend.

"Currently, London is the cheapest luxury market," D'Arpizio said.

In This Article

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

More from Luxury
How rapid change is reshaping the tradition-soaked luxury sector in Europe and beyond.

Top luxury groups are buying real estate to secure landmark store locations with serious implications for second-tier players who are already struggling to stay on key luxury streets, writes Luca Solca.



Luxury brands aren’t cutting back exactly, but the days of spending ever more of the budget on custom dresses and celebrity ambassador contracts may be coming to an end.


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 Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional Summit - New Frontiers: AI, Digital Culture and Virtual Worlds - March 22, 2024