LONDON, United Kingdom — There's a part of the British economy that is seldom discussed, and yet it employs more people than Britain's film, TV and music industries combined. It accounts for 8 percent of total exports and is worth over £32 billion to the UK economy. It contributes more in taxes than Premier League football and it is growing at a rate of more than 10 percent every year. That sector is luxury goods.

By any reasonable metric, Britain's luxury goods sector has, over the last five years, delivered outstanding results. New stars have emerged, including Emilia Wickstead, Orlebar Brown and Victoria Beckham. Established brands such as Jimmy Choo and Alexander McQueen continue to make impressive sales domestically and abroad — even through a period of slow GDP growth and Euro-malaise. We should be proud of these brands, their heritage, creativity, craftsmanship, quality, innovation and the contribution they make economically, culturally and to soft power diplomacy.

Why do luxury goods perform well here in Britain? London is a destination of choice for wealthy local and international customers, who seek out our deep well of creative talent and the heritage of many British brands. The financial flows in and out of London make it one of the global capitals of finance, while our diversified university system boasts fantastic arts, fashion and design schools that are the envy of the world.

But in spite of these many advantages, the sector also embodies a significant paradox. With the exception of a notable few, luxury companies from Britain struggle to achieve scale and grow into global powerhouses.

We need to show the ambition, the confidence to invest in the future.

Thanks to a recent piece of research by McKinsey & Company, we begin to understand what lies behind this paradox. To get a granular understanding of the landscape, the firm analysed the financial performance of more than 200 British luxury brands, and performed a similar exercise for French, Italian and German brands.

McKinsey also surveyed and interviewed the UK’s leading luxury goods companies. Having excluded the relatively large luxury automotive segment, most of the brands in the report are in fashion, although fine wines and spirits, beauty and art de la table are also included. The final survey’s findings were striking. As companies grow in size, the British luxury industry starts to lag behind its counterparts on the continent.

The research identified four phases of growth. Phase One companies, which have sales under £20 million, are typically entrepreneurial start-ups led by charismatic founders. The UK has 200-250 of these “brands of tomorrow,” around the same number as each of its main European peers (Italy, France and Germany). At Phase Two (up to £100 million) the UK’s 35-45 brands are still comparable with the number in Germany or Italy (although this is about half the number of those France.)

It is at Phase Three (between £100 million and £500 million in sales) that European luxury firms begin to outnumber British firms and UK companies fail to scale up for the global market. The UK has only 12 Phase Three companies, compared to Germany’s 22, Italy’s 32 and France’s 38. Phase Four companies are big global players, with revenues over £500m, which can concentrate on deepening their customer engagement. However, the UK has just four of these, compared to Germany’s eight, Italy’s 15 and France’s 17.

So how did those UK companies that have managed to break the £100m barrier succeed? Some striking common themes emerged.

The study identified five drivers of success. First, start by getting things right in the UK. Anything short of stellar domestic performance cannot be a platform for foreign expansion. A strong home market allows international development in a more strategic manner. There is one peculiarity about luxury businesses: companies can go international even when they are small and, interestingly, when UK luxury companies expand overseas, it is often the US and Middle East that are their first ports of call. Indeed 75 percent of those surveyed identified the US as key growth market for the next 5 years.

Second, nurture an iconic product: to a surprising extent, successful companies derive a majority of sales from a single product that encapsulates the brand. In 35 percent of the companies surveyed, that iconic product accounted for 60 percent of sales. But the trick is to use the iconic product as a foundation, not as a crutch.

Third, take advantage of the UK’s leading position in e-commerce. Although e-commerce is still small (accounting for 5-10 percent of sales for the brands surveyed), the UK is well positioned for an upturn in online luxury sales. The UK already had the world’s highest penetration of online luxury sales, at 11 percent, which equals the online reach of France and Italy combined.

Fourth, find managerial and business talent to complement the creative talent that is at the heart of most luxury companies. The UK is a tight market for managerial talent and small luxury businesses often struggle to attract and retain it.

And fifth, use outside investment at the right time to clear obstacles and enable key phases of growth. However, it is important to choose business partners wisely and not to take on unnecessary external investments before being ready for growth.

In addition to these success drivers, many of the report’s interviewees identified the need for an important cultural shift away from risk aversion in the UK luxury sector: “On the whole we need to show the ambition, the confidence to invest in the future,” said one chief executive. The lack of role models was also cited: “The trouble is there aren’t many great examples of large-scale success in British luxury,” said another. “As soon as there are, people will get excited and see that they can do it too.”

Overall, this research suggests to me that the outlook for British luxury brands is bright, and the opportunity is there to grow additional businesses into global powerhouses. This is an area where Britain has a distinctive competitive advantage on which we should be building. At every level of the ladder, support from government, industry associations like Walpole and funders can also improve the chances of success. The opportunity to grow more great British luxury companies is huge, and if all stakeholders play their part it lies clearly within reach.

Michael Ward is Chairman of Walpole, an alliance of 170 luxury British brands, including Alexander McQueen, Boodles, Burberry, Harrods, Jimmy Choo and Rolls-Royce Motor Cars. Michael Ward is Managing Director of Harrods.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.