Strong growth is expected for the global luxury market, but China may be falling short of expectations, according to a new report from Euromonitor.
Euromonitor forecasts the global luxury market to reach $405 billion by 2019; meanwhile, luxury sales growth in China is expected to moderate to 4 percent this year and 6 percent in 2015. Luxury sales in China had increased 11.5 percent to $9.6 billion between 2009 and 2014, according to Women’s Wear Daily.
The United States remains the world’s biggest luxury market at $78 billion, which is more than double that of Japan, the second biggest market.
Despite the slowdown in luxury spending, China is still on course to overtake Japan as the second largest luxury market. However, that milestone has been pushed back to 2019 from 2016, due in part to a more positive forecast for Japan.
The projected large drop in Chinese luxury spending can be misleading. Chinese consumers still have a huge appetite for luxury goods, but they are spending abroad.
“It is estimated that Chinese consumers spent upwards of $45 billion on luxury goods outside their own country in 2012, which was over double the value of the domestic Greater China market,” said Fflur Roberts, Euromonitor’s head of luxury goods, according to Luxury Daily.
For brands looking for long-term growth, Euromonitor indicated that they need “broad geographic and category spread” and that “putting too much emphasis on one area might have short-to-medium-term benefits, but is likely to lead to longer-term difficulties.”
image credit: flickr/kevin dooley