Luxury Market – the Importance of Asia
Luxury Market – the Importance of Asia
2.1 Luxury Market- The importance of Asia
The luxury industry is a unique in terms of its exclusiveness. It relies strictly on marketing and promotion to a specific target market. The vast majority of the people exposed to the advertisement generally only have aspirations of one day being able to own these products, yet there is a small percentage of people having enough purchasing power to afford these luxuries.
In terms of trends,consumer demand is driving industry trends that affect apparel and footwear manufacturers. These trends “relate to the size of the various demographic groups, their particular wants, shopping patterns, and spending power. Changing styles in the workplace and leisure attire are also influencing retail and manufacturing operations” (Wagle). Industry trends include shorter cycles, price deflation, offshore sourcing, diversifying to survive, and following the demographics. 1
Nowadays the luxury industry is shifting into a different direction, companies are emphasizing on the importance of the human touch, and moreover on their history. In order to compete in such a market, luxury companies are expressing themselves in their manufacturing in quality. The luxury good consumer in looking into these attributes in a fashion house.
Luxury Trend: Tradition 2.0 – As one of the most pervasive trends in luxury, Tradition 2.0 is about revamping and re-imagining luxury. Instead of starting from the drawing board, purveyors of luxury have found success in creating new products, inspired by the old, with a new twist. Whether its sweetening the deal with perks or re-stylizing traditional luxury, brands catering to the affluent lifestyle are spinning convention to develop products and services that are grounded in familiarity while updated with a modern edge. We discover the world of glamping and find enticing ways to spice up high-end real estate deals.
Buoyed by a projected 12% year-over-year increase in sales in 2009 in mainland China and 20% growth of sales online, the decline for the worldwide luxury goods industry will be less than expected in 2009 and poised for 1% overall positive sales growth in 2010; this is according to findings from the 8th edition of Bain & Companys annual Luxury Goods Worldwide Market study. Sales for 2009 are projected to decline by 8% to 153 billion euro worldwide at current exchange rates, a 20% downward revision versus the 10% year-over-year decline forecasted in April. The authors find, however, that a full recovery will not occur until 2011 when the industry is expected to grow by 4.2% for the full year. Results of the study were presented Monday at Altagammas 2009 Osservatorio conference by Claudia DArpizio, a Milan-based Bain & Company partner and widely-recognized global luxury goods industry expert.”Luxury goods markets are stabilizing,” said Ms. DArpizio. “We are seeing less discounting and mark-downs and more signs of increasing consumer confidence. Growth will be timid in 2010 but its showing movement in the right direction.”Luxury sales in mature markets show continued softness. Bain predicts that 2009 sales will be down 16% in America, 10% in Japan and 8% in Europe versus 2008 levels. But 10% projected sales growth for luxury goods overall in Asia will partially dull the impact of those declines.Emerging markets will also see the greatest growth in new openings of directly-operated stores (DOS). Of the 300 estimated store openings globally in 2009, 15% will be in mainland China, 25 % elsewhere in Asia, 30% in the Middle East, and 15% in Eastern Europe and Central Asia. The remaining 15% will largely come from so-called Tier 3 cities in the U.S. (e.g. Denver, Tucson) and the rest of the world.”Aspirational luxury shoppers in Asia and other emerging markets are fueling sales growth in 2009,” said Ms. DArpizio. “They remain bullish on brands.”2
However, Christian Lacroix became the first big-name designer to fall victim to global economic crisis when the Paris fashion house has confirmed on May 28th that it had filed for bankruptcy. Despite reaping lavish praise for Lacroixs opulent and theatrical creations, the business never made money in its 32-year-history.
That is why French luxury group LVMH sold it in 2005 to the Falic Group, the second-largest US duty-free retailer. The new owners invested heavily in the couture business, running up its debt.
2.2 The luxury consumer- Christian Lacroix
Generally speaking, the luxury market consumer is shifting towards Asia. China has replaced the US and is now the worlds largest luxury good consumer with 27,5% of the worlds luxury goods, according to the World Luxury Association. Luxury