Luxury goods not only ooze optimum quality, they are opulently priced in order to maintain its exclusivity. In the recent past, with increasing disposable income among the urban population, the demand for luxury goods has surged to new levels and will continue to expand at a healthy CAGR of 3.4% during the forecast period of 2014 to 2020, according to a recent report by Transparency Market Research (TMR). The report projects the valuation in global luxury goods market to rise to US$374.85 bn by the end of 2020. Growing number of high net-worth individuals (HNIs), advances in online marketing and digital market to promote the luxury goods, and resilient economy and currency dynamics in Asian and Latin American markets are some of the factors favoring the global luxury goods market. Moreover, due to burgeoning demand from emerging markets such as UAE, Saudi Arabia, India, Singapore, Malaysia, Thailand, South Africa, and Brazil, the luxury goods market is poised to grow rapidly.
Which segments are most lucrative?
The TMR report segments the global market for luxury goods in terms of product, into luxury watches and jewelry, apparels and leather goods, luxury personal care and cosmetics, wines, champagne and spirits, fragrances, and others including tableware and luxury pens. Out of these, the segment of apparels and leather goods accounted for an overall revenue of US$90.82 bn in 2016 and will continue to remain most profitable segment during the course of the forecast period, although the segment of fragrances as well as luxury watches and jewelry are projected for a better growth rate. The report observes that the demand for luxury watches and jewelry id driven primarily because of high spending on hard luxury goods by the consumers to acquire a certain status in the society. This trend is particularly prevalent in the development markets wherein men’s and other corporates are indulged in buying high-end watches.
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Geographically, the report studies the opportunities available in the global luxury goods market in North America, Asia Pacific, Europe, and Rest of the World, and rates Europe as the most lucrative regional market, followed by North America. The demand for apparels and leather accessories has significant demand in these two regions with developed economies. Moreover, the number of tourists increasing in Europe, which is further fueling the demand.
Who are the key player in the market?
The global luxury goods market is quite fragmented in nature with top five companies not accounting for even half of the market shares, and facing stiff competition from several regional and country-wide players who offer products of nearly equal quality at reasonably reduced cost. Some of the key players in global market for luxury goods are LVMH, L’Oreal Group, Kering (PPR), Richemont SA, and Swatch Group, Ltd. The research and development activities by these players in order to introduced advanced products to their esteemed customers is the primary strategy in the market.