Emerging consumer markets like the United Arab Emirates, China and Russia are taking center stage when it comes to luxury brands consumption compared to more stable and mature markets like the U.S., Japan and EU markets.
According to the fourth annual Global Powers of Luxury Goods report issued by Deloitte Global, 70% of consumers in emerging markets have increased their spending on luxury brands’ shopping, while only 53% of consumers in the mature markets did the same during the period covering the last five years.
“The market in the Middle East continues to represent a big opportunity for luxury brands: luxury markets in Abu Dhabi and Dubai have helped to promote these cities as desirable shopping destinations. Well established big-name brands have performed well in the region, and tourism is a major driver of sales in Dubai. However, the market saw a significant slowdown in 2016, caused by the low oil prices, higher gold prices and an increase in the cost of living,” said James Babb, Clients and Industries leader, Deloitte, Middle East.
“The region is likely to feel the impact of political unrest as well as global economic uncertainty, but further growth is nevertheless expected as Dubai and Abu Dhabi continue to be attractive shopping destinations,” he added.
According to Babb, almost half of luxury purchases in the region are made by consumers who are travelling, either in a foreign market (31%) or while at the airport (16%).
This rises to 60% percent among consumers from emerging markets, who typically do not have access to the same range of products and brands that can be found in more mature markets.
“Travel and tourism is still a great growth opportunity for the luxury sector,” Babb concluded.
The report examines and lists the 100 largest luxury goods companies globally, based on publicly available data for consolidated sales of luxury goods in FY2015 (which are defined by Deloitte as the financial years ending within the 12 months to 30 June 2016).
Among the report’s other key findings, the world’s 100 largest luxury goods companies grew by more than 3%, benefiniting from the weakening of most international currencies against the US Dollar.
In the top 100 companies, only six reported sales decline in FY2015.
Italy remains to be the leading country when it comes to number of luxury goods companies with 26 followed by France.
The Global Powers of Luxury Goods report identifies the world’s top 100 largest luxury goods companies based on publicly available data and analyzes them from multiple perspectives. It also examines industry trends and global economic conditions.
For the “New luxury consumer” section of the report, Deloitte Global surveyed over 1,300 consumers in 11 countries (China, France, Germany, Italy, Japan, Russia, Spain, Switzerland, UAE, UK and US) to explore their attitudes to luxury goods and their purchase behavior.