- Heidi Law |
Bain & Company has revealed a 7 percent growth of the global luxury market in constant currencies for 2018 at the Vogue Fashion Festival. Personal luxury items have yielded around 280 billion Euros worth of global revenue in the year.
Despite earlier shockwaves to luxury stock prices ignited by daigou crackdowns in China, the global luxury market continues to be bullish. “The recovery of the continental Chinese market has been confirmed in 2018, and is even accelerating”, said Joëlle de Montgolfier, the senior director of EMEA at the management consultancy, in a statement.
However, she also highlights the dangers of potential sustainability scandals. Animal welfare, leather and precious stones productions are areas that brands must be careful of, as the industry can “quickly become overwhelmed by controversies”, she warned. Not only can these issue negatively affect brands’ images, luxury industry investors nowadays are also closely scrutinising these issues on their risk assessments, reported Fashion Network.
Although the 2018 luxury market has avoided a downturn, progress is expected to slow to 4 to 5 percent over the coming years, and double-figure dynamic will no longer be realistic in the future. This number is consistent with the projection from the consultant company Ernst & Young, who predicts the global luxury market to grow at a compound annual rate of 3.4 percent, and a sales of over 490 billion Euros by 2020.
Slowing down of growth is attributed to shifts in consumer behaviour that combines high-end with affordable products, and the digitalisation of the purchase practice where price comparison is increasingly easy and commonplace.