Luxury Sales on the rise?

Bain: Luxury Sales Expected To Gain 8% This Year

by Sarah Mahoney, Yesterday, 3:12 PM

The rich aren't just back, they're really back: Worldwide spending on luxury goods is expected to increase 8% this year, according to the latest forecast from Bain & Co.
Fueled by strong spending in the U.S., Europe, Brazil, Russia, China and the Middle East, the report forecasts luxury spending of €185 billion euros, or about $275.4 billion -- up from €172 billion last year. And 2010 actually came on stronger than many expected, with a 14% jump in luxury goods in the fourth quarter pushing sales past their pre-recession levels. For 2010, sales totaled €172 billion -- busting past the prior peak of €170 billion in 2007.
From 2008 to 2009, the affluent cut back sharply, with luxury sales plunging 17%.
So far this year, sales are up smartly: In both February and March, Bain says both department store and direct-owned luxury chains saw double-digit growth from the prior year. And orders for the fall season are up sharply, particularly for accessories, leather goods and hard luxury categories such as jewelry and watches. The report was released by Fondazione Altagamma, the Italian luxury goods industry trade association.
In the Americas, it predicts spending for the year will reach €52 billion, or $77.3 billion, with the U.S. continuing to hold its position as the largest consumer of luxury goods.
"Luxury has made a brilliant return to the retail stage, but the script has been re-written," Claudia D'Arpizio, a Bain partner in Milan and lead author of the study, writes in their release. "More demanding customers, generational shifts, new loyalty rules, an increasingly integrated offline and digital customer experience and the continued growth of China and other fast-growing markets are transforming the luxury industry."
It expects spending to climb 25% in China, perhaps even exceeding Japan for the first time. And Japan's sales are forecast to decline 5%, partly as a result of the earthquake, but stabilizing in the third quarter.
Worldwide, Bain predicts annual growth of between 5 and 6% through 2014.