Greetings from Panama! I arrived at the Westin Playa Bonita resort on the outskirts of Panama City last night, just in time to attend the opening night party for the LUXURY Privé show, which opens today. If the smiles on the faces of the exhibitors and retailers shaking it up on the dance floor were any indication, the mood is remarkably buoyant.
The show, organized by JCK Events, marks the first-ever buying fair dedicated to Latin American retail jewelers, and reflects a real commitment to the global luxury market on the part of the organizers. Given the results of a study announced last week by Bain & Co. and Fondazione Altagamma, a consortium of Italian luxury goods providers, they’re on the right track.
The annual “Worldwide Markets Monitor,” released on Oct. 15, recorded a third year of double-digit growth in the personal luxury goods market in 2012, which is expected to total 212 billion euros, or $276 billion. (By “personal,” the study refers to goods such as apparel, shoes, leather goods, cosmetics, and, of course, jewelry and watches.)
While many of the findings—such as the fact that Asia remains the luxury world’s major source of growth—fall into the “tell me something I don’t know” category, several bear repeating:
- Luxury jewelry sales are expected to grow by 13 percent to reach 11 billion euros, or $14.3 billion, this year.
- Luxury watch sales are expected to grow by 14 percent to reach 35 billion euros, or $45.7 billion, this year.
- The Asia-Pacific region, driven by China, is projected to grow 18 percent this year, while revenues in the Americas are projected to rise by 13 percent.
- E-commerce is growing by 25 percent a year, while discount stores (i.e., outlets) are growing by 30 percent.
- Men are increasingly shopping online, thanks to the proliferation of dedicated sites catering to men’s fashion and accessories.
- Department stores remain a relevant channel of distribution in the United States.
- Despite the slowing in China, the Chinese are still buying—their tourist dollars have helped insulate European markets from the ongoing debt crisis.
- At 20 billion euros, New York remains the world’s No. 1 luxury goods market, while China (combined with Hong Kong) is No. 2.
- Emerging markets such as Brazil, India, South Africa, and Southeast Asia have plenty of untapped potential.
- Markets will continue to grow in 2013.
- Accessories are outperforming other categories.
- While personal luxury goods have seen a 10 percent increase over the past year, luxury hotels and luxury wines and spirits recorded even more impressive growth (18 percent and 12 percent, respectively).
- The worldwide luxury market, which includes everything from yachts to personal luxuries, is expected to total 750 billion euros, or $980 billion, this year.
Diamond earrings by Rahaminov, an exhibitor at LUXURY Privé Panama
“Concerns about market weakness are somewhat overblown,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study, in a statement. “But we are seeing sharp disparities between brands that are not keeping up with the quickening pace of change in the market and those that are adjusting to shifts in tastes and demographics.”
The study emphasized the peripatetic nature of global luxury consumers—especially those from emerging markets, who are helping to prop up sales in the battered euro zone. (An eye-opening statistic: Globally, one in four purchases of personal luxury goods comes from Chinese consumers.)
It also underscored the changing nature of demand from younger consumers, who are “seeking uniqueness over heritage, 24/7 access over exclusivity, and entertainment over mere shopping,” according to Bain.
Allow me to toot JCK’s horn for a second: We’ve covered the demographic shifts and macro-trends shaping the luxury market in considerable depth recently. For additional analysis, be sure to check out our September “Future of Retail” issue, and the Luxury Spotlight in the current October issue.
And stay tuned for an in-depth report from Panama. So far, que bueño!