The luxury-goods industry should improve strongly by 2005 as the global economy rebounds and new sales opportunities arise, said luxury market experts at BaselWorld’s annual forum on the luxury market. Speaking were Paola Durante, chief analyst of luxury goods at Merrill Lynch in Italy; Michael J. Silverstein, vice president of the Boston Consulting Group (BCG), Chicago; and Stéphane Truchi, managing director of IPSOS, a French market research firm newly partnered with the BaselWorld Forum.
After two years of sliding global economies, they predicted, luxury-goods firms should see their fortunes improve significantly as the world economy begins recovering in late 2003, aided by the post-Iraq-war rally. By 2005, the luxury sector should see 5% annual sales growth.
Firms whose products offer emotional security and relevance to consumers’ needs will succeed best, they noted. But to beat competition and thrive as the economy picks up, luxury brands must be well managed and financially strong and embrace innovation based on market research. They also must stay focused on core business and product values while responding to changing consumer dynamics. Companies doing so will be able to grasp opportunities now emerging as economies recover. One emerging opportunity is the market segment dubbed “New Luxury”—middle-market consumers who are trading up and paying premium prices for luxury goods.
IPSOS’s research says a key target for the luxury sector is “Masters”—people 45 to 65 years old with large discretionary incomes, who are living longer, consider themselves still young, and want to live life to the fullest. Another is the 25- to 35-year-old group, though companies must “target it carefully” with products representing security, stability, and realism in a rapidly changing world. A third is China, with an emerging minimum market for luxury goods of 10 million people.