LUXURY UNLIMITED
Our summer 2011 issue of Counter Culture focuses on the continued growth of the luxury retail sector. So-called ‘luxury goods’ cover a broad range of products and services, from fashion to furniture, premium drinks to prestige cars. Luxury retail has seemingly withstood the global recession and emerged stronger than ever. Yes, there is certainly a point to make about socio-economic inequality, but traditional audiences have also fragmented and the demand for luxury now comes from a more diverse customer base. This continued growth also serves as evidence that luxury brand owners have in most cases managed to maintain growth in traditional formats while creating new revenue and brand-building opportunities through new channels and new markets.
FASHIONABLY LATE TO THE WORLD OF E-COMMERCE
Until recently, many luxury fashion brands remained suspicious of the online retailing format, preferring to use their company websites for informative rather than transactional purposes. The past couple of years, however, have seen something of a U-turn; the success of third-party e-retail sites has forced many luxury brands to rethink their online strategies. Online retail sales for Yoox.com and TheCorner.com were €163.7m, a 31.8% increase on the prior year. Similarly, before its acquisition by Richemont, Net-a-porter hit sales of £81.5m in the year to 31 January 2009, enjoying 3.3 million unique users per month. These success stories have proved that people are in fact eager to buy luxury goods online. They have also gone some way to dispelling some of the concerns that have prevented many luxury brands from moving online in the first place.
INVESTMENT IN LUXURY BEGINS AT HOME
Europe plays a crucial part in the luxury sector, especially as its countries such as France and Italy are home to many of the world’s major luxury houses. European cities have become synonymous with fashion and luxury, with key locations including London, Milan and Paris all showcasing the forthcoming ranges during their respective fashion weeks twice a year. Europe is the largest market for global luxury retailing and, like all other regions, even the home of luxury was hit by the downturn, experiencing a sales decline of $17.7bn during 2009 to then start bouncing back to pre-recessionary levels during 2010.
HIGH-END LUXURY SWITCHES ON TO HI-TECH ENGAGEMENT
From streaming runway shows to Facebook and Twitter profiles, the world of luxury fashion is in the throes of a radical 21st century-style makeover. Runway fashion shows – once the exclusive pleasure of a select few fashionistas – are now watched by thousands via live online streams, with English heritage brand Burberry charging ahead in this space. For its autumn/winter 2010 collection, the fashion house broke new ground when it streamed its catwalk show at exclusive events in five major cities using 3D Technology. The show was also streamed in traditional 2D on the company’s website, where viewers could comment, critique, and ‘like’ different pieces in real-time using Facebook or Twitter.
THE CONTINUING RISE OF CHINA
According to Verdict Research, the luxury retail market in Asia-Pacific (excluding Japan) has more than doubled over the last five years (2005–2010). More importantly, growth rates in excess of 10% year-on-year are forecast until 2014. The region is hungry for luxury goods, and with increasing wealth and spending power, there is no slowdown in sight. As expected, new demand from China is chiefly responsible for the region’s strong performance. China is now a global economic superpower and luxury retailers are investing massively in the country, all too aware that the growing middle classes of the People’s Republic have excess disposable income. By way of illustration, the number of ‘wealthy individuals’ in China is set to grow at 19.7% per year until 2014. These people (who have over $100,000 in financial assets) are the target market for high-end luxury goods.
