A report published by Bain & Company revealed some unexpected outcomes. As per this report, the global unsteadiness and political turns have led to a decrease in the luxury market spending on goods. According to a partner and the lead author of this study, the luxury market is stuck in a holding pattern for the foreseeable future.
One of the main reasons for the weakening of this market is due to the rapid growth of online shopping. Even the wealthy prefer to purchase things just by a click. Due to this, it has made it tougher for high-end brands to command a premium because it’s easy for consumers to compare prices. This has become more challenging for luxury retailers to impress their customers.
Another reason is due to the fact that, even the rich are preferring to spend more on traveling, accommodation, dining and pampering rather than filling their closets with luxury goods. “More and more consumers are questioning the real value of luxury goods brands,” said Claudia D’Arpizio, a partner at Bain. This could have a significant impact to Maldives tourism industry where a significant growth of new luxury properties have been unveiled in the past year and additional new resorts are about to launch this year.
Looking into the Asian market for luxury goods, it has shown that Japan’s spending on luxury goods rose up to 10 % in 2016, unlike the other markets. Although the luxury spending is low at the moment, the future seems positive as a result of a large and growing middle class in China with more disposable income for luxury purchases.
However, the booming years of luxury market was from the year 1994 to 2007, which unfortunately has come to an end. The Bain & Company report states that during that 13-year period, “87% of personal luxury goods companies were able to grow, and half posted growth rates in excess of 10%.” Now, those numbers have been reduced to 50%, and 14%, respectively.
*Special thanks to Vibe Magazine
Contributing writer: Fathimath Nadha