Recession - What Recession? Spending on Luxury Items Topped $1.8Tr Last Year
By: Boston Consulting Group February 07, 2014
Consumers remain smitten by luxury. Their urge to splurge was revealed in a 2013 study by The Boston Consulting Group, which found that consumers spent an annual aggregate amount of more than $1.8tr worldwide on items the respondents defined as luxuries.
That figure far outstrips the approximately $390bn globally that is usually cited as total annual sales of luxury goods such as apparel, cosmetics, watches, and jewelry. Of the $1.8tr in annual luxury spending BCG has identified, sales of luxury cars account for more than $400bn worldwide, and the business of luxury experiences"”from private airline services to five-star restaurants"”is already worth almost $1tr of the total.
In this context, the luxury market continues to buck the slow- and no-growth trends typical of many other industry sectors. BCG forecasts that after the past two years of 11 percent annual growth, the personal-luxury-goods sector will expand annually at around 7 percent over the next few years, outrunning the increases in GDP seen in most economies.
But what those raw statistics don't show is how kinetic the luxury industry really is. We still see launches of lustrous new brands, bold acquisitions, equity stakes purchased by private-equity firms, and even start-up activity. Recently, LVMH MoÃ«t Hennessy Louis Vuitton spent $2.6bn to buy cashmere clothier Loro Piana and then acquired Nicholas Kirkwood, J.W. Anderson, and Hotel Saint-Barth Isle de France.