Luxury goods industry is feeling the loss of customers’ assets
According to information from the management consultancy “The Boston Consulting Group” (BCG), the global economic crisis has now also reached the luxury goods industry. After a slowed increase in sales in the previous year, there will be a noticeable decline in sales for the first time. When this industry will stabilize again cannot be foreseen at the moment.
“Our current analysis shows that this development is a global phenomenon that is affecting the entire industry,” says Dr. Antonella Mei-Pochtler, Senior Partner and Member of the Executive Committee of BCG. An international comparison shows that the USA in particular, but also Europe and Japan, contribute massively to this development with sales losses of 15 and 10 percent respectively. These three markets would account for 75 percent of global luxury sales. Since the slight growth in China of seven percent and in the Middle East of two percent can hardly outweigh this trend, sales at pre-crisis level can only be expected again in four to five years at the earliest.
The market for “hard luxury goods”, which mainly includes watches and jewelery, is much more affected by the economic crisis than the five times larger market for textile articles and accessories, so-called “soft luxury goods”. The reason for this is that the main target group of the affluent top income quintile is suffering from a decline in disposable income for the first time in years of steady income growth. As a result, willingness to trade up fell in the EU by 30 to 18 percent and in the US by 20 to 43 percent. In order to master the crisis, BCG recommends that companies use the right levers for portfolio optimization, brand-sensitive positioning, adapting the range, retail productivity and cash management, trying out alternative sales channels and optimizing marketing expenses.