Luxury Isn’t Having a Very Good Year

20/10/2016
LONDON — One trend that has gone out of fashion in the luxury world this year? Stellar sales growth. The global market for high-end personal goods is headed for its weakest year since 2009.

Thanks to a potent cocktail of turbulent currency exchange rates, political volatility in Britain and the United States, and fears about terrorism in Europe, the world’s wealthiest shoppers are being more thrifty, according to a study published on Thursday by the Italian luxury goods association Altagamma and the global consultants Bain & Co.
Sales of designer handbags, shoes, cocktail dresses and the like are expected to flatline this year at 249 billion euros, or $273.4 billion, at constant exchange rates (that is to say, excluding currency swings), according to the study. At current exchange rates, sales have slipped 1 percent when compared to the €251 billion in sales of personal luxury goods last year.
“After years of unstoppable growth, this is the new normal for the luxury industry,” said Federica Levato, a Milan-based partner at Bain. As to what that “new normal” is, here are the four main points you need to know from the 53-page report:

Currency turmoil is changing how and where people spend

Fluctuations in foreign exchange rates were the leading cause of headaches for luxury brands this year. A strong dollar led to a decline in tourism flows to the United States, for example, while in Japan, a strong yen meant that many expected visitors — particularly the big-spending Chinese shoppers — chose to head elsewhere in Asia. In Britain, the decline of the pound caused a short-term spike in spending; this week, Burberry announced a 30 percent jump in sales in its home market in its second quarter, as shoppers flocked to what had become the world’s cheapest luxury market. In dollar terms, a Louis Vuitton or Gucci handbag snapped up by a tourist in London now seems like a bargain compared with prices in other countries.

Forget Europe

Luxury sales in Britain might be performing well (for now), but on the Continent, retailers were hit hard this year by dented consumer confidence, largely because of a string of terrorist attacks across France and Germany. And while tourism by the Chinese is still growing, the pace of growth has slowed drastically, partly because of stricter visa rules in some countries. Fresh headaches are on the horizon for petroleum-producing economies (read, the Middle East), with low oil prices making consumers far more cautious when it comes to spending. Many European brands are looking to Asia to offset the declines in their home markets. This month, LVMH Moët Hennessy Louis Vuitton said that sales in Asia, excluding Japan, had improved significantly in the third quarter, but it offered a somber outlook for France in coming months.

China is on the rise (again)

After three years of stagnation, mainland China — where many Western brands had opened too many stores and an economic slowdown had damped shopper confidence — finally appears to be in recovery mode. The change is linked, at least in part, to an improvement in price disparities between China and the rest of the world. While import duties still make luxury goods in China more expensive than elsewhere, the difference now is about 30 percent. But globally, the gains from local shoppers choosing to spend closer to home have failed to offset the slowdown in purchases by Chinese tourists abroad.

Experience trumps product

Instead of handbags and shoes, shoppers shifted their sights to fast cars (sales rose 8 percent), fine dining and drinking (sales rose 4 percent) and luxury cruises (up 5 percent). No wonder Karl Lagerfeld announced plans this week to open a hotel chain, following in the footsteps of brands like Missoni, Bulgari and Versace, which have entered the hospitality business in recent years in an attempt to capitalize on the redirection of cash toward the memory bank rather than to the closet.

Fonte:http://www.nytimes.com/2016/10/21/fashion/luxury-sales-altagamma.html?mwrsm=LinkedIn&_r=0

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