International spending on luxury goods often tracks movements in worldwide travel. A recent report sheds light on how travel and high-end shopping are intertwined.
Deloitte’s “Global Powers of Luxury Goods 2017” examines the world’s largest luxury goods companies based on consolidated sales. While travel purveyors are not included in the study, in this case by design, many of the findings of the report are relevant, particularly for industry players keen to woo free-spending international shoppers.
According to Deloitte, “Consumers in emerging markets continue to drive luxury market growth. In China, Russia and the United Arab Emirates, the percentage of consumers claiming to have increased their spending stood at 70 percent, compared to 53 percent in more mature markets (EU, US and Japan).”
Many of those consumers in emerging markets are doing the bulk of their luxury spending while on the road. On average, almost half of luxury purchases are made by consumers who are traveling, either in a foreign country (31 percent) or while at the airport (16 percent). However, “the proportion rises to 60 percent for consumers from emerging markets, who may not have access to the same range of products found in mature markets.”
Next, looking at buying behavior by generation, the older one is, the greater the propensity to buy luxury goods at home. So, destinations looking to appeal to high-end international tourists might want to focus on local luxury shopper opportunities for millennials from emerging markets.
Although the report focuses on the luxury retail sector, many trends parallel what’s happening in the travel industry. For example, Deloitte notes that the luxury market for goods has moved “from an emphasis on the physical to a focus on experiential and how luxury makes you feel. Status has now become less about ‘what I have’ and more about ‘who I am’; more ethical, tasteful and discerning.” This ties right in with travel trends recently covered by Skift New Luxury reporting.
The report also considers the global economic outlook, which it says continues to be challenging for luxury brands due to slow growth in mature markets, protectionist backlash against globalization, and troubled credit in some markets. The U.S. still leads the luxury market, although spending has slowed due to the strong dollar and the resulting slowdown in foreign tourists. China may soon overtake the U.S., but for now, the report notes that economic uncertainty there is dampening consumer confidence.
For those curious as to which company came in as Deloitte’s #1 luxury brand, it was LVMH Moët Hennessy Louis Vuitton SE. That’s the parent company of Louis Vuitton, which came in at #19 on Interbrand’s 100 Best Global Brands.
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Photo credit: Louis Vuitton’s parent company tops Deloitte’s luxury brand rankings. Bloomberg