U.S. consumers return to luxury stores despite concerns over high unemployment and a double dip recession.
A recent study published by the U.S. consultancy, Bain & Co., indicates a strong surge in core product categories in the luxury sectors like apparels, shoes, accessories, leather goods and perfumes as the industry rebounds from its first full year decline in sales in 2009.
The recovery has been faster than expected. The concern over unemployment and the economy is not over yet, but wealthy customers understand it doesn't have a major effect on their personal wealth, said Claudia D'Arpizio, a Bain partner in Milan and lead author of the study in a statement.
D'Arpizio also added that with the reversal of the economic crisis, new behaviors and trends are being observed in the market. The luxury shopper of this decade is more likely to be Chinese, more likely to be male, and more likely to be young. Brands that meet the needs of these new segments will be in the best position to keep growing in a new decade.
During its annual study on the luxury goods market worldwide, Bain & Co. projected a 10 percent rise in sales in the year 2010 reaching $235 billion (168 billion euro), almost eclipsing its historical market peak of $238 billion (170 billion euro) in 2007. Bain attributed this rebound in sales mainly to four factors; double digit increases in the second and third quarter of 2010, rapid return of consumers to stores owned directly by the luxury brands, continued strong growth in China and a rebound of sales in the U.S.
The analysis further estimates an increase of 3 - 5 percent in 2011 owing to the return of the luxury market to a more level growth rate. This will, however, be subjected to fluctuations in the euro and dollar and may increase or decrease accordingly. Besides, U.S. sales are also predicted to increase by 12 percent to 46 billion euro, representing the biggest absolute revenue increase for the year.