Life's not all doom and gloom in the luxury sector
The luxury products market worldwide was expected to have declined by about 10% in 2009 compared with average annual historic growth of 7% to 10%. However, the Paris-based consultancy Bain & Co expects a very modest improvement in 2010 when the market will at best return to stability or at worst will turn down by 5%.
The luxury products market worldwide was expected to have declined by about 10% in 2009 compared with average annual historic growth of 7% to 10%. However, the Paris-based consultancy Bain & Co expects a very modest improvement in 2010 when the market will at best return to stability or at worst will turn down by 5%.
The three areas most affected by the economic crisis – Japan, the US and Europe – together account for 80% of worldwide luxury product sales and prospects of a pick-up are decidedly modest. However, other analysts of the sector are more bullish and one anonymous source in the sector said that the luxury product groups are expected to show a capacity for rapid recovery.
Some, including the PPR group which owns Gucci and Richemont which owns Van Cleef & Arpels, were both achieving double-digit growth before the collapse of the Lehman Brothers bank last September. Credit Suisse analysts note that Richemont's sales prospects are not highly visible at present though the long-term fundamentals of the group are good.
Overall, analysts appear to agree that some groups have a significant potential for growth, notably LVMH because of its strong exposure to the Chinese market.