The global personal luxury goods market is expected to grow by between 6 and 8 percent this year, driven by a strong rebound in China. That would mean sales reaching between €276 billion and €281 billion, according to a spring 2018 update of Bain & Company's ongoing study of the luxury goods market, which was released on June 7 in collaboration with Fondazione Altagamma, which is sponsored by the Italian luxury goods industry. According to Claudia D'Arpizio, a Bain & Company partner and lead author of the study, 2018 had a strong start and despite currency fluctuations, the positive trend is expected to continue across all regions and customer segments.
Chinese consumers, especially millennials, will stand out as a growth driver, she said. Mainland China is expected to grow by 20-22 percent at constant exchange rates. Other regions of the world will not show the same kind of acceleration, but almost all of them should show an upward curve anyway. Elsewhere in Asia, purchases in Japan are being boosted by foreign tourists, especially in Tokyo and Osaka. Bain forecasts growth of 6-8 percent at constant exchange rates in the country. Hong Kong and Macau continue their recovery. Visitors from China will give a boost to the South Korean market.
In the Americas, the U.S. luxury market benefited from a weaker dollar during the latest holiday season, with tourists from Asia and Europe doing more shopping in key cities. Canada is growing too, while the performance in Latin America is mixed. As a result, the Americas region as a whole is expected to grow by between 3 percent and 5 percent this year.
In Europe, the stronger euro has had a negative impact on purchases by tourists. Russia, France and Switzerland benefited from stronger consumption, while the U.K. and Germany experienced a slowdown. Bain & Company expects luxury sales in Europe to increase by 2 to 4 percent at constant exchange rates. The rest of the world is expected to be flat or see slight growth of 2 percent at constant exchange rates. Dubai continues to be supported by international tourists and is expected to remain stable. Meanwhile, the Australia market is set to capitalize on a larger store footprint.
Looking ahead to 2025, experts at Bain & Company forecast growth to pick up to an average of 4-5 percent per year at constant exchange rates until then, bringing the size of the market up to €366-390 billion.