High Times Ahead: Luxury Brands to Rebound in 2011

Posted by Barry Silverstein on October 22, 2010 02:40 PM

Executives at such luxury brands as Burberry, Louis Vuitton, and Versace can breathe a sigh of relief. The annual luxury market study by leading consultant Bain & Company is bullish on high-end goods, predicting a strong 2011. According to Bain, sales of global luxury goods should break the 2007 record next year.

Not surprisingly, demand by Chinese consumers for luxury goods — some call it "label lust" — will drive the uptick, with growth of as much as 30 percent. Europe will see a 6 percent rise, while Japan will recover more slowly. The U.S. luxury goods market, which dropped 15 percent this year, may see a 12 percent increase in 2011.

Luxury goods marketers were positively giddy at the news. Santo Versace, chairman of the Italian fashion brand Versace and chair of Altagamma, an Italian luxury goods association, proclaimed, "In the first half of this year we talked about a light at the end of the tunnel. On the basis of the preliminary 2010 figures, we can confirm that positive trend."

The latest figures from high-end marketers seem to support the Bain forecast. LVMH, owner of such brands as Burberry, Gucci, Krug, and Louis Vuitton, enjoyed a 14 percent increase in third quarter sales. Burberry, also an LVMH brand, reported that in the first six months of 2010, sales in its Chinese stores were up 25 percent.

Not all luxury goods will see improvement, however; Bain predicts that luxury yachts will likely experience a "double digit" decline in sales. Overall, Bain said, leather bags, jewelry, shoes and watches would be the biggest risers with an expected gain of around 8 percent next year.

More about: Luxury, Altagamma, Burberry, Gucci, Louis Vuitton, Versace, Bain

Grant says:

Great to see the rising trends of luxury goods worldwide.
Note - Burberry is not a LVMH brand!

October 23, 2010 06:04 PM #

S. Brady (brandchannel) says:

Thanks, Grant - good catch, thanks!

October 29, 2010 07:18 PM #

Dennis De Jesus Moro says:

Based on this study by Bain & Company, i think its good to foresee the rise of demands of some consumers in luxury goods. But for me its only in some big countries like US, Japan etc., not unlike in some third world countries where they tend to buy cheaper goods because of the imitations made by also some big countries such as China and Korea.

I just hope that this prediction will really boost the market of luxury goods!!!!!!!

October 24, 2010 07:10 AM #

Jimmy says:

Well, how can you blame the Chinese consumers for their label lust and their economy has been booming for the last 2 decades? LVHM is really the king when it comes to luxury brands and the increase in demand for high fashion products in China is good for business. However, do the Chinese also buy the imitation brands they send all over the world?

October 24, 2010 11:52 AM #

Ana-maria Georgescu says:

Neither Burberry, nor Gucci are part of LVMH as it is written in the article.

October 25, 2010 06:01 AM #

Muraculous says:

Sorry, selling something that costs $69.00 to make for $2,000 is part of the leverage problem not part of the solution. If the consumer doesn't have to use credit to buy this image of luxury, that is OK (but not smart). If the consumer is using credit then the luxury manufacturer risks undermining not only his/her market but luxury goods markets in general. When you are selling quality of life, isn't it a good idea to consider the quality of life of the consumer, post purchase?

October 25, 2010 02:01 PM #

Constantin Gabor says: