REGIONAL DYNAMICS IN THE LUXURY MARKET
Mainland China is expected to account for the lion’s share of growth in 2018, with Bain forecasting growth of 20 percent to 22 percent, at constant exchange rates. Brands are learning how to cater to local consumers, it stated, who are often young and heavily influenced by social media.
Purchases by tourists boosted spending in Japan during the first half of the year, especially Tokyo and Osaka, though it was partially redirected towards experiences. Local influencers and social media are also key decision influences for younger local customers. Bain & Company forecasts growth of 6-8 percent, at constant exchange rates, in that market.
Across the rest of Asia, Hong Kong and Macau continue on their recovery trajectory. South Korea benefits from visitors from China, but political tensions in the region could have a crucial impact on 2018 growth trends. Bain & Company believes this region could grow by 9-11 percent, at constant exchange rates.
In the Americas, reported Bain & Co., tourists from Asia and Europe boosted key cities while local consumers were drawn to luxury again. Canada is growing while performance in Latin America is mixed. The region as a whole is expected to grow between 3 to 5 percent in 2018.
Europe was negatively impacted by a stronger euro, which had an impact on purchases by tourists. While certain countries, such as Russia, France, Switzerland benefited from stronger consumption, the United Kingdom and Germany experienced a slowdown. Bain & Company forecasts growth of 2-4 percent, at constant exchange rates, for the region.
The rest of the world is expected to be flat or see only slight growth of 2 percent, at constant exchange rates. Dubai remains stable and supported by international tourists, while Australia is set to benefit from a larger store footprint.