According to the fashion related website, CPP-LUXURY, at times, overshadowed by the excessive coverage on China, several important international luxury markets have shown solid growth in 2012, defying worldwide volatile economic conditions. These markets have been showing great potential not only for the retail sector but also for hospitality, yachting and travel, with an increased appetite for luxury and with a strong motivation to buy locally rather than abroad.
Colombia – an impressive GDP growth / growth of all economy sectors / stable political environment / booming upper middle class / a wealthy segment increasingly driven by lifestyle (golf, polo, cultural events)
Indonesia – sheer size of the wealthy population, not necessarily ultra rich / excellent infrastructure / culture for luxury and lifestyle driven shopping
Australia – increase in luxury consumption by locals and other Asian countries, especially Chinese foreigners / third worldwide in number of luxury openings / construction boom determined by increased demand
Turkey – solid economy – least affected by the Euro debt crisis / fast growing upper middle class / increase in wealthy relocating from Syria and Egypt
Germany – excellent infrastructure and air connectivity to most emerging markets / double digit growth in number of wealthy arriving from the Middle East (most of them on long stays)
At the other end, we identified the ”disappointing” luxury markets, which have either stagnated or proven increasingly volatile because of the economy and political environment.
Russia – proposed luxury tax to be implemented in 2013 / already luxury goods are 20 to 25% more expensive than abroad / many brands still operate through local franchisees or exclusive deals / corruption and huge real estate costs
Ukraine – the political environment has dampened the economy, reducing drastically buying power
India – lack of infrastructure / despite ease in direct investment legislation, India provides the most challenging ”to do business” for luxury
There are also the ”volatile” luxury markets of France and Italy, which now depend over 70% on foreign wealthy travellers, however, political instability and pressure for restructuring due to the debt crisis, increased taxation is expected in 2013 – France’s administration already announcing plans for a luxury tax and Italy’s fiscal authorities clamping down on tax avoidance, conducting a fierce PR campaign which have seen sales of Ferrari drop by 50% in 2012 in Italy. Another risk is the pressure luxury brands face from the growing costs of real estate, most international luxury brands investing in 2012 in opening or enlarging their street location flagship stores.