The rise in disposable income has elevated the consumer lifestyle and shifted their preference towards deluxe cosmetics products. Moreover, the escalation in demand for luxury accessories and jewelry due to unique craftsmanship, refinement, quality, and brand name, further fuel the market. In addition, upgradation in product packaging styles and attractive marketing strategies by key players drive this market. However, currency depreciation, increased prices of raw materials, and economic turbulence in some developed countries could hamper the market growth.
This market is segmented on the basis of product type, mode of sale, gender, and geography. The product type segment includes designer apparels & footwear, accessories, cosmetics, jewelry, travel goods, fine wines / champagne & spirits, and others. In the year 2015, designer apparels and jewelry were the most popular segments and held a cumulative share of more than 59 % in global luxury goods market.
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The mode of sale could either be retail or online sale, wherein retail mode includes brand outlets, franchise stores, flagship stores, and retail outlets. Most customers prefer the retail mode of sale while buying luxury goods. However, online mode of sale is steadily gaining momentum and is expected to grow at the highest CAGR of 6.2 % during the forecast period.
Increase in the number of working women and their economic independence are the key reasons for the market growth for female consumers. In the year 2015, female consumers accounted for almost 65 % of global luxury goods market. However, increase in inclination of men towards designer apparels, leather bags, and footwear could result in high demand of luxury goods from male consumers. This segment is anticipated to grow at a CAGR of 4.4 % during the forecast period.
Luxury goods market is extremely dependent on economic stability of any particular region as these goods are mainly purchased by the upper economic classes. Furthermore, with the advancements in technology and increase in consumer demands, leading market players have developed various products in different categories of luxury goods and adopted different strategies to combat competition. Acquisition is one of the most prominent strategy in the market. For instance, in 2016, LVMH Group, a French luxury giant, purchased a minority stake in Repossi to expand its business in luxury jewelry segment. Similarly, in June 2016, L’ Oreal International acquired Atelier Cologne, a French perfume manufacturer, to enhance its luxury perfume product portfolio.