Retail in Asia

In Markets

Asia-Pacific poised to become largest luxury goods market

Asia-Pacific overtook Europe to become the largest regional luxury goods market in 2010. The trend continued in 2011, with record growth of over 20 percent overshadowing the more mature markets of Europe and the Americas, new research from Mintel showed.

The study on the international luxury goods market  found that Asia-Pacific accounted for 36 percent of the global luxury consumer goods market, followed by Europe (35 percent), Americas (26 percent and the other regions, including the Middle East, Africa, and India (4 percent) in 2010.

In 2011, the region’s share grew further, to account for 38 percent of the market. While Europe’s share dropped to 33 percent and the Americas to 25 percent, the other regions grew share from 3.8 percent in 2010 to 4.4 percent in 2011.

Mintel said this phenomenal growth is largely driven by demand from Chinese tourist shoppers, due to the newly affluent Chinese classes, who are more inclined to spend a larger proportion of their disposable income on luxury goods compared to HNWIs from the West.

Paul French, Chief China Market Strategist at Mintel, said Singapore is one of the main beneficiaries of the outbound Chinese tourist luxury spend as the country obviously appeals to Chinese tourists due to its food, culture and climate. With the recent opening of several new casinos higher spending Chinese have started visiting Singapore regularly and spending heavily on luxury goods and property.

Overall, the global luxury consumer goods market (excluding consumables and automobiles) grew by 14 percent in 2011. Demand was particularly strong from emerging markets and especially Asia-Pacific, in particular mainland PRC.

In spite of the macroeconomic context, Mintel forecasts market growth of 11 percent for 2012, although it expects rates to slow in the following two years to nearer 6 percent.

Looking at specific categories, the watches and jewellery category outpaced the total luxury goods market again in 2011. There is little sign of this category slowing, as shown most evidently in key high-end watch buying and collecting markets such as Hong Kong. Mintel expects this category to defy the macroeconomic context and post growth of around, or in excess of, 20 percent across 2012.

Meanwhile, fashion and leather goods, particularly the leather goods element, consistently outpaced the overall luxury goods market over the review period, and weathered the 2008-2009 storm with much more resilience than the watches and jewellery category. But the growth in the market for fashion and leather goods slowed from 20.6 percent in 2010 to 17.6 percent in 2011. Mintel expects that growth rates for 2012 may be a little below those seen in 2011 but we do not expect any major slowdown in growth.