Although most of the Western nations have been severely hit by economic austerity, the situation does not affect all regions the same way. A middle class is emerging in the developing nations with an insatiable appetite for luxury goods.
This redistribution of wealth is changing the face of the luxury industry.
For a long time now, mass consumer goods have adapted to meet the demands of local markets. Manufacturers know that Asians, Europeans and Africans do not all have the same needs in terms of cosmetics and that they have different shopping habits. However, luxury lines are more unified since their consumers are looking precisely for a “premium product” that transcends regions and local customs.
Little by little the clientele is changing. The largest share of sales – cosmetics and skin care in the lead – comes from export. While several emerging countries like South Africa, Indonesia and a number of Central Asian countries have become players on the luxury market, China is where it’s really happening. Chinese consumers accounted for one quarter of luxury purchases in 2012. A large affluent middle class (estimated at 280 million households by 2020, or twice that of 2011) and the luxury groups’ recent development of retail networks explain this phenomenon.
The Middle East is also a market with strong growth potential for luxury brands, cosmetics in particular, and the American continent also shows promising results, especially in fragrances.
Did you know?
1/ According to a study conducted in October 2012 by Bain & Company for the Altagamma foundation, one-fourth of the world’s luxury purchases were made by Chinese consumers in 2012. These relatively young Chinese luxury consumers are also eager for cosmetics.
2/ According to Bain & Company, the luxury market could reach 230 billion euros by 2014. Between 1995 and 2011, this market grew from 77 billion to 191 billion euros.
3/ Over 40% of luxury purchases come from tourism. The travel retail industry is in fact, a key growth driver for the L'Oréal Luxe division.