UK luxury market set to grow +57% to $15.4bn

By Doug Newhouse |

On average, overseas tourists accounted for 26% of all luxury goods spending on UK luxury brands last year – a market worth £6bn/$9.8bn – with this ratio rising by more than 40% since 2009. The UK luxury market is also forecast to grow +57% from £6bn ($9.8bn) last year to £9.4bn ($15.4bn) by the end of 2015.

According to a benchmark study on the British luxury sector by Walpole and specialist luxury sector research firm, Ledbury Research, Americans were the fastest-growing group of visitors to the UK, followed closely by Mainland Chinese (+21%). 

Walpole is a non-profit-making organisation representing the interests of the British luxury industry and along with Ledbury its second annual UK luxury benchmark study consists of consultations with senior luxury executives and members in the UK. 

80-PLUS SENIOR EXECUTIVES PARTICIPATED
The first part consists of a UK luxury benchmark study designed to understand the performance, expectations, and issues facing leading luxury brands in the UK this year. 

This was undertaken with over 80 senior luxury executives. Participants were asked a range of questions covering topics that included sales expectations, key overseas markets, sales channels and tourist spend.

The second part relates to Ledbury Research’s Luxury Market Model. This is used for both ‘accurate historic and current market sizing’, as well as forecasts. 

According to this research, the UK luxury goods market is due to grow 10% from £6bn ($9.8bn) in 2010 to £6.5bn ($10.6bn) in 2011 and by a 57% to £9.4bn ($15.4bn).

Walpole says that the 2011 UK luxury benchmark study findings reveal that British luxury brands remain confident for the future, with 91% of those surveyed forecasting sales growth for 2011. 

TOURIST SPENDING ACCOUNTED FOR 26%
It adds that tourist spending on British luxury goods accounted for just over one pound for every four spent last year, with this 26% ratio rising by more than 40% since 2009.

The company says that this means that the proportion of sales attributed to tourism has risen by over 40% in one year. 

The research also found that the features and attitudes of the luxury consumer have changed dramatically; evidence shows that ‘luxury shame’ has fallen away. Not only are customers buying less discreetly, but the industry is now less reliant on selling via private parties and trunk shows compared to last year. 

VISITOR SPENDING ‘CRUCIAL’
The benchmark study also revealed that overseas markets remain crucially important to the UK luxury goods industry. China has become a key focus, with 41% of those surveyed operating there already and a further 34% with plans to be in the coming year. 

Julia Carrick Ceo of Walpole commented: “We are delighted to be collaborating with Ledbury Research on the UK luxury benchmark research study, for the second year. 

The study highlights, in particular, the growing importance of tourism to the UK luxury sector and provides a positive outlook for the future of the British luxury industry as a whole.” 

‘BRITAIN’S UNKNOWN GROWTH INDUSTRY’
Guy Salter, Deputy Chairman & Founder of Walpole’s Thought Leadership Unit, which commissioned the report, commented: “This report backs up Walpole’s long-held optimism about the luxury sector.

“We are Britain’s unknown growth industry and a great example of something this country is globally competitive at. It also a timely reminder of the ‘soft power’ benefits of luxury brands in attracting visitors and flying the flag with affluent consumers around the world.”

James Lawson, Director at Ledbury Research, added: “The confidence in the UK luxury industry is different from that seen at the peaks of 2007, which was associated with a more conspicuous consumption.

“Today’s luxury consumers are different; demand is more considered and refined and the leading British brands are well positioned to engage with this audience.” 

ED’S NOTE: Walpole was formed in 1990 by top-tier British companies, including British Airways, Chewton Glen, Coutts & Co, DAKS Simpson, the Financial Times, The Savoy Group and William Grant & Sons. The membership provides a community for the exchange of best practice ideas to drive business development in both UK and export markets.

 

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