Bain & & Co Warns of the Stagnation of the Luxury Industry in 2016

2016 has not been a great year for the luxury industry.

Leeson. 19/12/2016

According to data from the consultancy Bain & Co., which is the leading reference of this sector, sales of luxury products will be reduced this year by 1% to about €249 billion, its weakest performance since 2009. It is the third consecutive year of deceleration for the luxury sector.

2016 no ha sido un gran año para el sector del lujo.
2016 has not been a great year for the luxury industry.

There are several causes to explain this setback. First, the world’s major economies are showing signs of a sustained recovery, but not at the necessary pace. Growth rates are moderate and this limits the purchasing power of a large part of the population. Secondly, Europe has been harmed by terrorism, which has limited the tourism coming from other regions (United States, Asia…) who are wealthy buyers of luxury goods. This effect has particularly weighed one of the main markets of the Old Continent, France, which is also the base of operations of several of the world’s leading companies, including LVMH.

LVMH is one of the leading companies in the luxury sector.

The third reason, linked with the previous two, is that the growth engines in recent years have not been able to recover the rythm of the past. Neither Russia nor especially China have been capable of generating the pace of sales expansion that we saw in the past decade. It is clear that China is recovering, but not yet enough to be able to sustain the global growth alone. There are not enough new buyers in the market who are able to drive sales up.

China is recovering, but not enough

In Bain´s Global Luxury Study, the consultancy firm predicts that luxury industry sales will grow by 3 to 4 percent by 2017, far from double-digit growth rates in the post-crisis years.

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