The ever-expanding appetite of consumers in emerging countries for Prada shoes and Hermes bags will be the primary driver--and supporter-- of the European luxury goods sector, according to analyst report from research firm Sanford C. Bernstein.
The European luxury goods sector is forecast to grow between 6 percent and 7 percent over the next five years, reported the Business of Fashion. Some 38 percent of that growth is expected to come from emerging markets, according to the report. When you include purchases made by consumers from these markets while traveling, that figure skyrockets to 60 percent of all projected European luxury sector growth.
The growth in Asia has already left a mark on high fashion manufacturers. The report's author Mario Ortelli told Business of Fashion that Chinese consumers make more than 60 percent of their luxury goods purchases abroad to benefit from the price difference between China and other countries. So, a customer from China can save a bundle buying a Christian Dior pantsuit in Paris or Prada shoes in Italy.
That has prompted some businesses to raise their prices in Europe in hopes of bridging the price gap. French luxury goods conglomerate LVMH is taking advantage of the emerging economy in two ways. Its brands are setting up pop-up stores in trendy fashion hotspots including Beijing, Hong Kong and Seoul and its Louis Vuitton brand has raised its prices in Europe.
Photo: Prada store in Hong Kong by Wikicommons