UK luxury sector set to double over next five years
New research forecasting the UK luxury market has reported that the sector will “almost double” in size over the next five years from 6.6 billion pounds in 2012 to 12.2 billion pounds in 2017. According to Walpole British Luxury, the trade body that represents luxury brands such as Burberry, Harrods and Jimmy Choo, and market research firm Ledbury Research, the study reports that he UK luxury industry is set for “strong growth”, despite the difficult environment in Europe, with the sector predicted to see double-digit growth, annually, for the next five years.
The annualUK luxury benchmark study also noted that British luxury brands continue to remain optimistic about the outlook with a staggering 83 percent expecting to see a rise in sales in 2013, with the research predicting that the sector will grow by 12 percent to the to 7.4 billion pounds this year.
The report, which is now in its fourth year, covers performance, expectations and issues facing luxury brands, and is used as a benchmark for UK companies especially when looking to expand overseas. This year the report highlighted Brazil and India as “key target markets” for UK brands looking for international growth, adding brands entering BRIC economies, which also includes Russia and China, could expect “key potential growth”.
Brazil and India identified as “key markets” for UK luxury brands Currently only 13 percent of British luxury brands have operations in Brazil, but with the Olympics and World Cup coming up, 52 percent of brands have plans to enter the market. It is quite a similar story in India, with only 23 percent of British luxury brands currently present in the country, however more than 50 percent of brands have interest in entering the market in the long term. Though the report did note a number of challenges facing brands entering India including, the lack of infrastructure, understanding of local business culture and the local regulatory environment. Other countries outside of the BRIC economies that offer important market growth for British brands, according to the report, include South Korea, Mexico, Indonesia and Vietnam.
As well as looking internationally, the report that surveyed senior management at some of the most important brands in the UK luxury market, also noted the importance of UK regional “luxury hubs”, naming Manchester and Edinburgh as the most important.
Whilst London remains the leading hub for luxury sales, 81 percent of luxury brands have a presence outside the capital, and Manchester had the strongest luxury sales outside of the capital in 2012, according to 24 percent of the study’s respondents. This was closely followed by Edinburgh, and the report also noted “robust demand” for luxury in cities such as Birmingham, Glasgow and York.
Commenting on the study, Julia Carrick, chief executive of Walpole said: “The findings from this year’s study provide an insightful look at the changing landscape of the UK luxury industry and the key priorities and challenges facing senior luxury executives in the coming year.