Surge in wealthy individuals is driving rapid expansion for luxury retailers

Surge in wealthy individuals is driving rapid expansion for luxury retailers

The rising number of high net worth individuals and mass affluent globally is the key driver behind rapid expansion of the luxury retail market, new global research* by communication technology company Communications Specialist Ltd shows.

Its study with senior executives at luxury retailers with total annual turnover of $3.1 billion across Asia, Africa, Europe, the US and South America found they are forecasting annual growth of more than 5.6 per cent for the luxury retail sector over the next three years.

The research by Communications Specialist Ltd which supplies technology supporting luxury retailers and their clients found growing confidence about rising revenues at their firms and for the market as a whole.

Senior executives questioned for the research highlighted the growth in high net worth individuals and mass affluent people worldwide as the biggest reason for rising sales.

Around 80 per cent of executives said growing wealth globally is boosting sales while more than half (53 per cent) pointed to improved performance by luxury retailers and pent-up demand following the COVID-19 pandemic. Around a third (31 per cent) say increased sales are down to more personalised offers from luxury retailers for clients.

The combination of factors is undoubtedly translating into higher sales – almost all (96 per cent) questioned believe revenues at their firm will be higher this year than in 2022. More than a fifth (22 per cent) expect revenues to be 50 per cent higher this year.

It is a similar story when comparing revenues to pre-COVID results from 2019 – 96 per cent say revenues this year will be higher with just 4 per cent predicting sales will still be down on pre-COVID levels. They are slightly less optimistic about the market as a whole – 92 per cent say it will perform better this year than last while 98 per cent say revenues this year will beat pre-COVID levels.

Rising revenues are not down to price-cutting, the research found. Around 94 per cent say margins this year will be higher than last year while 90 per cent say margins will be higher than pre-COVID levels. Up to 40 per cent say margins will be significantly higher than pre-COVID levels.

Kevin Buchler. Chief Marketing Officer at Communications Specialist Ltd, said: “The luxury retail sector globally is firmly on a growth path with the market set to expand by 5.6 per cent a year for the next four years.

“It is not simply a case of the post-COVID recovery as executives point to the rising number of wealth individuals worldwide as well as increasing sophistication and personalisation of offers from retailers.”


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