Asian Luxury Market Could Grow Between 5% and 7% Over Next 12 Months

By Wong Siew Ying, Channel NewsAsia | Posted: 28 September 2009

From channelnewsasia.com

“SINGAPORE: Asian consumers are still prepared to dip into their branded wallets to splurge on luxury products despite the global recession.

Experts said luxury brands are likely to continue doing well in Asia, with the market set to grow at a conservative estimate of between five and seven per cent over the next year.

Observers said the luxury market in China alone could grow by some 10 per cent over the next 12 months in line with rising affluence and economic growth.

A recent MasterCard survey found that key discretionary spending by the wealthy in China, Hong Kong and Taiwan could hit over US$200 billion in 2015.

Luxury brands with a presence in Asia are tipped to outperform their Western counterparts, although Japan is an exception.

Michel Phan, assistant professor of Marketing and LVMH Chaired Professor at ESSEC Business School (Paris & Singapore), said: “The market is declining in Japan and because the market is already saturated amid the crisis, and its strong economic impact on Japan, the whole industry in Japan is falling by almost minus 10 per cent.”

Experts said luxury brands should take advantage of the downturn to grow their business by launching new products and exploring new markets.

Mr Phan added: “For example, Cartier in Japan opened their first online shop, e-commerce for the Japanese customers only last year, targeting at the techno-savvy consumers.

“You also have Louis Vuitton. They are going to open next month in October 2009, the first store in Mongolia, in Ulan Bator and probably next year, they are going to open a new store for the first time in Kazakhstan.”

Apart from finding new ways to reach out to consumers, experts said luxury brands must work on improving their services both online and offline. It is also important for them to keep cost down by better managing their supply chain.

Industry watchers said the total market for luxury brands in Asia and Europe amounted to some US$63.6 billion in 2008.

Sales are likely to be slower this year, dragged down by lower demand in Europe. Forecast shows that the luxury market in Europe could contract by up to five per cent next year while the US is likely to see a drop of 10 to 15 per cent. – CNA/vm”