The rise of affluent middle class and wealthy consumers in Asia seem to have an insatiable appetite for luxury designer brands that keeps growing despite economic slowdown in the region.
The Chinese government may have cracked down on luxury goods at home, but Chinese tourists rampage through designer stores when shopping in cities like London, New York and Paris.
According to the Economist Intelligence Unit (EIU) report Rich Pickings, the Asia Pacific region will devour around half the global output of luxury goods within 10 years as incomes in the region rise:
- China dominates the market with an expected 13 million households to hit an average annual income of £100,000 or more by 2030 – representing almost half of the households with this level of income in the region
- India will have more than 30 million households with average annual incomes of £32,000 or more, but this is a small percentage of the 270 million households earning this level of income
- These figures will be boosted by the unreported ‘grey economy’ across the region
Huge growth
Although other nations are growing in economic stature, their luxury goods markets are small – like The Philippines, Indonesia and Thailand.
Until the onset of Abenomics, Japan looked like a lost cause after 20 years of economic problems, the tsunami and deflation and the jury’s still out on how the current recovery may affect the Japanese desire to buy luxury goods.
“Luxury brands are reporting a slowdown in the 14 markets we monitored for the report as they expanded into Asia to take advantage of the huge growth in wealth,” said the report.
“Indeed, some firms may be changing tack to the Middle East and North Africa to lessen their exposure in Asia.”
Increasing incomes
However, the EIU reports accessing the potential wealth in Asian households will be the key for higher sales.
The report predicts that despite a slowdown in growth across the region, Asia has a stronger potential to expand in the luxury goods market than any other region.
“Taking the long term view until 2030, we can only see Asian incomes increasing,” said the report. “Even with changes in taste and shifting allegiance to new or currently unpopular brands, the demand for luxury goods will increase in line with this new found wealth,
“Although the current demand is driven by Asia’s wealthy elite, as the middle class grow richer, the market will expand as happened in Japan.”
