The forecast was given by Claudia D’Arpizio, a partner with Milan-based Bain & Company, which monitors a total of 220 luxury brands, covering luxury segments of industries that include cosmetics, perfumes, leather, fashion and others.
After an unprecedented growth spurt that has lasted 15 years, the market researcher says that the first two quarters of 2009 have shown a 10 percent contraction in global market sales.
This means that sales in the first six month of this year fell to $215bn, compared to €238bn in the corresponding period last year, Bain & Company says.
Shift to private label and cheaper brands
Private label and cheaper brands have held up solidly during the current market conditions, while luxury and premium end companies, including LVMH and Estee Lauder and fragrance players such as Inter Parfums, have all reported slowing sales.
However, D’Arpizio believes that these results merely represent a hiccup that will last through 2010, start to pick up in 2011, and will eventually see a full recovery by 2012.
According to Bain & Company sales of luxury products will stabilize by the end of 2010, will increase by approximately 4 percent in 2011, and will return to the type of figures that were being recorded before the economic downturn, at 7 – 8 percent annual growth.
Luxury market loses the bling
However, D’Arpizio also underlines the fact that the luxury market has been hit by a renewed sense of consumer ethics, which has seen some consumers turn away from the pamper and luxuriate outlook to take on a less is more approach.
“The downturn simply accelerated a trend that was already in place,” said D’Arpazio.
Arpazio reports that even before the downturn, consumers were shying away from showy or ‘bling’ luxury goods, which may hint that when consumers return to buying luxury goods again in the future, they might be opting for more sober choices.