The Luxury Economy

Luxury brands conjure up magic and make the customer feel very special. Porsche is once again the most valuable luxury brand in the world, and one of the criteria that proved important in enhancing the brand was its ability to make customers «feel special».

The luxury economy is made up of brands from all sectors, including fashion, perfumery and cosmetics, hospitality, gastronomy and spas, cars, yachts and private jets, dream travel, jewellery and watches, alcoholic beverages, decoration, accessories and art – brands that know how to amaze discerning consumers who have zero concerns when it comes to purchasing power.

It is a powerful economy, which, in 2018, had a total turnover of 1.2 trillion euros, a 5% increase with relation to 2017, according to a study * by the company Bain & Co.

This report states that luxury cars enjoyed sales of 495 billion euros, personal luxury items – fashion, jewellery, watches, perfumery, cosmetics and accessories – achieved a turnover of 260 billion euros and luxury hotels contributed 190 billion euros to overall turnover. The remaining amount is spread over six more product categories.

Online sales in the luxury market are growing fast, but only in personal luxury items, at around 27 billion euros in 2018, i.e. 10% of sales in this product category, but a negligible value in total turnover.

Advances in technology and the emergence of younger generations explain the prediction that by 2025 the online channel will represent 25% of personal luxury goods sales, which at that time will be expected to be worth between 320 and 365 billion euros.

Luxury sales will continue to grow 3% to 5% annually over the next few years, as leading brands are able to create value and will be increasingly desired, almost irrationally so. Recently published data ** confirms that the world’s top ten most valuable brands increased in value by 15% to 95% in 2018.

And this value, which enthrals and entices, is above all else intangible, and made of culture, symbolism and charm.