According to the study, ‘LUXURY
GOODS RETAILING IN EUROPE, 2017-2022: MARKET & CATEGORY EXPENDITURE AND
FORECASTS, TRENDS, AND COMPETITIVE LANDSCAPE’, some of the major
companies that are manufacturing and distributing personal luxury good in the
European region include LVMH, Ralph Lauren Corporation, Michael Kors Holdings
Ltd., Kering S.A., CompagnieFinanciere, Richemont SA, Burberry Group PLC. Most
of the organizations are huge enterprises with big financial support. In 2016,
the sale of the luxury products in the European Market fell significantly owing
to falling international tourists and the case could have been worse however,
there were decent sales in the UK market because of a depreciated dollar. In
the European region, just like rest of the world, wholesale distribution is the
most widely accepted distribution channel which could be due to the assurance
of the quality of a product that a retailer cannot offer. However, recent
studies suggest as people move towards a more convenient life, they are slowly
shifting from big wholesalers to retailers who have the ability to supply them
the goods without much hassle which translates into a possibility that retail
could be the preferred channel in the future.
The overall growth for the luxury good market has not been very
stable in the recent years and is currently witnessing a slow growing trend
especially in the last 5 years. With respect to the European market, the
industry has witnessed a negative CAGR in the year 2017. There have been many
reasons for this slowing trend in the recent years. These include the US
presidential elections, rising terrorist activities and majorly Brexit which
transformed the outlook of the European market towards the luxury goods
industry. All these factors have reduced the consumer confidence with relation
to these goods which ultimately resulted in the slowdown of sales of these
products. However, the future of this industry seems to be bright which can be
showcased via a stabilizing international economy, rising number of
international tourists, especially Chinese tourists. This industry is expected
to grow at a moderate pace in the coming years.
Another trend that is quite prominent is diminishing importance of
luxury store outlets. Monobrand stores, speciality stores and department stores
are some of the stores that traditionally sell luxury goods via their physical
outlets. However, they are tending to lose their value
whereas online stores and Ecommerce platforms are some the trending
distribution mechanism. The growth in the luxury goods via an online platform
has been immense which could be an opportunity that could be tapped in the
future.
Overall, major markets like Germany, France and Italy were
characterized by falling spending which could also possibly explain the reason
for a slow growth of luxury goods markets in the European region.
There are many threats and opportunities that currently prevail in
the European luxury goods market. All the companies need to analyse the best
combination of product selling techniques so that the various opportunities
that the changing ecosystem offers can be integrated while keeping the threats
at bay. The competition landscape in this industry is much consolidated with
only a few companies holding a major market share. A new company that wishes to
compete with these established enterprises, needs to not only have better
products but also require appropriate marketing, distribution as well as sales.
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