It's a good time to be in luxury says Bain & Co. The consulting firm reports that worldwide sales of luxury goods are in surge mode, underpinned by double-digit growth in China, as well as a resurgence in the U.S. and Europe.
The Wall Street Journal writes that "luxury spending is expected to rise 8% to $274 billion in 2011," this according to Bain & Co.'s "Luxury Goods Worldwide Market Study," which was released Tuesday. "The expected gains follow a record year in 2010, when the sales recovered from the recessionary plunge they took in 2008 and 2009."
Conspicuous consumption very well may be back as the well-heeled are out splurging once more. LVMH Moët Hennessy Louis Vuitton reported a 17% increase in sales for the first quarter, with gains in all its categories.
High-end department stores are also doing well. Saks Inc. reported double-digit same-store sales increases in February and March.
Bain & Co. projects sales in the Americas will rise 8% this year. Sales in Japan, the second-largest luxury market, are expected to dip 5% as the country recovers from the earthquake and ensuing tsunami.
But it's China that is having the most growth: luxury goods sales there are expected to rise by 25% this year to $17 billion, as second and tertiary cities become new destinations for luxury brands. That's not all: more than 50% of Chinese luxury spending occurs overseas, in markets such as Europe and the U.S.
Bain forecasts the worldwide growth trend will continue for the next few years, with sales rising between 5% and 6% each year. It says that other potential growth markets for luxury brands include Russia, the Middle East and Brazil.