With global luxury goods sale growth bringing in a disappointing FY17, Australian market sales are expected to grow 6-8% per year through to 2024.
This is well ahead of 3% annual growth forecast for the broader retail sector, according to Deloitte’s fifth annual Global Powers of Luxury Goods report.
Deloitte national retail leader David White said the growth story hasn’t been limited to just bricks and mortar stores.
“With handmade crocodile skin handbags selling for upwards of $50,000, we’ve seen the likes of Louis Vuitton and Hermes, for example, make strategic acquisitions of Australian crocodile farms in order to secure their supply chain of this scarce commodity,” he said.
Australia’s luxury market, and its growth prospects, also continue to be defined by two key segments – tourists from Asia, and local domestic consumers.
“Our close proximity to Asia and, in particular China, has seen significant growth in purchases from high spending tourists visiting and shopping in Australia.
"Retailers have responded by opening new stores in peak tourist areas, as well as ‘sixth continent’ international airports, where retailers are targeting consumer segments based on travel times, destinations and even language.
“That said, while Chinese tourists have provided a significant source of sales growth, they only make up around 30% of our luxury market.
"Local consumers, as well as international students, remain highly significant to forecast growth trajectory, and even during tougher times, we have seen local sales remain relatively solid.
“While the local luxury market overall is set to grow next year and beyond, competition also continues to increase, and as with the rest of the retail market, there will be winners and losers in the battle for market share.
“With the increasing influence of the next generation of consumers, and speed of change in the luxury segment, brands can increasingly go from hero to zero in a very short period of time.
"We can expect to see more disruption, as well more opportunities, for those operating in the Australian market, all of which will be good news for Australian consumers.”
He said more brands are expected to enter Australia in coming years.
“Australia has experienced an acceleration of new brands either entering our market, or expanding their existing operations in recent years, with total sales growth peaking at 16% in 2016,” White said.
“Growth rates have subsequently slowed, but the next seven years are forecast to see annual growth between 6 and 8%, significantly higher than the broader Australian retail market, which is forecast to grow at around 3% per year.
"This is also significantly higher than the 3.9% average growth rate experienced by the top 100 luxury retailers globally over the past three years.”