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Posh shoppers revive luxury economy

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Posh shoppers revive luxury economy

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If the Louis Vuittons and Audemars Piguets of the world needed a reason to bring out the Moets and clink their Riedels, 2011 would be it.

With the worlds economy cruising out of the global financial crisis, consumer confidence is growing positively, with global luxury sales projected to grow to over AUD256 billion dollars by the end of this year. According to Bain & Company, a global luxury market consultancy that conducted the Luxury Goods Worldwide Market Study, the predicted numbers will show a 8% growth from 2010, and will be the highest the luxury market have experienced in global spending.

While expenditure on designer and luxury goods dipped in 2008 and 2009 due to consumers withholding on influent purchases, Claudia DArpizio, a partner at Bain & Company believes that the market is back to pre-recession levels and that luxury shame is now over.

The largest contributor to this positive growth comes from powerhouse of the East – Greater China. Inclusive of Hong Kong, Macau and Taiwan, Greater China has been indentified as the second biggest luxury market in the next five years. Thanks to growing affluence and international brands appearing in smaller cities, along with a trend of holiday-makers purchasing luxury goods overseas, DArpizio has termed China as the rising star in the luxury market.

Closer to home, Asia Pacific, including Australia, has been forecasted to enjoy an increase in luxury expenditure of 15%.

There has been steady local growth in expenditure and consumption of luxury goods in the Australian market, with the example of the champagne and sparkling wine category experiencing increase in sales year on year, Matthew Poiner, managing director of PDC Creative, a boutique creative agency that specializes in luxury and premium brands tells Marketing.

Maintaining high quality in their products will stand local luxury brands in good stead and help them achieve an increase in value generation. Aside from just marketing, it is important that luxury brand managers understand their brand architecture and have effective price management strategies.

In order to capitalize on this growth, DArpizio advises that luxury brands be mindful of more demanding customers, generational shifts, new loyalty rules and to invest in an integrated offline and digital customer experience.

The study predicts that revenue in the market will continue to grow within the next three years and that in-depth consumer behaviour understanding and an investment in enhancing the customer experience will be essential to owning the luxury goods future.

Authenticity, says Poiner, is the key to capturing a loyal brand following for luxury brands. Marketers must tap into the true character of the brand itself and present that in a honest, compelling and beautiful way in order to yield success.

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