Luxury Fashion Market Overview
The luxury fashion market is projected to register a CAGR of 3.59% and reach a value of USD 333,775.3 million by 2028. Luxury fashion is characterized by high price points that are placed separately from products necessary for daily life. Ideally, luxury fashion products have high price tags due to high-quality materials, design, and craftsmanship. There is no fundamental definition of luxury as the price point is based on the business and brand placement point of view, addressed to the affluent consumer range. Moreover, the spending power of consumers varies massively between countries and regions owing to factors such as GDP, per capita disposable income, urbanization, corporate sector, and many more. The shift in consumer values has been a prime factor driving to sales of luxury fashion worldwide. The price points also vary based on the different product types, such as handbags can range from USD 1,500-25,000, watches with a price range of USD 7,800-21,900, shoes & belts ranging between USD 650 to USD 1,250, and jewelry ranging from USD 210-4,900. These price ranges also vary between brands due to the use of expensive gems, craftmanship, fabrics used, and brand value.The global luxury fashion market is expected to register a CAGR of 3.59% during the review period. Several factors are driving the growth of the market. The increasing per capita disposable income across the globe is majorly fuellingthe market growth. Social media promotions and celebrity endorsements also contribute significantly to the luxury fashion market growth.
COVID-19 Impact Analysis
As a measure to limit the spread of the coronavirus, various governments across the world haverestricted the gathering of more than ten people in a closed space, and many manufacturers were ordered to shut down their production facilities. Procurement of the raw materials became a cause of concern for the manufacturers owing to the urgent measures taken across the globe to control the spread of the COVID-19, impacting the logistics. The outbreak of the COVID-19 pandemic and subsequent adoption of lockdown strategies in many countries have restricted the availability of labor to carry out the production process. To fight the pandemic, the whole world was under lockdown. Thus, there were some urgent measures taken by the government of various countries, such as physical distancing and limitation of transportation to fight surge ability. The worldwide lockdown has certainly affected the production of luxury fashion products. Following state and regional guidelines, manufacturers have implemented extensive measures to protect the health and safety of their employees. Many global manufacturers have temporarily closed their operations or limited the production capacity of their products. This scenario has also affected the manufacturers financially, and they are strategizing their operations to survive the pandemic with minimal losses.
The global luxury fashion market is expected to register a CAGR of 3.59% during the review period. Several factors are driving the growth of the market. The increasing per capita disposable income across the globe is majorly driving the market growth. Social media promotions and celebrity endorsements also contribute significantly to the luxury fashion market growth. The growth of the organized retail sector in Asia-Pacific further boosts the growth of the market. However, a limited customer base owing to the high prices of the products is expected to restrain the market growth. Furthermore, the rising threat of counterfeit products poses a challenge for the market players. Nevertheless, strategic mergers and acquisitions and the increasing demand for sustainable and recycled collections create an opportunistic market for the players in the luxury fashion industry.
Disposable income is the personal income of households left after paying income taxes, which is available for spending and saving. The rising per capita disposable income of people across the globe, especially the emerging economies, is boosting the demand for luxury fashion in the global market. The standard of living of people is improving due to their rising disposable income, propelling them to opt for luxury products as a symbol of status. The rising living standard of consumers is increasing their aspiration to enhance their appearance with luxury fashion products such as luxury clothing, watches, jewelry, and footwear. Furthermore, the rise in the number of High-Net-Worth Individuals (HNWIs) and affluent consumers drive the growth of the luxury fashion market. The individuals with a total net worth of more than USD 1 million are categorized as HNWIs. The US had 5.9 million HNWIs in 2019, which is almost 11% higher than in 2018. The US, Japan, Germany, and China are among the major countries with an HNWI population. Moreover, rapid urbanization in emerging countries and an increasing working population lead to improved economies for various countries, thereby driving the growth of the global luxury fashion market.
- Increasing Per Capita Disposable Income
Promotion plays a vital role in increasing the sales of luxury fashion; celebrity endorsements also significantly influence consumer buying decisions. Celebrities are extremely valuable to brands, especially in the luxury fashion industry. They exert enormous power in fashion circles and can contribute to making and breaking brands. Celebrities have been used to endorse luxury brands for years. Moreover, product promotion through various celebrities on social media through their blogs and videos highly influences customers. Social media provides a potential opportunity for product launches and branding to bridge the gap between marketers and consumers. The explosion of social media has transformed the business environment, creating new opportunities for market players. There are continuous blogs and live streams on social networking sites such as Facebook, Instagram, Twitter, and YouTube. Manufacturers use social media to promote their brand and build relationships with customers by offering exclusive advice and offers. There is a continuous rise in the amount of social media content dedicated to the fashion industry. Social media plays a critical role in driving the demand for luxury fashion, especially among the youth, who actively participate in social media for information nowadays. Thus, blogs posted on social media platforms in favor of luxury brands are highly influencing the growth of the market.
- Social Media Promotions and Celebrity Endorsements
Luxury fashion manufacturers incorporate the best materials and employ the most skilled craftspeople. The production process and raw materials used in luxury fashion widely differ from fast fashion. Luxury fashion is based on sourcing high-quality fabrics, and no corners are cut in the printing and dyeing process as they tend to be in fast fashion. Luxury brands ensure that their high standards are adhered to at every step of the production process. This is the primary reason for the higher prices of luxury fashion products. However, since a majority of the global population is price sensitive, the high prices narrow down the customer base for luxury fashion brands. With changing fashion trends, fast fashion is preferred by the price-sensitive customer base. Furthermore, the high prices of luxury brands create obstacles for repeat purchases even among their loyal customers, which affects the market's sales volume. Thus, these factors associated with a limited customer base restrict the market growth.
The luxury fashion market is almost saturated with the presence of established brands, who compete against each other intensely to secure a larger customer base. Furthermore, mergers and acquisitions are gaining traction in the field of luxury fashion. In the last few years, luxury fashion has witnessed quite a few strategic mergers and acquisitions which assist in driving the market growth. For instance, in January 2021, the world's leading luxury products group LVMH acquired Tiffany & Co., the global luxury jeweler. The addition of Tiffany's to its global brand has helped LVMH to bolster its jewelry branch and expanded the brand's exposure to luxury consumers in the US. Also, following Tiffany's takeover, the share prices of luxury brands across the world, such as Huge Boss, Mulberry, and Burberry, soared.
- Strategic Mergers and Acquisitions
With the increasing demand for luxury fashion, manufacturers are finding it difficult to ban counterfeit products. The counterfeit products of luxury brands affect the actual brands in terms of revenue and dampen the brand goodwill. It is difficult to identify the difference between a fake product and a genuine one. Counterfeiters keep the prices lower than genuine products to attract the price-sensitive population.
- Rising Threat of Counterfeit Products
Segment OverviewBy Product Type
By End User
- Based on product type, the global luxury fashion market has been segmented into clothing & apparel, footwear, and accessories. The clothing & apparel segment is further broken down into jackets & coats, skirts, shirts & t-shirts, dresses, trousers & shorts, denim, underwear & lingerie, and others. The accessories segment is further classified as gems & jewelry, belts, bags, watches, and others. The clothing & apparel segment accounted for the largest market share in 2020 and is projected to register the highest CAGR during the forecast period.
By Distribution Channel
- Based on end user, the global luxury fashion market has been segmented into men, women, and unisex. The women segment accounted for the largest market share in 2020 and is projected to register a decent CAGR during the forecast period. However, the unisex segment is expected to register the highest CAGR during the forecast period.
Global Luxury Fashion Market Share, by Region, 2020 (%)
- Based on distribution channel, the global luxury fashion market has been segmented into store-based and non-store-based. The store-based sub-segment is further classified as supermarkets & hypermarkets, specialty stores, and others. The store-based segment accounted for the larger market share in 2020. However, the non-store-based segment is expected to register the higher CAGR during the forecast period.
Source: MRFR AnalysisRegional Analysis
North America Market
- By region, the global luxury fashion market has been divided into North America, Europe, Asia-Pacific, South America, and the Middle East & Africa.Europe accounted for the largest market share of 38.63% in 2020, with a market value of USD 97,368.2 million; the market is expected to register a CAGR of 3.42%. North America was the second-largest market in 2020, valued at USD 79,071.3 million; the market is projected to exhibit a CAGR of 3.27%. However, the market in Asia-Pacific is expected to register the highest CAGR of 4.23% during the forecast period.
- North America helda market share of 31.37% in 2020 and is expected to register a CAGR of 3.27% during the forecast period. The native people of North America are diverse in terms of culture, language, and ecological adaptations to various environments. This variation is expressed in the attire that they wear. Most of the population in North America perceive luxury products as synonymous with quality, exclusivity, and rarity. The increasing rate of millennial spending and the arrival of digital and niche-born brands are further diversifying luxury fashion in the region. The prime growth engine of the luxury fashion market in North America is the shift in a generation where 83% of the luxury growth in 2020 is fueled by Gen Y and Gen Z. The new generation is low on patience and are inclined more towards speed and convenience, which is creating a tremendous growth rate in the fashion industry.
- Asia-Pacific is one of the most lucrative regions among the manufacturers of luxury fashion. It accounted for a 21.45% market share in the global luxury fashion market. The market in the region is projected to increasea CAGR of 4.23% during the forecast period. The growth of the luxury fashion market in Asia-Pacific is attributed to several factors, such as increasing population and rapid urbanization in emerging economies. The rising per capita disposable income acts as a significant factor for the growth of the luxury fashion market. Furthermore, the luxury fashion market in Asia-Pacific is growing due to the proliferation of boutique luxury brands, rapidly changing consumer trends, and the shift from physical stores to digital stores. China holds the largest share in the Asia-Pacific luxury fashion market.
- The key players operating in the global luxury fashion market include Ralph Lauren (US), Capri Holdings Limited (US), PVH Corp. (US), Kering (France), LVMH (France), Inditex (Spain), Giorgio Armani S.P.A. (Italy), Chanel S.A. (France), Dolce & Gabbana (Italy), and Burberry Ltd. (UK). The market comprises tier-1 players along with some local players with diverse product portfolios. Companies such as Ralph Lauren (US), Capri Holdings Limited (US), PVH Corp. (US), Kering (France), and LVMH (France) dominate the market due to brand reputation, product differentiation, financial stability, and strong distribution network. The players are focused on lowering their environmental footprint and investing in research and development and strategic growth initiatives such as acquisitions and product launches to strengthen their market position and capture a large consumer base.
Scope of the ReportGlobal Luxury Fashion Market, by Product Type
- Few developments occurred in recent times, influencing the market growth of the luxury fashion market are listed below:
- In November 2019, Giorgio Armani launched its first high jewelry collection. This launch helped the company in expanding its product offerings.
- In October 2020, Chanel purchased its Bond Street store. The acquisition helped Chanel's commitment to British retail.
- In June 2020,Inditex invested USD 3 billion to boost e-commerce operations of chains such as Zara and Bershka,expand store space, and gain an edge over competitors in the pandemic.
- In August 2020, Fendi invested in a leather goods factory in Florence. This investment helped the company in strengthening its product portfolio.
Global Luxury Fashion Market, by End User
Global Luxury Fashion Market, by Distribution Channel
- Clothing & Apparel
- Jackets & Coats
- Shirts & T-Shirts
- Trousers & Shorts
- Underwear & Lingerie
- Gems & Jewelry
Global Luxury Fashion Market, by Region
- Supermarkets & Hypermarkets
- Specialty Stores
- North America
- Rest of Europe
- Australia and New Zealand
- Rest of Asia-Pacific
- Rest of the World
- South America
- Middle East
- Luxury Fashionmanufacturers
- Raw Material Suppliers
- Governments, Associations, and Industrial Bodies
- Investors and Trade Experts
Frequently Asked Questions (FAQ) :
The Key players of the market are Shiseido company, Louis Vuitton, Ralph Lauren, Financiere Richemont, Loreal group, Kering SA and The Estee lauder.
Consumer spending from the wealthy society is the crucial driver for the market. Also, attractive promotional methods are another crucial drives.