- Luxury goods sales in Australia will outpace the local retail market.
- Forecasts by Deloitte show 6% to 8% growth a year over the next seven years.
- Among goods in demand are $50,000 handmade crocodile skin handbags.
Australian sales of luxury goods will outpace retails sales and grow by 6% to 8% a year to 2024, according to analysis by Deloitte.
Deloitte’s fifth annual Global Powers of Luxury Goods report says the Australian market can expect to see the arrival of more international luxury brands.
Those already in market will continue to expand their store footprints and online offerings.
“Australia has experienced an acceleration of new brands either entering our market, or expanding their existing operations in recent years,” says Deloitte National Retail Leader, David White.
Total sales growth peaked at 16% in 2016.
“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 by the top 100 luxury retailers globally over the past three years.
Melbourne and Sydney are the strongest Australian markets, although key shopping destinations in Queensland, including the Gold Coast and the major shopping malls in and around Brisbane’s CBD, have also attracted an increasing number of luxury retailers.
“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 says.
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,” he says.
Retailers have responded by opening new stores in peak tourist areas where retailers are targeting consumer segments based on travel times, destinations and even language.
Chinese tourists are outspending per head any other visitors to Australia:
This has spurred the growth of luxury retail in Australia’s international airports, a segment of the market now commonly referred to as the “sixth continent”.
Airports, previously a haven for price-savvy consumers to buy at duty-free prices, have increasingly become key markets for luxury retailers where travellers have access to some of the best products available.
“While Chinese tourists have provided a significant source of sales growth, they only make up around 30% of our luxury market,” he says.
“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.”
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