Luxury retailing is exploding in Australia thanks to China

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Tourists from Asia, mainly China, are driving strong revenue growth in Australian luxury retailing.

The demand for Swiss watches, lavish handbags and designer clothing has pushed growth in luxury retailing to 11% a year over the five years to 2016-17 to reach $1.8 billion, says industry analyst IBISWorld.

This growth is forecast to continue at 8.2% a year to 2021-22 and hit $2.7 billion.

IBISWorld says about 30% of industry revenue can be attributed to tourists, especially from increasingly sophisticated markets in Asia.

The depreciation of the Australian dollar has helped this growth in inbound tourism and boosted demand for luxury goods. The change has coincided with the increasing sophistication of high-value Asian tourism markets.

The number of international arrivals is forecast to reach 7.95 million this financial year, a 5.7% increase on last year.

Australia is the first choice among tourists from China for their next holiday, according to the fifth edition of the Chinese International Travel Monitor by

Chinese tourists are now the biggest group coming through Australia’s main airports. Over the past year there were 1.35 million arrivals from China and Hong Kong, overtaking New Zealand.

Luxury clothing and footwear accounts for the largest share of industry revenue at an estimated 61%.

Melbourne and Sydney lead in terms of store numbers but Brisbane and Perth are emerging as potential growth markets for luxury retailers.

Competition is expected to intensify due to an increasing number of boutique stores and foreign online retailers.

Already the opportunities have brought a wave of international luxury powerhouses to the Australian market.

“Heritage luxury powerhouses like Louis Vuitton, Hermes and Chanel have taken this opportunity to expand over the past five years, while experimental and emerging labels have also grown with the assistance of luxury boutique stores,” says IBISWorld.

“Traditionally, the typical consumers of luxury goods have been the cash-rich, middle-aged cohort.

“However, as incomes increase, younger consumers are becoming increasingly conscious of fashion and luxury, especially as they are continually exposed to the extravagance of celebrity lifestyles through film, media and social networking platforms.

“This trend has been reflected in the rise of emerging labels and experimental brands that target the younger cohort, with a host of international designers and labels reaching Australian shores through luxury boutiques or smaller flagship stores.”

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