The luxury apparels sector has been one of the prime beneficiaries of the steady rise in the disposable income of consumers in emerging regions. Though consistent demand from developed, affluent regions such as North America and Europe is the key sustaining force for the global luxury apparel market, the rising demand in emerging regions could play a significant role in the development of the luxury apparel market in the coming years. The luxury apparel market is one of the leading segments of the global luxury goods market, which has risen steadily in recent years and, albeit the slowdown caused by the economic turmoil in Europe and the 2008-09 slowdown, is likely to make steady progress in the coming years.
According to Transparency Market Research (TMR), the global luxury apparel market is expected to be valued at close to US$60.8 bn by the end of 2024. The market is projected to exhibit a robust CAGR of 13.2% between 2016 and 2024.
How can Established Luxury Apparel Makers Cope with the Onslaught of Technology?
One of the key factors likely to affect the direction of the global luxury apparel market in the coming years are the efforts taken by premier luxury apparel brands to adapt to the shopping demands of the modern consumer. While traditional brick-and-mortar stores remain the conventionally popular option for apparel purchase, the rising use of online shopping portals has driven the increasingly affluent urban youth demographic away from established names in the global luxury apparel sector. The changing nature of the modern consumer’s spending structure has also resulted in a disinclination against expensive clothing, with several Millennials exhibiting a clear preference toward experience-based spending rather than object-based spending.
2017 has not been a good year for major retailers in the global luxury apparel market, with nine already filing for bankruptcy by May. Ralph Lauren Corp., one of the premium names in the global luxury apparel market, faced a three-year low in the valuation of its stock in April 2017, with the pricing dynamics of the modern urban lifestyle starting to prove too much for conventional modes of operation in the luxury apparel sector. The easy availability of products priced at a third or even a fourth of premium Ralph Lauren products has led to a steady drop in demand from the luxury apparel giant. In an effort to cut costs, Ralph Lauren was even forced to shut down its flagship store in Manhattan in January this year; the company responded with a restructuring plan expected to cost more than US$350 million in its entirety.
While Europe is the current leader in the global luxury apparel market, European companies are likely to concede significant ground in the sector to emerging companies in dynamic economies such as China and India. The rising production of fabrics such as cotton in Asia Pacific countries is a key factor enabling steady growth of the luxury apparel sector in the region, while the rising disposable income of consumers in Southeast Asian as well as East Asian countries is likely to lead to a rising demand for luxury apparel. India, China, Thailand, Vietnam, and Japan are also among the leading producers of silk in the world, which also bodes well for the luxury apparel sector in the region.
Several leading players in the global luxury apparel sector have made efforts in recent years to establish a firm presence in the Asia Pacific market. Louis Vitton and Versace have been among the key players actively focusing on expansion in Asian economies and are likely to retain a leading share in the global luxury apparel market in the coming years. Other key companies in the global luxury apparel market include Giorgio Armani S.p.A., Burberry Group Inc., Prada, Dolce and Gabbana, and Hugo Boss AG. Companies that proactively adapt online sales models are likely to succeed in the Asia Pacific market in the coming years, as the rapid growth of the telecommunications sector in Southeast Asian countries has presented significant scope for the ecommerce sector in the region.