The interior of a Louis Vuitton store in Shanghai. (Louis Vuitton)
A new study conducted by luxury research firm Ledbury and commissioned by American Express-owned luxury lifestyle publication Departures surveyed 70 major luxury company CEOs to gauge their thoughts on where the global luxury market is going in the next few years.
According to the executives, China will unsurprisingly continue to play a key role in the industry's growth for the foreseeable future. When asked which region would be the most important contributor to growth in the next five years, East Asia excluding Japan ranked second after North America. However, this predicted North American success will still be heavily influenced by Chinese tourists, who are now the world’s top travel spenders. The vast majority of the CEOs surveyed—95 percent—said that tourist spending has been growing for their company. As a result, respondents believe that it is extremely important to maintain the same standard for products and services offered across the world in order to ensure a uniform retail experience for high-net-worth traveling shoppers.
Despite China’s economic slowdown and anti-extravagance campaign, CEOs are optimistic about the China market for the coming years. China’s GDP growth rate ranked as the third most important external factor having a positive impact on global growth, after the rise of e-commerce and the U.S. economic growth rate. Although China’s growth rate is the slowest it has been in a decade, with a year-end projection by the Chinese government of around 7.5 percent, participants still recognize that the number is quite high. The survey noted that many even believe the slowdown has been exaggerated in the media over the past year.
The majority of respondents (89 percent) are also optimistic about the global luxury industry for the next 12 months, and their companies’ digital initiatives are a top priority in terms of their plans to evolve their businesses over this time. This includes not only e-commerce, but also social media, which brands hope to utilize to strategically reach their main target audience. For now, one main social media challenge remains conveying a brand’s upscale image on a platform which one respondent said has “no luxurious element,” but is “high tech instead of high touch.” Although it wasn't specified which platforms were garnering the most attention, with the stated importance of the China market, it's likely that Sina Weibo and WeChat are high on the list of priorities.