This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Global Luxury Markets Rise 10 Million Each Year

NEW YORK (TheStreet) -- The number of luxury consumers worldwide has more than tripled in the past 20 years, and will continue its relentless growth for years to come thanks to an increasing number of wealthy shoppers in emerging markets.

About 10 million luxury consumers enter the market each year, according to a Lens on the Worldwide Luxury Consumer report compiled by Bain with broker Redburn Partners and research agency Millward Brown.

In 1995, there were about 90 million luxury consumers around the globe. By last year that jumped to 330 million, the report says, and by 2020 it will be closer to 400 million.

The majority of those consumers last year were in North America (90 million) and Western Europe (80 million). But emerging markets already make up a substantial portion of the luxury consumer base  130 million such shoppers last year, with the Chinese being the leading emerging-market spenders.

Must Read: Capital One Stumbles Over Rules With 'Creepy' Debt Collector Policy

"When you look cumulatively at the last 20 years, we have had some major changes in the world economy," says Dan Geller, a behavioral economist and author of Money Anxiety. "China came on board with tremendous economic growth that created affluence. It definitely created luxury consumers. The same thing with India, it has an improving economy also."

There were about 50 million luxury consumers in China last year. Another 25 million came from what the report describes as "other Asian countries" and another 20 million from Latin America.

The report describes China in particular as a "universe of its own" when it comes to luxury shoppers and their diverse profiles. Overall, luxury is viewed as a social enabler in China, with strong demand for well-known luxury brands.

But it's not just China that has a growing appreciation for luxury goods.

Catherine Heald, CEO of Remote Lands, a boutique travel and tour operator with a focus on pricey trips to Asia, has seen firsthand a growing demand for luxury throughout the region.

"If you go to the capital of Mongolia, they have a Louis Vuitton shop, which is absolutely crazy," Heald says. "The first time I went there in 2005, there was absolutely nothing."

Mongolia is just one example of the increasing luxury consumption seen by Heald, who lived in Hong Kong for seven years and travels to Asia about four times each year. Heald has been to Bhutan three times since 1999, and has seen a growth in the demand for luxury of all types there as well.

"It has changed hugely. The first time I went there, there were no luxury hotels, nothing," Heald says. "Now they have resorts that are $2,000 a night, and there are a lot of Asians in those hotels."

True luxury consumers consistently dedicate a part of their discretionary spending to personal luxury products of various types, the Bain report says. "Occasional consumers" want to buy luxury products but can afford only a few entry items  such as designer second lines, beauty products and small accessories.

Of the 330 million luxury shoppers last year, about 150 million were true luxury consumers. The top 10% of true luxury consumers make up half of global spending on luxury items.

During the past five years in particular, people have been feeling better about spending, especially luxury spending, Geller says.

"At the beginning of the recession, which was pretty much worldwide, consumers held back on luxury items because of the financial anxiety and uncertainty about the future," says Geller, developer of a "money anxiety" index. "But we are seeing evidence that there was an improvement in consumer financial anxiety in 2013 and therefore we are seeing an increase in purchases of luxury items."

To prove that theory, Geller did his own study focused on high-end diamond sales through DiamondsonWeb, an Internet retailer.

The study tracked and compared sales figures 2012 and last year, focusing on diamonds of $15,000 or more because such pricey diamonds are not a necessity purchase and tend not to include the engagement ring category of buyer, Geller says.

"Lo and behold, there was an increase of 10% in the sale of diamonds of $15,000 or more," Geller says. "This is significant because those are purely luxury items."

"Since January 2013 the 'money anxiety' index that I measure is improving," Geller says. "We are creatures of habit. And basically as soon as the level of money anxiety decreases, we repeat our behavior  so that includes spending more and for those who can afford it, it means spending more on luxury items."

According to the Bain report, by 2030 there will be an estimated 500 million luxury consumers around the world.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.01 -2.70%
FB $104.02 -5.90%
GOOG $684.00 -3.40%
TSLA $163.01 -7.00%
YHOO $27.97 -4.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs