Lux­ury goods mar­ket de­clin­ing

Daily Local News (West Chester, PA) - - BUSINESS - By Colleen Barry AP Busi­ness Writer

The ter­ror threat in Europe, a strong dol­lar and uncer­tainty over the U.S. pres­i­den­tial elec­tions have eroded the con­fi­dence of the globe’s big-spenders, hold­ing lux­ury pur­chases flat in 2016, ac­cord­ing to a study re­leased Thurs­day.

Spend­ing on lux­ury ap­parel, ac­ces­sories and other per­sonal items is ex­pected to hold steady at 249 bil­lion eu­ros ($273 bil­lion) this year, a study by Bain Con­sul­tancy for the Al­t­agamma as­so­ci­a­tion of Ital­ian high-end lux­ury pro­duc­ers. Add in spend­ing on lux­ury cars, yachts, jets, cruises, ho­tels, fine art, de­sign and food, and the mar­ket tops a stun­ning 1 tril­lion eu­ros.

As political events and mon­e­tary pol­icy ex­ert greater in­flu­ence on lux­ury spend­ing pat­terns, brands have turned their fo­cus

to woo­ing buy­ers in their home coun­tries rather than count­ing on tourist ar­rivals to buoy sales, said Bain part­ner Clau­dia D’Ar­pizio.

“This is not hap­pen­ing by de­fault,” D’Ar­pizio. “Brands are re­fo­cus­ing on the lo­cal cus­tomer base and work­ing to de­velop prod­ucts that are more af­ford­able and more in­clu­sive to meet their needs.”

For the first time, spend­ing by China’s su­per con­sumers

shrank, al­beit slightly from 31 per­cent of the to­tal to 30 per­cent of the to­tal. Part of the shift was due to an in­crease in the num­ber of mid­dle-class Chi­nese trav­el­ers, who col­lec­tively spend less than higher rollers, she said.

While U.S. pres­i­den­tial

elec­tions al­ways put the freeze on con­sumer spend­ing, D’Ar­pizio said this year’s squeeze was a lit­tle tighter due to a strong dol­lar, which also hurt tourist spend­ing, and higher oil prices.

In Europe, brands are also work­ing to cul­ti­vate lo­cal

buy­ers as the threat of ter­ror­ism has hurt tourism. They are see­ing lo­cal con­sump­tion re­cover in Italy, Ger­many, Spain and Bri­tain. But spend­ing re­mains soft in France, with ter­ror at­tacks im­pact­ing both tourists’ and lo­cals’ sen­ti­ment, D’Ar­pizio said.

Bri­tain’s decision to exit the European Union so far has proven a boon for lux­ury spend­ing, with the fall­ing pound en­cour­ag­ing both do­mes­tic con­sump­tion and trav­el­ers to spend.

“Cur­rently, Lon­don is the cheap­est lux­ury mar­ket,” D’Ar­pizio said.

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