The booming luxury products industry in the UK is set to go from strength to strength in the coming years, with retail tourism acting as a catalyst for the sector.
At the end of 2010 the UK luxury sector was worth £6 billion and, according to new research released today by industry body Walpole and market research group Ledbury, is set to increase in value by 57 per cent in the next five years to £9.4 billion.
Tourist spend currently accounts for just over £1 in every four spent on luxury goods in the UK, a rise of 40 per cent in just one year, with Americans the fastest growing group of luxury visitors closely followed by the Chinese.
Several luxury retailers and brands have posted strong sales in recent months, including Burberry, Net-a-Porter, Mulberry and Harrods, and today’s report says 91 per cent of luxury companies surveyed expect trading to rise this year.
Guy Salter, Deputy Chairman & Founder of Walpole’s Thought Leadership Unit, which commissioned the report, commented: “This report backs up Walpole’s long held optimism about the luxury sector.
“We are Britain’s unknown growth industry and a great example of something this country is globally competitive at.
“It also a timely reminder of the ‘soft power’ benefits of luxury brands in attracting visitors and flying the flag with affluent consumers around the world.”
Another report unveiled today by global property company Colliers, also shows the strengthening demand for luxury goods, with global rents for prime retail space growing again after recent decline.
According to this research London’s Old Bond Street has managed to maintain rental levels at $962 (£591) per sq ft whilst other locations around the world have seen huge growth, like Hong Kong’s Causeway Bay for example where rents rose 25.6 per cent year-on-year to $1,510.
Colliers argues however that London’s strong tourist appeal will ensure high-spending consumers will still flock to its prime retail streets.
Mark Charlton, Head of Research & Forecasting at Colliers, said: “Although a move to discount retail is apparent in many countries, luxury retail is benefiting from “aspirational” consumers.
“An expanding middle class - particularly in Asia Pacific and South America - will be a key source of growth for many luxury retailers.
“In particular, increasing Chinese tourist numbers are driving luxury goods sales in a range of major city retail destinations.”