Symbols speak to power, and no one knows that quite as well as luxury brands. Financial status has been used as a gauge for character amongst social groups since the dawn of capital. So has one’s ability to flaunt said finances tastefully, as though wealth is not a prize, but a state of being. A way of life.
The flash of a million-dollar watch, the swing of a heavily labeled bag, the rev of a rare engine—all celebrated as indicators of success, whether true or not. Where your visible possessions lie on the spectrum of expense directly correlates to your value in the eyes of society.
So, it’s really no wonder that the global luxury goods market is raking in hundreds of billions of dollars every year from individuals across the class divide. This exorbitant profit is only projected to rise.
Top Products
There are many product subcategories that are classified as “luxury” by manufacturers and consumers alike. However, few stand out as major purchase-enticers around the world: Jewelry, clothing, perfumes and cosmetics, and bags and purses.1
- Jewelry
Anything made from a limited resource will become a privilege to own. Authentic jewelry, like tiered diamond necklaces and handcrafted gold watches, is worth so much that they’re sometimes bought to wear once, then retired and put on display in homes and galleries. It sounds backwards—to spend millions on something, then let it sit untouched for the rest of eternity.
Thankfully, this mainly applies to jewelry of historical or relative significance. Today’s jewelry market draws in buyers for a multitude of purposes. Sales of necklaces, bracelets, rings, and other daily-wear accessories of authentic elements have steadily increased over the past decade, even as the value of certain elements drops. However, it’s for this reason that a larger demographic of people can afford real jewelry, therefore improving profitability and heightening demand.
- Clothing
Perhaps the most telling but often overlooked signal for wealth is that of quality clothing. The average person likely can’t tell the difference between a designer coat and one straight off the rack from a department store. Most judge fashion on a scale of style over substance.
But there is an intrinsic awareness amongst high-end clothing brands that it’s not about outside perception, but the wearer’s knowledge that what they put on their body is something few can afford or justify purchasing when there are cheaper alternatives. Call it ego inflation or a simple boost of confidence. Either way, it’s a topic of conversation that can lead to a grand revelation of power:
That’s a lovely blouse. Where’s it from?
Oh, this? It’s only Miu Miu.
- Perfumes and Cosmetics
The emergence of social media has strongly amplified discussions surrounding appearance and hygiene, making it a more profitable industry—especially when marketed toward women. Whether for better or worse, it’s become a driving factor behind the recent successes of the luxury goods market.
In this context, the “perfumes” and “cosmetics” categorized as luxury can’t be found in a drug store. Similar to the above theory of clothing, hundred- to thousand-dollar skin care, makeup, and scents, though comparable to drug store products regarding effectiveness, are more valued by the consumer because they showcase wealth.
- Bags and Purses
There’s been a substantial rise in the sales of bags and purses since the early 2000s. Not only as tools for carrying our day-to-day items, but also as collectibles. Designer bags are easier to identify than other clothing and accessories, which makes them highly sought after as a sign of wealth.
However, there’s been a rise in the production of counterfeit designer bags that could hamper sales moving forward. Cost-conscious consumers will opt for the cheaper, near-identical fakes.
Country Data2
Asia-Pacific accounts for the majority of luxury goods sales at 39.7% of the global market. This is accredited to a rise in high-net-worth individuals who are purchasing higher quality products in bulk amounts. Generational wealth is also a major contributor to these sales. There are dozens of prominent families and more burgeoning as companies move operations to Asian countries.
Europe and the U.S. follow closely behind Asia-Pacific as consumers of luxury brands. Both markets are estimated to grow by almost 7% by 2030 as more of these brands move their manufacturing headquarters stateside.
Exports
E-commerce is prominent in the luxury goods industry because many brands prefer to sell direct rather than through various distributors, such as department stores. Depending on where a brand is headquartered, foreign exports can play a major or minor role in their success.
For instance, LVMH—the merged luxury goods brand of Moet Hennessy and Louis Vuitton—calls France home. But its top consumer continent was Asia by a significant margin. Whereas Tiffany and Co., a U.S. company, makes most of its sales in North America. So, though they’re exporting as well, their success lies in the name they’ve made for themselves right here.
By 2030, the market for luxury goods is expected to be a pillar of the economy, bringing in as much—if not more—money than agriculture. There’s a certain undeniable appeal to items that convey wealth without overstating it, and as median household incomes rise across various countries, more individuals can splurge on expensive goods.
Establishing a luxury brand requires more than talent. To be frank, it requires a whole lot of luck and decades to centuries of development. But it’s worth noting that luxury brands need suppliers just as every other major company does. Your business could hold the key to the next trending product, whether it be growing the plant stem cells necessary for a new skincare product by Chantecaille or programming the technology needed for Patek Phillipe’s newest watch. It’s worth researching how becoming involved could benefit you.