Why the top 20 luxury brands may need to cut costs
Luxury brands may have to lower their prices as the world’s wealthy seek to save more for their retirement, according to a report from consulting firm Gartner.
Luxury companies may need a little more help than they think to balance the budget and help the world feel better about the economic future.
Gartner says that a number of brands, from luxury home furnishings to luxury apartments, may have more trouble meeting demand than expected, due to lower demand from wealthy consumers and consumers who may be more vulnerable to health-related risks.
The luxury space has been particularly vulnerable to the slowdown in demand as the global economy slowed to a crawl, and demand for luxury goods has slowed to levels not seen since the early 2000s.
This has made the luxury market a more attractive target for brands than ever before, according the report, which surveyed more than 700 brands and executives.
Gill Pratt, senior vice president and research director at Gartners, said luxury products and services are expected to account for about a quarter of the global luxury market, but they are expected be hit especially hard by the slowdown.
“The number of luxury companies in the market is expected to grow by about a third to 30% between 2020 and 2030, which is the most rapid growth in the luxury segment of the market in the last decade,” Pratt said in a statement.
“This has driven up the cost of luxury goods in many categories, including homes, apartments and even clothing.”
Pratt said that the biggest challenge for luxury companies is the fact that demand has slowed considerably over the past decade.
“Luxury companies need to diversify and find more profitable ways to increase revenues,” she said.
“Some of these industries are more vulnerable than others to this slowdown, so it is important to keep these industries on track to ensure they can maintain their value as a source of revenue.”