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The Luxury Sector

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II Luxury Sector Analysis 1. Description of the luxury sector In economics, a luxury good is a good for which demand increases more than proportionally as income rises, and is a contrast to a "necessity good", for which demand increases proportionally less than income. Luxury goods are often synonymous with superior goods and veblen goods (Luxury goods 2015). Luxury sector covers various products and services: apparel and accessories; arts and entertainment; automotive; consumer electronics; consumer packaged goods; retailing; education; financial services; food and beverage; fragrance and personal care; healthcare; home furnishings; jewelry; legal and privacy; media/publishing; retail; software and technology; sports; travel and hospitality …show more content…

The overall amount of worldwide luxury consumers has reached 350 million from 140 million. Furthermore, the full-year performance of luxury market is expected to rise 2-4 percent at constant currency (Global luxury goods market expected to sustain steady momentum 2015). According to Bain's research, currency fluctuations in the first quarter of this year had an immediate impact on touristic flows and spending patterns, especially among the Chinese (Global luxury goods market expected to sustain steady momentum …show more content…

Italian luxury giant Prada announced the net sales of 774.1 million euros in Greater China, 6.3% lower than a year ago. French luxury brand Louis Vuitton claimed a strong sales performance in US and European markets in this fiscal year, which drove business profit growth in both regions. However, demands from Chinese consumers remain weak because of government’s anti-corruption policy that keeps putting pressure on high-end consumers. French luxury group Hermes who gained a better global performance in 2014, although realized 1.14 billion US dollars (about 7.1 billion yuan) net profit that rose by 8.7% in comparison with last year, its watch business experienced negative growth. Hermes claimed that sales were worsening from the previous year's growth of only 1% to negative growth of 10.6% this year because of China's massive anti-corruption campaign (Prediction of the luxury goods industry 2015). Furthermore, the government anti-corruption action is not the only reason that led the downturn in luxury sales in China. According to Professor Zhang Mengxia from Research Center for Chinese luxury goods of Foreign Trade University, the suppressed luxury consumption corruption should be regarded as an "abnormal" part of sales. Chinese luxury market is becoming healthier because of the anti-corruption policy (Prediction

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