Luxury car maker Rolls-Royce Motor Cars sold a record number of cars in 2014. The company sold over 4,000 cars for the first time in its 111-year history – up 12% on 2013. This marks the fifth consecutive year of record car sales for the company.
Emerging markets fuel luxury success
The luxury car market has been left largely unaffected by the recent global economic downturn. Demand from the US, China, and emerging markets have helped fuel success for companies such as Rolls-Royce, Ferrari, Jaguar Land Rover and Aston Martin. The success of Rolls-Royce is part of a much larger trend – of the success of luxury brands despite the challenges in the global economy.
The success of Rolls-Royce is part of a much larger trend – of the success of luxury brands despite the challenges in the global economy.
A report from Frontier Economics, which was released last month, found that the number of people employed making high-end cars, wines and clothing rose 11% between 2010 and 2013. Europe’s luxury goods sales grew almost 28 per cent to €547bn (£428bn) in the same period.
The World Watch Report 2013 also stated that global demand for luxury watches by brands such as Rolex, Omega, and Cartier increased by over 5% over the previous 12 months. This was driven by demand in the BRIC group of countries; Russian demand increased by 20%.
As billions struggle with poverty and unemployment, new millionaires and billionaires are seeking expensive luxury items in order to stand out among their peers and spend newly acquired wealth. There are also more billionaires than ever before. In 2014, there were 15% more billionaires across the globe than in 2013 and the super rich are spending on everything, from stays in luxury hotels, clothes, jewellery and yachts.
Consumers still want to treat themselves
But the success of luxury is also down to the fact that luxury is something that many classes of wealth engage with – not just millionaires. When times are tough for most of us, and the annual holiday abroad is out of the question, many brands are enjoying sales from people spending a fraction of the cost of a holiday on something such as a wallet or expensive fragrance. Consumers still want to treat themselves, and a small token from a luxury brand is how many are doing it.
Those at the very top, and those at the bottom, are stealing a march. Those in the middle will have a tough 2015.
The success of luxury is in stark contrast to those businesses in the mid-market, such as the larger supermarkets and high street clothing stores. Those brands are struggling. The success of luxury is only matched by the cut-price offerings at the lower end such as Primark and Aldi. Those at the very top, and those at the bottom, are stealing a march. Those in the middle will have a tough 2015.
In the end, this is positive news for the UK in particular. Retail consultants Conlumino predicted that the UK will overtake Italy and France to become the largest luxury goods market in Europe by 2018, largely owing to the effect of London, which has become the world’s No 1 shopping destination. Many luxury brands have opened flagship stores in the capital, and London boasts many home grown luxury brands, including Burberry, Smythson, Victoria Beckham, McQueen, and The Ritz Hotel. Even BMW-owned Rolls-Royce has retained its ‘Britishness’.
2015 is set to be a strong year for luxury brands, and one that is increasingly important to employment, to the economy, and to the branding of Britain.
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