Spain could be the next global luxury destination as it sees economic recovery in its high-end and luxury markets, growing at a rate faster than anywhere else in the world.
In 2017, sales of luxury goods and services accounted for a total of 9.2 billion euros, up nearly 10 per cent from the previous year. Although it is a modest market in comparison with other European countries, the pace of growth in Spain is much higher.
The Spanish luxury market, which is home to fashion houses such as Loewe and conglomerates Puig, grew at an average rate of 8 percent in the last two years (5 percent last year), compared to the global average of 3 percent, according to an analysis of the sector made by the consulting firm Bain & Company for Círculo Fortuny, an organisation which brings together some of the leading companies in the luxury retail sector.
Sales of luxury could double by 2025
According to the report, the luxury business in Spain could double by 2025, supported by tourism and the better positioning of brands and destinations.
The report, entitled “Spanish excellence: Today & Tomorrow,” places Spain with its 9.2 billion euros of sales as a discrete market in the world of luxury. Compared to France (27 billion) or Italy (29 billion) Spain achieves but a third of these figures, although it gains positions in some of the other categories in the sector, which includes personal goods, hotels and high-end restaurants, food and gourmet drinks and designer goods.
Luxury personal goods account for half of sales
According to the study, sales of personal luxury goods account for over half of the turnover, which includes the major fashion brands, cosmetics, accessories and so-called hard luxury (jewellery and watchmaking).
Since 2012, when the market was worth 3.7 billion euros, it has accumulated an average annual growth of 6 percent. As in the UK and London specifically, Chinese shoppers are responsible for 35 percent of luxury purchases.
In terms of numbers, eight out of every ten euros spent in 2017 was done in Madrid (1.9 billion euros) or Barcelona 2.2 billion.
Upon pubication of the report, the Spanish broadsheets were keen to note that Catalan capital Barcelona saw a drop in sales due to the vote for an independent state, which greatly affected tourism and deterred luxury shoppers. Figures fell more than 30 percent in the last quarter of 2017, according to the figures of duty-free sales that were measured in the study.
Claudia D'arpizio, Bain consultant and author of the report stated “political problems have impacted more than the terrorist attacks" of Barcelona in August, adding to the targets that make tourists feel they “are not welcome to the city".
While the numbers are a far cry from cities such as London, Paris or Milan, there is enormous potential for growth.
According to Falcó, with appropriate marketing, activating the ‘levers of growth’ and speeding up visa processes for foreign shoppers, Spain could find itself to be a formidable global luxury destination. “It is a big opportunity for companies in this sector,” underscored D’Arpizio.
Photo credit: Loewe website homepage