EY comments on the current challenges facing the luxury consumer market
17 April 2014
Ed Hudson, EY Consumer Products Leader, comments on the current challenges facing the luxury consumer market:
"Consumer markets are sluggish everywhere and this is particularly noticeable in fast moving consumer goods categories where companies are currently struggling to find any growth. Consumers continue to be very cautious as they pay down debt and suffer diminishing real income in many countries. There are now signs that the previously robust luxury goods market are feeling the effects too.
"We have already seen the impact of this resulting in downward price pressure on everyday consumables but at some point it was inevitable that the effects were felt on the luxury sector as "conspicuous consumption" remains unfashionable. There are also a number of previously robust fast-growth emerging markets affected by government actions and other tensions that fragile economic circumstances exacerbate. Even in Japan, another big luxury goods market with a well publicised stimulus programme, the consumer is cautious as witnessed by the sharp falls in sales following the recent sales tax increases.
"Furthermore the new generation of connected customers, with instant access to globally transparent pricing, product comparisons and the opinions of luxury-bloggers, will make it more challenging to justify and sustain the high pricing differentials crucial to a luxury strategy. With all this in mind, luxury goods manufacturers will have to work very hard in this environment to tap into more tightly defined consumer segments and markets if they are to continue to grow at a time of heightened international price pressures."