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Deloitte has high hopes for the luxury market in Australia

Consultancy Deloitte has predicted that retail sales in Australia are likely to suffer something of “a hangover” in 2019 before picking up again in 2020.

In a recent report, Deloitte predicted retail sales growth of 1.6% in Australia this year, which would be slower growth than 2018’s 2.2%. However, the same report said retail sales would grow by 2.2% again in 2020.

In the report, Deloitte partner David Rumbens said Australia has sustained a reasonable rate of sales growth, but in “an unconventional way”. He explained that, while consumer spending growth over the past five years has reached an average of 2.5% per annum, growth in household disposable income has been lower at 1.9%.

Growth for Australia’s retail sector has come not so much from income growth, Mr Rumbens said, “but leveraging off consumers’ willingness to spend”.

Of particular interest is Deloitte’s predictions for sales of luxury goods in Australia. It forecasts growth of between 6% and 8% per year until 2024, well ahead of the wider retail sector. This, the consultancy firm has said, will encourage the arrival of more international luxury brands, and those already in the Australian market will continue to expand their store footprints and online offerings.

Luxury retailers in Australia will continue to jostle for prime retail locations, according to Deloitte, because having a flagship store in cities such as Sydney and Melbourne is of great importance in building up brands’ reputation. Deloitte expects more luxury flagship stores to open.

The firm’s lead consultant for retail in Australia, David White, has said that supply chain implications are also likely to arise from luxury brands’ greater involvement in Australia. “With handmade crocodile skin handbags selling for upwards of $50,000, we’ve seen the likes of Louis Vuitton and Hermès, for example, make strategic acquisitions of Australian crocodile farms in order to secure their supply chain of this scarce commodity,” he said.

Image shows a Louis Vuitton store in Melbourne.




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