As per an Ernst & Young’s report, ‘The Luxury and Cosmetics Financial Factbook 2017’ that the global luxury market is expected to reach sales of over €490 billion ($599bn) by 2020, after achieving sales of €419 billion ($512bn) in 2016. The company expects growth in the sector to be driven by emerging markets and development of online channels.

Patricia Fernandez Mesa, Head of Fashion Retail at EY says, “Trends in the luxury sector are changing rapidly, driven by the new digital consumer who sees fashion from a different perspective and demands a more personalised relationship with brands. We are in a deeply disruptive moment in which, far from identifying a great trend that guides the sector’s evolution, we are seeing different behaviours according to different categories and markets.”

The global luxury market was worth €269 billion ($328bn) in 2016 and is expected to grow at a CAGR of 3.4 per cent by 2020. This is higher than the 2.8 per cent rate recorded in the 2012-2016 period, but contrasts with a strong CAGR of 11.7 per cent experienced between 2009 and 2012.

According to EY, the luxury market is slowing down due to a shift in consumer behaviour as more consumers are now combining high-end products with more affordable items. This is coupled with the disruption of digital age which indicates a direct impact on the global sales of the sector due to greater transparency and the ability to compare prices online. It has also contributed to a fall in footfall and in-store traffic, says the report. Meanwhile, the premium and entry-to-luxury segment was worth €101 billion ($123bn) in 2016, with a CAGR of 4.4 per cent between 2012 and 2016.

The EY report also notes the change in the market in favour of these two segments has been fuelled by the rise of the middle class in countries including China and India, an increase in the price range of luxury products, traditional luxury consumers increasingly adding premium and fast-fashion products to their wardrobes and the rise of casualwear.