German luxury market surges

Warc, 27 February 2013

MUNICH: The German luxury market is currently in the middle of a boom period, with over three-quarters of brand owners enjoying sales growth during the second half of last year.

MEISTERKREIS, the industry association, polled 60 senior managers from leading companies, in association with Roland Berger Strategy Consultants, and established that there had been substantial growth during the second half of 2012 and most expected this to continue in the first half of 2013.

Specifically, 81% of luxury products companies polled saw their business do well or very well in the latter half of 2012.

Sales increased by more than 10% at a third of companies, while another 43% registered sales growth of between 5% and 10%.

And for the first six months of the current year, 62% anticipated sales growth of 5% or more.

"Overall, we rate the mood in the German market as very positive," said Clemens Pflanz, CEO of MEISTERKREIS.

"Many companies are well positioned in their market segment and are achieving robust and profitable growth," he added.

Much of the improved performance has been generated domestically. More than half of the companies surveyed (55%) said sales in Germany had been better than in other markets last year, and a third of companies believe this trend will continue.

"Sales to shopping tourists have been booming for many years," said Philip Beil, a partner at Roland Berger, noting that international customers are important or very important to almost two thirds of the companies surveyed.

The expectation of a bright future is backed up by the figures for future investment, with almost half planning more new hires (48%) and higher marketing spending (45%) in early 2013.

In addition, most of those surveyed also aimed to raise the average prices of their products in the first half of the year.

Data sourced from Roland Berger Strategy Consultants; additional content by Warc staff