This article is from the Australian Property Journal archive
MILLENNIAL and Gen Z consumers with an eye for luxury brands are supporting strong sales in Australia’s luxury retail market.
According to CBRE’s Luxury Retail Report, younger Australians buying up high-end products paired with the return of international tourism has helped underpin a record $6.2 billion in luxury retail trade over 2023. With 2023 marking the highest level of growth in national luxury retail revenue since 2015, at 14.8%.
“The luxury market’s dynamic nature and shifting consumer preferences present exciting opportunities for growth and innovation in Australia,” said Sheree Griff, head of retail property management and leasing at CBRE, Pacific.
Though discretionary spending has stabilized from its peak in January 2023, it has continued on a upwards trend of the last five years.
Louis Vuitton, Richemont and Hermes were the top performing luxury brands in Australia over the year, with the three brands delivering strong performances over the last four years, with revenue growth of 87%, 153% and 177% since 2019 respectively.
Generationally, Millennial and Gen Z shoppers are more likely to prioritize both high-end and sustainable products.
“The trend of younger consumers showing a preference for premium products over ‘fast fashion’ is a key driver behind the robust performance of Australia’s luxury retail market in 2023,” added Griff.
“Social media, particularly TikTok and Instagram, has become a significant platform for younger consumers to discover and engage with luxury brands. Short-form videos and viral content, often featuring celebrities and influencers, heavily influence purchasing decisions of Millennials and Gen Z who want to align with fashion trends and brand status.”
Despite the rapidly rising e-commerce penetration in Australian retail, as at April 2024 those aged between 15 and 54 accounted for over 50% of all high-end spending in Australia. With luxury buyers more likely to value the experience of shopping in a flagship store.
With The Cartier flagship at 388 George Street designated as one of the 18 new “World’s Most Beautiful Shops and Stores” in 2023 by the selection committee for the Prix Versailles – The World Architecture and Design Award at UNESCO.
Nationally, international tourists spent $43.1 billion during their travels in 2023, up 118% from $19.8 billion in 2022. And are expected to spend at greater than pre-pandemic levels this year.
With forecasts for international spend in Australia over 2023-2028 at an average annual growth rate of 12.2% or $250 billion in expenditure, according to Tourism Research Australia.
60% of luxury spending was in the clothing and footwear category, which accounted for $4.3 billion of total revenue in 2024. With Jewellery and watches following at 25% or $1.5 billion of total revenue.
Luxury retail in Australia has a forecast CAGR of 2.7% from 2024 to 2029, after reaching a CAGR of 5.3% over 2019-2024.
