Luxury retail trade revenue has reached a record $6.2 billion in 2023 across just 483 retailers - including both international and domestic brands, operating nationally.
This is according to CBRE’s new Luxury Retail Report, which showed that younger demographics alongside an inflow of High-Net-Worth Individual migrants were key drivers for the lift.
This has also been driven by recovering international and domestic tourism as well as increasing discretionary spending in the luxury space, defying reported softening in discretionary household spend across all retail.
The report showed the top-performing luxury brands in Australia were Louis Vuitton, Richemont and Hermes. These three brands have outperformed over the past four years, achieving revenue growth of 87 per cent, 153 per cent and 177 per cent, respectively since 2019.
Across Australia, according to IBISWorld, top-tier brands have either established stores or expanded their footprint by securing leases across Sydney, Melbourne, Brisbane, Perth and Adelaide.
There has also been a consumer shift in Australia’s luxury market with the rise of Millennial and Gen Z generations showing a preference for high-quality and sustainable products, CBRE claims.
Although they are engaging with brands online, consumers are also still making purchases in-store. As of April 2024, people aged between 15 to 54 accounted for more than 50 per cent of all high-end spending in Australia.
“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,” CBRE’s Pacific head of retail property management and leasing Sheree Griff said.
“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.”
Griff also noted that while consumers were discovering luxury goods online, they still valued the unique buying experience offered in flagship stores and this had led many top-tier brands to expand their footprint across Australia’s major cities.
“The luxury market's dynamic nature and shifting consumer preferences present exciting opportunities for growth and innovation in Australia,” she said.
When it comes to what luxury consumers are buying, clothing and footwear continue to dominate, accounting for $4.3 billion of total revenue in 2024, making up 69 per cent of the luxury market.
Jewellery and watches also have a significant market share of 25 per cent with a total revenue of $1.5 billion in 2024.
The report identified luxury luggage as a submarket that has had substantial growth in recent years, outperforming all luxury markets.
The outlook for luxury retail in Australia is promising, the report claimed, with a forecast compound annual growth rate of 2.7 per cent from 2024 to 2029, driven by robust recovery in international tourism and a growing volume of affluent Australians seeking out luxury goods.