The UK luxury industry is looking forward to a rich future despite current global economic uncertainty.
A report from international consultancy Frontier Economics reveals that the value of sales from British luxury industries reached £32.2bn in 2013, valuing the sector at 2.2 per cent of the UK’s GDP.
It expects the sector to continue growing rapidly in the medium term and forecasts the value of sales for 2019 to reach around £51.1bn, with the industry set to employ 158,000 people.
This is despite the recent crisis in China which has raised concerns over the future spending power of its upper and middle class consumers. Similar worries have been expressed about the previously free spending emerging consumers in Russia and Brazil.
The report, commissioned by Walpole, the alliance of Britain’s luxury brands including Alexander McQueen, Burberry, Rolls-Royce, Selfridges and The Savoy and in association with leading British law firm, Charles Russel Speechlys, defines British luxury industries according to 12 classifications that capture the range of activities across the sector. They include: designer apparel and footwear, fine wines and spirits, luxury accessories, luxury jewellery and timepieces, high-end beauty and personal care and high-end car manufacturing.
It found that these industries are strongly export-oriented with 78 per cent of production, in value terms, destined for overseas markets – or £25bn in 2013.
Indeed the British luxury industries accounted for around 4.3 per cent of total UK merchandise exports in 2013. Year-on-year export growth in 2013 was around 12.1 per cent, a rapid increase attributable mainly to a strong performance in the luxury car sector.
Total employment in the sector is estimated at approximately 113,000 jobs in 2013, with the sector accounting for three per cent of jobs created during the period.
The report also identifies what it describes as the ‘distinctive business principles’ which underpin these industries.
– The aura of the products, which reflect the cultural heritage on which they draw, and the rich tradition of skilled craftsmanship they embody.
– The importance of long-term relationships with a network of skilled suppliers, with an emphasis on product quality that allows the brands in these sectors to position themselves competitively.
– The role of intellectual property in securing the value added of the final product.
Michelle Emmerson, chief executive of Walpole, said: “We are delighted by the findings of the Frontier Economics report revealing the truly significant value of the British luxury industry and its contribution to the UK economy. With well over half the produce destined for overseas markets over the year, we are proud that the British luxury industry pioneers as an export-orientated sector. We are thrilled to sit at the heart of an industry so valuable to the economy, and with such a promising growth trajectory.”
Edward Craig, head of the retail and leisure group at Charles Russell Speechlys, added: “British fashion, luxury products, cultural industries and design are amongst the UK’s most prolific exporters, prized around the world for their quality and distinctiveness. But businesses in the sector risk losing ground in a competitive global marketplace: threats range from Chinese counterfeiters to an inability to secure visas for skilled workers to work in the UK. Most of these issues will have a legal dimension.
“For the growth forecasted in this report to materialise, companies must assertively protect their intellectual property, commercial and digital rights around the world, and they must continue to access and export to global markets. Visas and digital governance issues will become more important. Our luxury sector is the jewel in the crown of UK industry, and it is important that the right policies and legislation are in place to foster their continued growth.”
Ed Vaizey, Minister of State for Culture and the Digital Economy, said the industry represents a ‘business card for Britain’. He added: “The brands represent the core values of luxury – creativity, innovation, design and the highest-possible quality and are recognised throughout the world. British luxury brands inspire the next generation of designers, businesses and cement the reputation of ‘Made in Britain’.
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