Sales across the UK luxury industry grew by 49% to £48bn in the period between 2013 and 2017, new research by UK luxury brand association Walpole has shown.
The report by international consultancy firm Frontier Economics, commissioned by Walpole, suggests that the British luxury sector will continue to grow rapidly in the medium term.
The predicted value of sales for the end of the 2019 is between £51.1bn and £57bn, contingent on the UK and European Union securing agreement on their future trading relationship.
In an optimistic scenario, wherein the UK and EU conclude an agreement that ensures duty-free trade, Walpole projects that the value of sales could grow to between £65bn and £74bn between 2019 and 2024.
However, if the UK and EU cannot secure an agreement on their future relationship, sales are estimated to grow to between £52bn and £60bn in the same period.
The report defines British luxury according to 11 classifications, including: 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.
The sector is still heavily export-orientated: 80% of production – £38.5bn in value – shipped to overseas markets in 2017, up 54% from 2013. The top export markets for British luxury goods are the EU (42%), North America (23%) and China (11%).
Exports across the designer apparel and footwear sector reached £5.81bn in total sales in 2017.
The research stressed that leaving the EU without a deal would jeopardise up to 20% of luxury industry export revenues, equivalent to £6.8bn a year.
Meanwhile, direct and indirect employment in the British luxury sector grew 38% from 113,000 to 156,000 in the same period. It accounts for almost 6% of all jobs created in the UK during 2013 and 2017.
Overall, the British luxury sector is growing on average 9.6% year on year, mainly attributable to a strong performance in the luxury car sector. This outpaces the UK’s average annual economic growth of 4%.
The report also highlighted the ever-increasing trend of shopping tourism and the consumption of high-end products while travelling in the UK.
In 2017 the value of sales of high-end goods to non-UK resident customers was £4.5bn: China, the Gulf Cooperation Council countries, and the US were pinpointed as the top three spenders.
Helen Brocklebank, CEO of Walpole (pictured above), said: “These figures demonstrate the exceptional contribution British luxury makes to the UK economy and to the reputation of ‘Brand Britain’ worldwide. Few other business sectors can demonstrate growth of nearly 50% in just four years and, against a challenging political backdrop, this is a sector that continues to demonstrate a commitment to investing in UK manufacturing and creating sustainable employment across the country.
“We look forward to continuing this kind of robust growth, not least in exports, but the threat of exiting the EU without a deal remains, and would cost British luxury businesses £6.8bn in lost export revenues. Now is the time for policy makers to provide distinct sector recognition and to guarantee a suitable framework to protect the growth of the UK’s high-end creative and cultural industries.”
Michael Ward, chairman of Walpole and managing director of Harrods, added: “Britain’s luxury brands are our calling card to the world. We should be enormously proud of these businesses: their heritage, creativity, craftsmanship, quality, innovation – and the contribution they make economically, culturally and to soft power diplomacy. It is critically important that this thriving sector is promoted and protected to ensure its long-term growth.”