Sector to watch: Luxury Goods
As the UK economy teeters between anaemic growth, a cost of living crisis, strikes over pay crippling the public sector along with interest rates at generational highs leading to recruitment slowing down significantly when compared to 2022, it can be easy to be negative. Nonetheless, as business leaders, the challenge is to find a way to succeed regardless. In recruitment, that starts with identifying markets which are outperforming others, and segments that still seeing buoyant demand. With that in mind, this week, we have highlighted Luxury Goods as a sector to watch. Why?
- Vacancies are now up five months in a row, since the lowest point in Easter and we expect September to be higher still.
- Looking at the five-year period, August 2023 has resulted in the second-highest level of vacancies overall. Only January 2023 saw higher totals.
- Despite it being a small sector overall, (factor that in 2019 only 0.2% of private sector vacancies 40k+ were in luxury goods, in 2023 it is 0.8%) the share has quadrupled over the period, making it the fastest growing sector in the UK.
So thinking through why this could be happening, let’s deconstruct:
Salaries now rising faster than inflation: Across the private sector, salaries are now rising faster than inflation. That combined with the position of the Bank of England to freeze interest rates at current levels, will mean disposable incomes are now rising. Higher disposable incomes will mean more spending on luxury goods.
Rise of E-commerce & BNPL: For people wanting to buy a special item, for example jewellery or a watch as a big ticket item, it has never been easier. Shopping from your phone combined with BNPL, means that as long as you have half decent credit, you can buy an item on the way to work on Monday, and it will arrive by the weekend. This ease of purchase is becoming so established, and because of the looser regulatory framework for BNPL (as opposed to credit card regulation), more and more people are using Buy-Now-Pay-Later schemes. Indeed it is one of the fastest-growing segments within Fintech, right now.
Forecast change to Govt tourist VAT: One of the changes made by the Government was to make it so that Tourists could no longer claim back VAT on shopping, where in terms of the consequence, businesses have seen the drop in footfall from tourists, where in contrast, Paris has rolled out the welcome mat. Looking ahead, the Government is probably going to reverse its decision here and companies are already starting to price this in. Look out for an announcement on a change here, in one of the coming budgets.
Export Potential: British brands such as Burberry and others are increasingly competing on a global playing field, equally decisions are made from HQ. As these companies scale global operations, so the HQs are on the rise. Whereas the rest of retail generally is susceptible to commoditisation in local markets, luxury goods have their brand to protect them and the global middle class is growing in size. Hence, if you have the money, why have a cheap knock off when you can have Burberry?
So where are the opportunities within Luxury Goods? Marketing is the biggest single area, where just as importantly, the share of jobs that are for marketing is on the rise. Hence we see 25% of all 40K+ jobs in luxury goods companies now being for marketing roles. This is up from 23% in 2019, where the types of roles which are specifically of interest are digital predominantly, equally unsurprisingly, this is the only sector where branding is a top 3 area being recruited for within marketing teams. Just as importantly, on the rise too. Factor over 5% of all 40k+ vacancies in the last 3 months, across all business functions, were for branding specialists.
If you would like to find out more about how we can help you, please do get in touch.
The data referenced above has been sourced from Vacancy Analytics, a cutting-edge Business Intelligence tool that tracks recruitment industry trends and identifies emerging hotspots. With 17 years of experience, we have a deep understanding of market activities in the UK and globally.
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