Amidst Australia’s sun-kissed landscapes, a fervour for opulence and exclusivity is sweeping across the retail industry, driven by young Australians’ taste for high-end goods.
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A recent report from real estate firm CBRE details the buoyant trajectory of Australia’s luxury retail market, due to multiple factors. The resurgence of international tourism, coupled with the burgeoning presence of Millennial and Gen Z cohorts embracing luxury brands, has laid a robust foundation for the sector’s remarkable performance in Australia.
According to CBRE’s Luxury Retail Report, Australia basked in a record USD6.2 billion in luxury retail trade in 2023, with 483 retailers—both international and domestic—in the market.
While the allure of luxury goods commands a premium, Australia’s allure to High-Net-Worth Individual (HNWI) migrants, surging tourism, and a surge in discretionary expenditures have collectively bolstered the market’s vigour.
Luxury expansion driven by demand
Top luxury groups including Louis Vuitton, Richemont, and Hermès have showcased remarkable revenue growth rates in Australia of 87 percent, 153 percent, and 177 percent, respectively, since 2019.
Other high-end brands have either entrenched their presence or expanded their reach, securing leases in key metropolises including Sydney, Melbourne, Brisbane, Perth, and Adelaide, as per data from IBISWorld and CBRE.
Sydney remains a “strategic city” for luxury brands looking to enter the ANZ market, according to CBRE. Melbourne has also shown resilience in the past 24 months, while Brisbane has experienced “strong growth” in the same period.
Perth is also seeing an expansion, with the redevelopment of Raine Square. Brands including Dior, Omega and Cartier are poised to enter Perth’s growing luxury offerings.
Looking ahead, the forecast for luxury retail in Australia is projected at a compound annual growth rate (CAGR) of 2.7 percent from 2024 to 2029.
Australian Millennial and Generation Z consumers gravitate toward luxury
A seismic shift in consumer behaviour within Australia’s luxury domain has also come to the fore, with Millennials and Gen Z cohorts gravitating toward high-quality and sustainable offerings.
Despite the burgeoning digital engagement with brands online, the allure of the in-store experience remains undimmed, as individuals aged between 15 to 54 accounted for more than 50 percent of all high-end spending in Australia as of April 2024.
Apparel and footwear reign supreme, commanding a lion’s share of USD4.3 billion (69 percent) in total revenue in 2024.
Meanwhile, exquisite jewellery and timepieces holds steadfast, constituting a significant 25 percent market share with a total revenue of USD1.5 billion in the same year. According to CBRE, luxury luggage has also outshone its counterparts in recent years.
Social media, and in particularly TikTok and Instagram, has become a platform for younger Australian consumers to discover luxury brands, says Sheree Griff, CBRE’s head of retail property management and leasing.
“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 notes.
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At the same time, these cohorts value the “unique buying experience” offered at flagship stores. “This had led many top-tier brands to expand their footprint across Australia’s major cities,” Griff says.