British Luxury Economic Value report 2015
A report from the international consultancy Frontier Economics, commissioned by Walpole in association with leading British law firm Charles Russel Speechlys, reveals that the value of sales from British luxury industries reached £32.2 billion in 2013, valuing the sector at 2.2% of the UK’s GDP. Creating a new benchmark for the British luxury industry, suggests that the sector will continue to grow rapidly in the medium term, forecasting the value of sales for 2019 to reach around £51.1 billion, with the industry set to employ 158,000 people.
The full report can be read here: Walpole Economic Impact Assessment Study
An infographic with the report’s key information can be viewed here: Walpole Economic Assessment Study Infographic
The report 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. While the economic importance of British luxury industries has been previously recognised, data collection by official sources on the activities of these industries has yet to be undertaken. In particular national accounts data do not capture the sector value because they exclude key elements such as high-end car manufacturing.
Britain’s luxury industries are strongly export-oriented with 78% of production, in value terms, destined for overseas markets (i.e around £25 billion in 2013). The British luxury industries accounted for around 4.3% of total UK merchandise exports in 2013. Year-on-year export growth in 2013 was around 12.1%, a rapid increase attributable mainly to a strong performance in the luxury car sector. Total employment is estimated at approximately 113,000 jobs in 2013, with the sector accounting for 3% of jobs created during the period.
Beyond the immediate economic contribution of the British luxury industries, revenues generated indirectly highlight the importance and scale of the industries. The main example is in tourism, reflecting the growing trend of shopper-tourism to the UK.
The report identifies that distinctive business principles 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
Edward Craig, Head of the Retail and Leisure Group at Charles Russell Speechlys, said: “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 UK luxury goods sector is hugely successful; it boosts Britain’s exports, is a creator of jobs and apprenticeships, and a major contributor to the economy. A ‘business card for Britain’, 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’.”