Investing in luxury goods: a sector set for years of galloping growth

Rising Chinese consumption and the advent of e-commerce are two long-term trends powering the premium-goods industry, says Stephen Connolly. That implies market-beating returns for investors.

Chinese woman shopping for handbags
Shopping at Louis Vuitton, Shanghai: parent company LVMH is a powerhouse of top fashion brands
(Image credit: © Alamy)

“I’m a man of simple tastes”, Oscar Wilde used to joke. “I’m always satisfied with the best.” People’s idea of luxury goods will depend on their location, income levels and plain old individual taste, while these products also span several industries. Fashion – ranging from haute couture such as Christian Dior to Chanel’s shoes and handbags – is perhaps the most eye-catching area but there are luxury brands in areas as diverse as automobiles, jets, yachts, travel, drinks, watches and jewellery, as well as cosmetics and perfumes.

Whatever your exact definition, however, it is the combination of a strong brand name and perceived high quality that gives luxury goods their cachet – and also explains why they are such a lucrative business and a market-beating long-term investment.

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Investment columnist

Stephen Connolly is the managing director of consultancy Plain Money. He has worked in investment banking and asset management for over 30 years and writes on business and finance topics.