Over the post-recession years of 2010-2013, sales of personal accessories have grown disproportionately to consumers’ annual disposable incomes. Surprisingly, personal accessories have not only
outpaced the growth of disposable incomes but also the growth of larger industries such as apparel and beauty and personal care. We dissect this development for the largest personal accessories markets in the world – China, the US, India, Japan and Russia.
The Present Gulf in Consumption
With absolute per capita expenditure standing at US$289, US consumers will spend nearly nine times more than Indian consumers on personal accessories in 2013. Although it is inevitable that per capita expenditure on personal accessories in India and China lags behind that in Japan and US, it is interesting to analyse the respective proportions of annual disposable income an average consumer spends on personal accessories.
Proportion of Annual Disposable Income Spent on Personal Accessories (Per Capita, 2013)
Source: Euromonitor International
Owing to the overwhelming use of gold jewellery in religious ceremonies, as part of wedding attire and as wedding gifts, India has one of the highest ratios (2.6%) of disposable income spent on personal accessories. Relatively large sums spent on such occasions are often seen as a social obligation, and the practice is unlikely to change in the near future. On the other hand, a prominent gifting culture in China for both personal and corporate purposes has led to the increased importance of luxury brands in bags and watches. This has helped avoid a scenario similar to that seen in India, where jewellery is responsible for nearly 90% of all sales of personal accessories.
In stark comparison to these two emerging markets, the average consumer in the US or Japan spends less than 1% of his/her annual disposable income on accessories. Although this presents an opportunity for manufacturers in developed markets, there exist certain growth limitations, as highlighted below.
2010-2013 Sees a Rise in Incomes but a Greater Rise in Sales of Personal Accessories
Apart from representing the highest proportions of disposable income spent on personal accessories in 2013, China and India also registered the largest increments over 2010-2013.
Growth in Annual Disposable Income and Expenditure (Per Capita, 2010-2013)
Source: Euromonitor International
It is worth noting that the per capita sales growth of personal accessories outperformed the corresponding rise in disposable income across the five markets – whether emerging or developed. This not only demonstrates the resilience of the industry to macroeconomic concerns, but also the rapidly increasing footprints of global players such as LVMH, Swatch and Samsonite.
Another aspect of the rise in sales of personal accessories is its performance in contrast to other industries. Apparel and beauty and personal care, both of which account for much larger proportions of consumer expenditure, grew slower than personal accessories in four out of the five markets above. In comparison to the other two industries, personal accessories still has a dearth of mid- and economy-priced brands with global recognition. As such, both global and local brands are gradually enhancing their national retail presence in the largest markets of China, the US and India.
Competing with Brands AND Industries
Over the 2013-2018 forecast period, global players in personal accessories will benefit from continually rising disposable incomes in emerging markets such as China, India and Russia. However, the existence of established jewellery players such as Krascvetmet in Russia, Titan Industries in India and Chow Tai Fook in China is likely to limit the influence of global brands in the category.
The key to consistent growth in developed markets lies in increasing the industry’s share of disposable income, and this will entail direct competition with other categories which enhance ‘personal appearances’. As such, personal accessories might have to contend with beauty and personal care and apparel for a share of the consumer’s wallet over the forecast period.