Luxury brands in Peru

By Francisco Espinosa Bellido

11.8% of Lima´s population, just over one million people, is today part of the highest merchandise consumer group of Peru´s capital. The percentage represents the all-around economic growth of the country and with it the emergence of a hefty purchasing power formed especially by young men and women, which, according to a report of newspaper El Comercio, has changed the landscape of the Peruvian market by strongly acquiring luxury goods from the world´s top fashion and jewelry brands.

When Ermenegildo Zegna opened its first store in Lima many consultants consider it a high risk low reward economic strategy. But today the store has annual incomes of 1.5 million dollars. Over the years many other luxury brands have joined the Italian fashion house in Lima: CH Carolina Herrera, Coach, Adolfo Domínguez, Max Mara, Versace Collection, Moschino, Etro, Emporio Armani, Pal Zileri, Hugo Boss, Salvatore Ferragamo, Riedel, Crepier, Bvlgari, Hublot, Dior, Zenith, Breitling, TAG Heuer and FreyWille.

It´s expected that in the short term the number of brands will grow up to 16, with the already confirmed upcoming arrival of Missioni and Rosa Clara, while Louis Vuitton executives have repeatedly visited Lima to analyze its market reality and fluctuation. Gucci, Prada, Dolce & Gabanna, Burberry and MontBlanc Omega are also negotiating possible arrivals with local and foreign sales representatives.

According to El Comercio Louis Vuitton advent could be fulfilled in the next two years, depending on the consumer penetration rate of "fast fashion" brands like Zara, H&M and Forever 21. Consultants explained that, although Peru is generating a huge potential market for luxury brands, it must first attract and strengthen "fast fashion" houses, creating thereafter the need of hefty spending consumers to differentiate themselves from other consumers brand elections. 

It will remain to be seen if the arrival of new luxury brands to Peru, and the easier access to those goods by some Peruvian consumers, will have any effect in the sales of counterfeited luxury goods in Peru, such as purses, shoes and accessories, given that such brands will have an additional incentive to fight and stop the indirect competition and the dilution of the brand that such counterfeit activity represents.