Gold watches and precious jewelry featured in more holiday gift boxes last year, helping the luxury goods market rebound stronger than expected in 2010 to surpass pre-crisis levels.
The global luxury market was worth euro172 billion ($254 billion) in 2010, according to a survey by Bain & Company released Tuesday by an association of Italian luxury producers.
That's a 12 percent increase from 2009's disastrous euro153 billion, and higher than the euro168 billion mark Bain had forecast in October - just two months before the ever-important holiday period.
"It went better than expected across the board, but in particular in the United States and Europe," Bain partner and luxury goods expert Claudia D'Arpizio said. "The market is back to pre-recession levels, so there has been a complete recovery from the crisis in 2008 and 2009."
The best previous mark was euro170 billion worth of fashion items sold in 2007.
Bain is expected the pickup to continue, forecasting sales of designer apparel, leather, jewelry, watches and cosmetics to grow to euro185 billion this year.
The strongest surge in 2010 was in hard luxury items like watches and jewelry, which suffered most from the crisis. The value of sales of branded watches and jewelry rose by 21 percent last year, followed by accessories with 17-percent growth and apparel with 10 percent.
The March 11 earthquake and tsunami forced high-end retailers in Tokyo to close for 10 days. But Bain is forecasting a recovery by the end of the year, and that some of the money earned during the extensive reconstruction be spent on luxury items.
The Japanese market, the second largest in the world at euro18 billion, is expected to contract by just 5 percent, and the long-term impact is not expected to be significant, Bain said.
The study noted that the Kobe earthquake in 1995 had a low impact on luxury.
China continued to grow, and D'Arpizio projected that within five years it will become the third-largest luxury market in the world behind Japan. Chinese consumers purchased euro9.2 billion worth of indulgences at home last year.
But take into account purchases made abroad by globe-trotting Chinese, and D'Arpizio says they are already the second-biggest spending consumer group, behind U.S. shoppers who collectively spent euro48 billion last year on luxury.
Bain presented the semiannual survey at a conference sponsored by Italy's Fondazione Altagamma association of luxury producers.