The competitive landscape within the Italy luxury goods market is made of domestic and multinational companies in Italy. Italian brand owners enjoy strong brand loyalty and recognition thanks to brand heritage and quality. Such an image led foreign multinationals to acquire Italian brand owners to strengthen and consolidate their leading positions. Italian manufacturers remained fierce competitors, however, thanks to a dominant position in the domestic market.
Price volatility of raw materials and rising costs of production enabled luxury goods to achieve a good performance in value terms in Italy in 2012. However, lower purchasing power and disparities in terms of salary remained a hindrance to the volume performance of luxury goods. Domestic demand was chiefly affected by a willingness to cut down spending on more essential goods due to the high rate of unemployment. Additionally, domestic demand was chiefly affected by austerity measures in 2012. The Italian Government also made a move on tackling tax evasion, giving less opportunity to domestic consumers to pay cash for their purchases of luxury goods.
Department stores and designer boutiques remained the main distribution channels of luxury goods in Italy. Brand owners tended to focus on retailing in 2012 for increasing brand awareness. This led to a consolidation of their directly operated stores at the expense of wholesale distribution channels. Moreover, Internet retailing grew in Italy. The Yoox Group is an important key player in Internet retailing within luxury goods. Its solid business relationships with brand owners led to partnerships for promoting and selling online luxury goods.
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