Luxury retailing industry revenue is projected to grow at an annualised 8.5 per cent over the next five years through 2019/20, to total $2.4 billion, according to new data by business information analyst, IbisWorld.

While much of the global retailing scene has suffered from instability in financial markets, Australian luxury retailers have been relatively insulated as growing discretionary incomes have fuelled consumers’ passion for fashion.

According to IbisWorld, the industry has grown at a rapid pace over the past five years, especially as inbound tourists from Asia have provided another boon for retailers.

Industry revenue is forecast to grow strongly in 2014/15 as burgeoning tourists from China and the rest of Asia provide ample growth for retailers.

Global luxury powerhouses have also pounced on the Australian industry, with several high profile brands expanding their retail networks across the country.

The top three companies in the industry are Louis Vuitton Australia, Tiffany & Co (Australia), and Prada Australia.

The growth of foreign online luxury retailers has also increased competition for the industry.

According to IbisWorld industry analyst, Lauren Magner, Australia’s taste for fashion and luxuries has prompted industry players to scour the world for the right fusion of fashion and luxury to cater for consumers’ changing needs.

“Despite these favourable trends, competitive pressures lurk,” Magner said.

These competitive pressures are expected to be of greater significance over the next five years, especially as flagship stores bring the fight back to independent boutiques and online retailers as they ramp up exclusive offerings and five star customer service.

Experimental and emerging luxury labels are anticipated to make a stronger mark on the industry, especially as they target cash rich younger consumers.

This is expected to benefit independent boutiques, which have greater flexibility in what they stock.

The luxury industry in Australia consists of bricks and mortar retailers who primarily sell international luxury fashion items such as clothing, footwear and accessories. The industry excludes department stores that retail luxury products.