While still small in the global scheme of things, more and more major brands are opening here to tap into the demand. Although only an estimated 5 percent of Argentina's population of 40.3 million can afford luxury goods, the democratization of fashion has reached the middle class and people are willing to go into debt to afford a more luxurious lifestyle.
An example of this trend is the car market where, out of 440,000 units sold in 2006, 5,000 belonged to the highest end. Last year, total car sales reached 500,000, of which 7,000 were in the premium market, and the growth is expected to continue this year. One of the brands that increased sales is Porsche, which went from 100 units in 2006 to 140 last year.
Argentina's luxury market grew by an estimated 38 percent between 2002 and 2005, and 9 percent in 2006. In 2007, the increase stabilized and, according to estimates, it will grow by about 6 percent a year until 2010.
Of course, the wealthy still dominate the market for fashion and luxury, accounting for about 70 percent of the business. "We are talking about 1,000 to 1,500 families whose fortunes are stable and they do not move along with the economic ups and downs that Argentina might suffer," said Gabriela Guerschanik, an Argentine analyst of the sector who is based in Chile.
But the aspirational market is growing fast — and many of these consumers live outside the major cities. They're finding themselves increasingly wealthy as a result of the country's booming commodity and agricultural exports, particularly soy.
"New millionaires connected with the countryside powered the sector," said Guerschanik, who described these top consumers as being "the same buyers who also boosted the square meter value [of apartments] to almost $4,000 in Puerto Madero [in Buenos Aires] and the sales boom of luxury cars."
The rising incomes of Argentines can be seen in their favored luxury goods. A recent survey found that consumers prefer to spend money on, in order: luxury cars, jewelry, technology, hotels and clothing. Among brands, those perceived to rank the highest in luxury are Ralph Lauren, Armani, Swarovski, Hermès, Ermenegildo Zegna, Salvatore Ferragamo, Christian Lacroix, Audi, Volvo and Bang & Olufsen.