Strong demand for luxury goods from shoppers in China and online will help return the sector to growth next year, a new report predicts, although it cautions that a full recovery is not likely for another two years.

The eighth edition of the annual 'Luxury Goods Worldwide Market' study from consultancy Bain & Company also notes that the decline for the worldwide luxury goods industry is set to be less than expected this year, with an 8% drop to EUR153bn now forecast worldwide.

But researchers don't expect a full recovery to take place until 2011, when the industry is likely to grow by 4.2%. 

"Luxury goods markets are stabilising," said Claudia D'Arpizio, a Milan-based Bain & Company partner and global luxury goods industry expert.

"We are seeing less discounting and mark-downs and more signs of increasing consumer confidence. Growth will be timid in 2010 but it's showing movement in the right direction."

The report notes that luxury sales in mature markets show continued softness, with sales in 2009 predicted to be down 16% in America, 10% in Japan and 8% in Europe versus 2008 levels.

But 10% projected sales growth for luxury goods overall in Asia - helped by new stores opening up - will partially dull the impact of those declines.

"Aspirational luxury shoppers in Asia and other emerging markets are fuelling sales growth in 2009," said Ms D'Arpizio. "They remain bullish on brands."

This year's apparel sales are set to fall by 11% worldwide, Bain says, with both men and women deferring new purchases, and focusing on more durable items with less fashion content.

For both men and women, accessible brands have seen the strongest impact, as consumers shifted to either discounts on higher-end brands or fast fashion alternatives.

Leather, shoes and accessories will hold the line with a projected 1% decline, since they represent more affordable ways for consumers to stay loyal to their favourite luxury brands.

Click here for Bain & Company's prediction of 10 global luxury trends for the coming decade starting in 2010.