In their most recent report, Bain & Company and the Altagamma Foundation provide insights into the future of the luxury industry and its changing dynamics. The report, titled Luxury Goods Worldwide Market Study – Spring 2023, highlights several key trends that are shaping the industry.
One significant development is the emergence of new geographical dynamics in the luxury market. Despite the uncertainties brought about by political, economic, and societal factors, the personal luxury goods market experienced a record-breaking year in 2022, reaching an estimated value of €345 billion. This positive trend continued in the first quarter of 2023, with a projected increase of 9% to 11% compared to the same period in 2022.
One factor driving this growth is the rebound of luxury consumption in mainland China. After the lifting of pandemic-related restrictions just before the Lunar New Year, luxury sales in China regained momentum. This resurgence is expected to continue and potentially reach levels similar to those seen in 2021. Additionally, the luxury market in Asia is undergoing a transformation, with new tourist sites in China and the growth of Southeast Asia reshaping the industry’s geography. While luxury in Japan remains vibrant, there are concerns about a slowdown in South Korea, as Korean customers redirect their spending towards overseas purchases and travel retail gains momentum through spending from Southeast Asian tourists.
The report also highlights shifting consumer preferences towards a more selective approach to luxury. Customers are now prioritizing iconic and exclusive pieces, favoring investment security over excessive consumption. This trend is evident in the growing demand for signature bags, high-end jewelry, and niche perfumes. According to Joëlle de Montgolfier, Director of Research at Bain’s Global Luxury Division, luxury is entering a new era where customers seek unique products that reflect their individuality. To remain relevant, new luxury brands must maintain their rebellious spirit, expand on their founder’s vision, launch standout products, and build organizational capabilities for long-term growth.
Despite these challenges, the outlook for the luxury market is optimistic. The report predicts that the global luxury market will reach a value between €360 and €380 billion by the end of the year. Furthermore, the luxury personal goods market is expected to experience sustained growth, increasing from €530 billion in 2020 to around €570 billion by 2030.
However, the luxury sector must address various challenges, particularly its environmental impact. There is a pressing need to decarbonize the value chain and prioritize sustainability. The report also emphasizes the significant role of artificial intelligence in driving innovation and enhancing various aspects of the luxury market. It concludes that the leaders of tomorrow will be those who leverage new technologies and stay ahead of the curve, as demonstrated by the ongoing digital transformation.
Useful Links:
– Bain & Company – Luxury Goods Worldwide Market Study – Spring 2023
– Altagamma Foundation
