The grandest industry is set to get even grander this year.
The global luxury market is expected to rise between 8 and 10 percent over the previous year to reach a record $1.6 trillion (€1.5 trillion), according to the latest report by Bain & Company and Altagamma.
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Despite rising economic headwinds, the luxury sector achieved robust growth of between 11 and 13 percent in 2023. This is consistent with last year’s growth rate and equates to a $174 billion (€160 billion) uptick in spending.
The key segment, personal luxury goods, is expected to record 4 percent growth year-over-year and reach an estimated $393 billion (€362 billion) by the end of 2023. The report says all luxury categories are booming, too, as shoppers look to invest in high-quality pieces.
The study did point out that macroeconomic and geographic uncertainties have impacted the spending habits of high-end shoppers. The last quarter in particular is showing a slowdown in sales, due to the economic tensions in China, the Israel-Gaza crisis, the business consolidation in the U.S. and Europe, the increase in interest rates, and high inflation.
U.S. spending in 2023 was down 8 percent compared with 2022. American shoppers are continuing to snap up items abroad, as the dollar remains strong against the euro and overseas purchases can work out to be cheaper. Europe rebounded well overall, but sales slowed down in the last quarter. Chinese spending is now about 40 percent of what it was in 2019. Conversely, Japan’s sales skyrocketed thanks to loyal local shoppers and a weak yen. Hong Kong, Macao, and South East Asia also showed growth.
The research suggests that even in such challenging times, luxury will experience mid-single-digit growth each year until at least 2030.
“The market is set for long-term growth, rooted on strong fundamentals,” said Federica Levato, partner at Bain & Company and co-author of today’s report. “Capturing and amplifying the market potential will be key, as the clear convergence among luxury markets allows for further expansion.”
By 2030, Chinese shoppers are expected to account for 35 to 45 percent of the personal luxury goods market, while Europeans and Americans together will represent 40 percent. Gen Z is expected to carry out 25 to 30 percent of luxury purchases, while millennials will cover 50 to 55 percent. Catering to such diverse collectors will, of course, be pivotal to the industry’s long-term success.