The global luxury goods market is expected to continue its growth despite slowing momentum on economic warning signs, according to Bain & Company’s Luxury Goods Worldwide Market Study – Spring 2023, in collaboration with Altagamma.
The personal luxury goods market is estimated to reach between €360 and €380 billion (US$392 billion to $415 billion) this year, following last year’s record €345 billion. The market reported about 10 per-cent year-on-year growth in the first quarter of this year on the back of recovering consumer confidence in Europe, the reopening of China, and positive momentum in Japan and Southeast Asia bolstered by intraregional tourism.
However, the report said luxury shopping in the US is slowing down due to economic uncertainties and consumer caution around a potential recession.
“Top US customers are holding up, yet partially shifting their spending abroad as price differentials widen, and aspirational customers are spending less,” the report said.
The world’s second-largest luxury market, Mainland China, is expected to grow again this year but not yet back to 2021 levels. Meanwhile, the rest of Asia has been witnessing a reshuffling.
Hong Kong and Macau have seen sharp growth as key Chinese tourist destinations, with extra tailwinds from government policies. While Southeast Asia continued its significant growth path driven by an influx of Russian tourist spending and the first arrivals of Chinese consumers, South Korea is receding with a rebalancing of local spending on purchases abroad and travel retail accelerating. Japan is the rising star with the continuation of local luxury spending and Chinese arrivals.
The European market is anticipated to continue growing as the region has welcomed its first Chinese tourists in the past few months, with a solid return expected later in the year.
“The luxury industry is experiencing a new phase after its post-pandemic growth, with renewed drivers of resilience establishing winners and losers,” said Claudia D’Arpizio, a Bain & Company partner and leader of Bain’s Global Luxury Goods and Fashion practice, the lead author of the study.
According to the report, the personal luxury goods market is likely to experience two-fold growth by 2030 compared to 2020, reaching between €530 and €570 billion.
The report also addressed the key challenges for the industry in the midterm, including ESG regulatory pressures as well as the impact of generative AI and new technologies on all steps of the value chain.
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