Report indicates luxury products market encountering first slowdown since 2008 crisis
Date
11/16/2024 9:08:17 AM
(MENAFN) The market for personal luxury goods is projected to experience its first decline since the financial crisis, excluding the impact of the Covid-19 lockdown period, according to a new report by Bain & Company. The annual study, conducted in partnership with Italy's Altagamma association of luxury manufacturers, forecasts a 2% drop in the sector this year, with total sales expected to reach €363 billion ($384 billion). This slowdown is attributed to macroeconomic uncertainties, including a decline in consumer spending in China.
The report highlights that Generation Z, or "zoomers," have been particularly affected, with rising costs and reduced brand loyalty causing them to cut back on luxury purchases. The study notes that around 50 million luxury consumers have either reduced their spending or exited the market entirely over the past two years.
Luxury spending worldwide, including on items like clothing, bags, jewelry, and cosmetics, is expected to remain flat in 2024, totaling around €1.5 trillion ($1.6 trillion). While categories like beauty and eyewear have seen growth, jewelry has proven to be the most resilient, while shoes and watches have struggled.
Bain & Company also predicts that only about one-third of luxury brands will see growth in 2024, a significant drop from two-thirds last year, meaning many brands are likely to experience a decline in revenue. However, spending on luxury experiences, such as high-end hospitality and dining, is expected to increase.
To stay competitive, luxury brands will need to innovate by blending traditional strategies with new approaches, according to Bain partner Federica Levato. Emerging markets such as Latin America, India, Southeast Asia, and Africa are expected to drive future growth, potentially adding over 50 million upper-middle-class luxury consumers by 2030.
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