According to Bain & Co, the Personal Luxury Goods market is set to slow, with growth of between 1% and 4% in 2024
The overall global luxury market is expected to reach 1.5 trillion euros by the end of 2023, accelerated by the Personal Luxury Goods segment that could reach 362 billion euros, according to the 22nd luxury market report by Bain & Co. and Altagamma.
By Shilpa Dhamija15 novembre 2023
By the end of this year, the Personal Luxury Goods market is expected to see a growth rate of 8% over 2022. But in 2024, it is forecasted to see a slower growth of about 1 to 4% over 2023 and hit a figure between 365 and 390 billion euros. These are the conclusions of the 22nd edition of the Bain & Company Luxury Study, conducted in collaboration with the Fondazione Altagamma.
The slow growth of this segment in 2024 will start in the very first quarter due to certain impediments in key luxury markets such as China and the US. Macroeconomic tensions and fragile consumer confidence may hinder fast growth in China, while sparse signs of economic recovery will impact it in the US.
The Personal Luxury Goods market in the US saw a deceleration of 5% as compared to 2022. However, the report adds that top customers from the US have maintained their spending abroad this year, as the US dollar remains strong against the Euro and price differentials favor overseas purchases.
Among all global markets, Japan saw the highest percentage growth at 27% due to the large inflow of tourists from China who were attracted to Japan because of the weak Yen throughout 2023. Local customers in Japan, too, showed renewed interest in the luxury sector as global brands collaborated with local craftsmanship and creativity to increase cultural relevance.
Within Mainland China, the Personal Luxury Goods market grew by nearly 12% vs 2022.
Expenditure on Luxury Experiences Supercharges in 2023
Other than Personal Luxury Goods, Luxury Experiences will close in 2023 with noteworthy progress as consumption by big spenders expands beyond luxury products. Luxury Cruises are forecast to grow 116% in 2023 over 2022 to 4 billion euros. The sales of private yachts, too, will hit a double-digit growth of 13% over 2022.
With tourism picking up, Global Luxury Hospitality will witness a commendable recovery of 17% growth and reach 213 billion euros. So far, in 2023, European countries noted growth in tourism at long-haul resort locations alongside key luxury cities.
Global luxury tourist purchases reached near pre-pandemic levels in 2023. Notably, in Europe, purchases of luxury goods by tourists grew by nearly 10-15% in 2023 compared to 2019. These sales were driven by tourists from the US and GCC region (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman) and not so much by Chinese tourists. In Mainland China, the recovery of luxury hospitality remained below the pre-pandemic level despite the reopening of borders.
The Dilemma of Catering to Multi-generational Consumers Will Continue in 2024
The report recommends brands navigate through rising multigenerational complexity, playing ambidextrously to serve different needs across the consumer base. Generation X and Y are in their peak income years, representing the bulk of luxury purchases. But by 2030, millennials will make up more than 50% of the global luxury market customers, while Gen-Z, more than a quarter of it.
Chinese Will Dominate the Personal Luxury Goods Market in 2030
Global Chinese customers are predicted to account for 35-40% of the personal luxury goods market by 2030, while America and Europe will together account for nearly 40%. As global travel retail waits for Chinese consumers to revive their spending to pre-pandemic levels, Mainland China’s local region, Hainan, is set to become a competing destination for tax-free hubs like Hong Kong and other such destinations in Asia. Hainan will become an entire duty-free island by 2025.
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