Bain – Long Live Luxury: Converge to Expand through Turbulence

Despite challenging global economic conditions, the luxury market has shown impressive growth, reaching €1.5 trillion in 2023, a record high for the industry. This growth is attributed to the resilience of the luxury sector, as highlighted in the 22nd edition of the annual Luxury Study by Bain & Company and Fondazione Altagamma. The luxury industry comprises nine segments, with luxury cars, luxury hospitality, and personal luxury goods being the top contributors. While overall spending in the luxury market increased, the market for personal luxury goods experienced softer growth, reaching €362 billion in 2023, a 4% increase from the previous year. However, there is uncertainty surrounding the market's performance, with diverging signals from different regions. The Chinese market showed signs of reacceleration, while markets in the US and Europe decelerated. Asia and Europe were the main drivers of luxury market growth, fueled by strong domestic demand, increased tourism, and the influx of Chinese tourists. In contrast, the Americas experienced a slowdown in luxury spending, with customers shifting their purchases abroad. Saudi Arabia and Australia were standout markets for luxury brands, attracting investments and providing growth opportunities. In terms of distribution, monobrand stores were favored by consumers seeking in-person interactions, while multi-brand stores faced challenges. Online market share saw a slight decline, with monobrand websites experiencing a normalization of growth. All categories of personal luxury goods showed growth, with jewelry and ready-to-wear performing well. The beauty sector benefited from the "lipstick effect," where consumers opt for less expensive luxury goods during economic crises. Watches also remained popular, despite some industry polarization. Overall, the luxury market has demonstrated its resilience and ability to adapt amidst global uncertainties, with Asia and Europe driving growth and different segments experiencing varying levels of performance.