In 2023, the worldwide luxury market is anticipated to achieve a remarkable 8-10% expansion compared to 2022.
Topline
According to the latest report by the global management consulting firm, Bain & Company, along with the Italian luxury goods manufacturers’ industry association, Altagamma, the luxury market registered an impressive growth of 11-13%, at constant exchange rates. Personal luxury goods proved to be a key segment, projected to reach $394 billion by the end of the year.
Experience-based spending rebounded to unprecedented levels, driven by a resurgence in social interactions and travel. Global luxury tourist purchases have nearly returned to pre-pandemic levels.
Despite the record-breaking forecast, the study shows potential headwinds for the fourth quarter, including cautious consumers, macroeconomic tensions in China and little evidence of recovery in the US.
Interest in fine jewelry as an investment propelled the market. (New Africa, Shutterstock)
Key Facts
- The jewelry market is positioned to achieve a market value of $32.5 billion in 2023. Fine jewelry, in particular, solidified its position as a fruitful investment amidst prevailing uncertainties.
- Europe has experienced a steady increase in tourism with various countries rebounding as a result. Long-haul resort destinations are drawing high-spending individuals in addition to key luxury cities.
- Alternatively, the Americas saw a deceleration in tourism spending, with an 8% drop from 2022.
- The first quarter for China posted a strong reopening but waned as new macroeconomic topics appeared.
- Currently in their peak income years, Generation X and Y make up the majority of luxury purchases. By 2030, Gen Z will account for 25-30% of luxury market purchases, while millennials will account for 50-55%.
The Big Number
1.63 Trillion– The projected total in US dollars for 2023, a milestone for the global luxury market.
Crucial Quote
“This is a defining moment for brands, and the winners will separate themselves through resilience, relevance, and renewal—the basics of the new value-centered luxury equation. The luxury market is generating positive growth for 65-70% of brands in 2023, compared to 95% in 2022.To stay in the game, it will be crucial for brands to take bold decisions on behalf of their customers.” – Claudia D’Arpizio, a Bain & Company partner and the lead author of the study.
By 2030, two-thirds of the market is projected to be accounted for by online and monobrand channels. (13_Phunkod, Shutterstock)
Outlook
According to the report, the luxury market is set for long-term growth, bolstered by strong fundamentals. While unforeseeable speedbumps may cause momentary dips, overall projections see a trend towards growth.
By 2030, online and monobrand channels are anticipated to represent two-thirds of the overall market. This shift is expected to trigger a new wave of mergers and acquisitions, compelled by the need to tackle the industry’s critical challenges. Prioritizing sustainability and embracing technology will be crucial in this evolution, says the study.
In addition, a purpose-driven strategy will remain essential for long-term success. In an increasingly saturated market, brands should prioritize creativity and innovation to increase their relevance with consumers and subsequently build a base of brand enthusiasts.
