Fashion Updates

The global personal luxury goods market is set to experience a growth rate of 5-12% in the upcoming year

Published: July 21, 2023
Author: Fashion Value Chain

The latest study from Bain & Company and Altagamma reveals growth projections for the global personal luxury goods market in 2023, despite economic uncertainties. The market is expected to expand by 5-12%, reaching a value of €360-€380 billion, up from €345 billion in 2022. By 2030, the market is anticipated to double in size, reaching €530-€570 billion.

In the optimistic scenario, the growth trajectory for 2023 is driven by China’s recovery, along with sustained growth in Europe and the Americas. Sales in the personal luxury goods market are projected to increase by 9-12% compared to 2022. However, a realistic scenario suggests a slowdown in mature markets, potentially impacting luxury customer spending. This scenario predicts sales growth of 5-8%.

While luxury shopping in the US is slowing down due to economic uncertainties, the study highlights a rise in Europe, fuelled by tourism. However, the second half of the year may bring changes to these trends.

Challenges for the luxury industry in the midterm include navigating environmental, social, and governance (ESG) regulatory pressures, as well as adapting to the impact of generative artificial intelligence (AI) and emerging technologies.

Despite geopolitical tensions and macroeconomic uncertainties, the personal luxury goods market performed exceptionally well in 2022, reaching a record value of €345 billion. This positive momentum continued into the first quarter of 2023 with a growth rate of 9-11% compared to the previous year.

This growth can be attributed to several factors, such as a gradual decrease in hyperinflation, recovering consumer confidence in Europe, the reopening of the Chinese market before Chinese New Year shopping, and strong momentum in Japan and Southeast Asia.

In the US, despite holding significant unspent savings, consumers are refraining from spending due to economic uncertainties and the end of COVID relief funding. Top US customers are shifting some of their spending abroad due to price differentials, while aspirational customers are reducing their spending.

Europe started the year with a strong performance, particularly driven by top spenders. However, the region faces a critical period in the summer, as the absence of US and Middle Eastern tourists is expected to impact local luxury shopping. The return of Chinese tourists, starting with a solid influx in the first quarter, is expected to strengthen in the coming months.

Mainland China saw growth in the first quarter and is projected to rise further, although not all brands have reached their 2021 levels yet. Hong Kong and Macau experienced significant acceleration as primary destinations for Chinese tourism, benefiting from government policies.

Southeast Asia continues its impressive growth trajectory, driven by Russian tourist spending, the influx of Chinese consumers, and a strong demand for jewellery and watches. South Korea, on the other hand, is experiencing a slowdown as locals prioritize purchases abroad and travel retail gains traction.

The rising star in this landscape is Japan, where local customers sustain their spending, and growth is fuelled by inbound tourists seeking popular accessories, including early signs of Chinese arrivals.

Amidst regulatory ESG pressures, luxury brands must prioritize value chain decarbonization in the next three years, focusing on reducing scope 3 emissions and decoupling business growth from emission levels.

Related Posts

NEET 2024 Syllabus Changed in the Middle of the Year – Students Find Relief in MTG Learning Media’s Revised NEET 2024 Books

Royal Green Realty Launches SCO Project – Courtyard 37D, in Gurugram with Investment of Rs. 60 Crore