Global luxury market to reach 1.5 trillion euros

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The global personal luxury goods market is anticipated to achieve a 4 percent growth rate by the conclusion of 2023, reaching an estimated 362 billion euros, as indicated by the Altagamma-Bain & Company Worldwide Luxury Market Monitor 2023 presented in Milan. This projection is a slight adjustment from the spring update in June, which initially forecasted growth between 5 and 12 percent in 2023, ranging from 360 billion to 380 billion euros.

The broader luxury market, on a global scale, anticipates gains between 8 and 10 percent in 2023 compared to 2022, reaching sales of 1.5 trillion euros. This projection, setting a new record, underscores the sector’s resilience. At constant exchange rates, the industry is foreseeing growth between 11 and 13 percent, aligning with last year’s performance.

Despite macro-economic and geographic uncertainties impacting luxury consumer spending, particularly in the last quarter, which has seen a slowdown due to various factors such as economic tensions in China, the Israel-Gaza conflict, consolidation in the U.S. and Europe, and rising interest rates and inflation, the luxury market continues to demonstrate growth. The reopening of China has played a crucial role in propelling the industry forward.

Bain & Company expects mid-single digit growth until 2030, leveraging the sector’s “super solid fundamentals.” Europe has benefited from a recovery in tourism and local spending, with a slight slowdown reported in the last quarter. American and Asian shoppers, especially visitors from Thailand and China, have been identified as robust consumer clusters. Although Chinese spending currently amounts to 40 percent of the 2019 level, it is considered a significant achievement given the pandemic’s impact.

The U.S. experienced a deceleration in spending, with an 8 percent contraction compared to 2022. Higher growth is anticipated in China, with Chinese tourists contributing to sales growth in Japan. Jewellery and elevated-quality apparel are among the categories experiencing increased sales, reflecting a market shift towards investment pieces.

Looking ahead to 2030, Bain predicts that Gen Z will account for 25 to 30 percent of luxury goods purchases, while Millennials will represent 50 to 55 percent. The report also foresees an increase in M&A deals driven by the need to address challenges such as sustainability and digitalisation.

Stefania Lazzaroni, the general director of Altagamma, presented the foundation’s Consensus study, estimating that luxury companies’ earnings before interest, taxes, depreciation, and amortisation (EBITDA) will be around 4 percent in 2024. This projection follows the necessity for companies to raise retail prices in the previous year to compensate for higher costs. Sales are expected to grow between 5 and 6 percent.