Luxury Goods Market Thrives Despite Uncertainty

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The personal luxury goods market posted a record year in 2022, reaching a market value of €345 billion, despite geopolitical tensions and macroeconomic uncertainty. This momentum persisted into the first quarter of 2023, achieving 9-11% growth over 2022. However, nuances across countries remain. These are among the findings of management consultant Bain & Company’s Luxury Goods Worldwide Market Study – Spring 2023, presented with Altagamma, the Italian luxury goods manufacturers’ industry association.

The study attributes growth in Q1 2023 to a number of factors, including: the gradual decrease of hyperinflation, recovering confidence of local consumers in Europe, the re-opening in China and lifting of its zero-Covid policy restrictions before Chinese New Year shopping, and the positive momentum in Japan and South-East Asia, bolstered by intraregional tourism. However, the picture is nuanced across countries. A slowdown is expected in the US due to consumer caution in light of a potential recession.


“The luxury industry is experiencing a new phase after its post-pandemic growth, with renewed drivers of resilience establishing winners and losers,” said Claudia D’Arpizio, a Bain & Company partner and leader of Bain’s Global Luxury Goods and Fashion practice, the lead author of the study. “Brands who want to succeed need to focus holistically on consumers; balance their exposure across geographies; offer a high value proposition with elevated entry clienteling and experientiality at scale; and push on icons, timeless, and statement pieces.”

Despite holding onto about $900 billion in unspent savings, US consumers are refraining from spending, due to economic uncertainties and the end of Covid relief funding. Top US customers are holding up, yet partially shifting their spending abroad as price differentials widen, and aspirational customers are spending less. In this context, US luxury consumers are focusing their purchases on statement pieces across categories as well as new formal and occasion wear. In the meantime, a rebalancing of the luxury map is taking place: the “giants,” such as New York and California, are coming back while holiday destinations, such as Hawaii and Las Vegas, are recovering yet still behind their 2019 peaks.
Europe has started the year off strong, with sustained performance in the first quarter, especially due to top spenders.

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The region, however, is awaiting “a moment of truth,” which will pressure test its resilience in the summer as locals face an end to their “luxury shopping haven”—the long tail of US and Middle Eastern tourists in the first half of the year is now expected to slow down. In the last months, Europe has experienced its first Chinese tourists back, with a solid return expected later in the year.

Mainland China, which saw Q1 growth, is expected to rise again this year, with some, but not all, brands back to 2021 levels. In the meantime, the Asian market is experiencing a reshuffling, with old and new luxury magnets. Hong Kong and Macau posted a sharp acceleration as primary destinations for Chinese tourism since the country reopened, with additional tailwinds from government policies (~€5 billion market value in 2022).

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