We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Increasing market concentration, yet with high dynamism from rising stars. Gen Y and Gen Z accounted for the entire growth of the market in 2022, it notes. Spending on experiences will be the last luxury outlay to recover historical highs given its reliance on the resumption of international tourism and business travel. This trend has also been reflected in product categories, through the shift to the 'post-streetwear' era, which maintains some elements of so-called streetwear (such as gender fluidity, occasion-less apparel, inclusivity and sports-driven inspiration) but goes beyond its style codes through new and enhanced techniques, materials and functionalities. Retailers have seen a decrease in footfall amid a recent surge in COVID-19 cases across the UK due to the Omicron variant. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. Heinemann Outperforms Travel Retail Rivals With 81% Growth To $4.2 Billion In 2022, Airport Retail Confectionery Firsts From Oreo And Lindt, Both With Live Chefs, Consumer Demand Is Slowing, Good For Government Policy Wonks, Bad For Retailers, An Exclusive Retail Service Experience Is At The Center Of CB2's New Design Shop, Whats Working - And Not - In Mobile Commerce (Part 1 Of 2), Magna reports global digital media grew by nearly one-third year-over- year in 2021, China can be a risky bet for Western luxury brands, Chinese Gen Z consumers find local brands. Growth was steady across regions as people finally realized travel ambitions previously blocked by Covid, using money they couldnt spend on trips during the pandemic. If you would like to help improve Deloitte.com further, please complete a 3-minute survey, To tell us what you think, pleaseupdate your settings to accept analytics and performance cookies. A powerful factor for sector growth this decade will be generational trends. This market growth is driven by factors that go beyond aspiration, with consumers becoming more knowledgeable and choosy, and intensified competition for loyalty and advocacy. More specifically, they make up for almost 50% of the whole market. Strong market share shift towards European brands. Taken together, the study characterizes these trends as the 'nouvelle vague' or 'new wave' of developments for the sector. However, Chinese lockdowns, a continued shortfall in international Asian tourism, and limited business travel constrained total market growth. Even though this market is constantly improving since Q3 2020, there still is some uncertainty when it comes to the next holiday season. Source: Deloitte Touche Tohmatsu Limited. When it comes to the overall value of this market, luxury cars significantly outperform all of the other components combined. The luxury market now appears better equipped to cope with economic turbulence, thanks to a consumer base that is both larger and more concentrated on top customers who are less sensitive to downturns. Sales of new watches grew by 22%24% and reached a record 52 billion, reflecting solid demand for top-of-the-range models and iconic pieces, but growth was capped by low product availability. According to report co-author . All markets fared well throughout the year, aided by healthy domestic demand and the return of tourists from the US and Middle East. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report. The spending of US tourists in Europe doubled between 2019 and 2022; about two-thirds of that gain reflected an increase in transactions while the other third came from an increase in average transaction size, according to Global Blue data. The year 2022 saw a global tempering of the peak activity witnessed in 2021, triggered by tightening monetary policies across American and European markets as economies emerged from a Covid-19-induced suppression in economic activity. In keeping with greater social interest in diversity, equity, and inclusion, galleries and collectors focused more on areas such as women artists and African art. These wildcards secondhand luxury, next-gen consumers and China may continue to test the strength, resilience and agility that Bain observes has enabled luxury brands to overcome the tremendous turbulence of the past two years. Profit levels that had quickly recovered post-Covid to an average 21% in 2021 have slightly eroded in 2022, down to 19%21%. The nouvelle vague the new wave of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics all while new trends and concepts develop, said Claudia DArpizio, a Bain & Company partner and leader of Bains Global Luxury Goods and Fashion practice, the lead author of the study. Travelers were lured not just to leading cities but also to out-of-the-way destinations, in keeping with the pandemic trend to seek rural solitude. Post-streetwearis emerging as the new look. Recent studies Altagamma Studies archive The apparel category grew by 22%24% in 2022, aided by wardrobe restocking. It seems that traditional market segmentation lost its relevance. Wealthy individuals turned to private jets more in 2022, due to their perceived safety and efficiency vs. commercial travel. We therefore forecast that the market value of personal luxury goods will rise to between 540 billion and 580 billion by the end of the present decade, from an estimated 353 billion in 2022an increase of more than 50%. Both LVMH and Kering have seen their luxury goods sales more than double. data regarding the outbreak of Covid-19 and consequential lockdowns across countries; macroeconomic data (e.g., GDP, consumer confidence index) and latest forecasts; current trading performance from relevant luxury industry players; annual reports, quarterly results, and analyst reports; and. SEA is still suffering from a lack of tourism. Demand for personalization and digital connectivity rose. The latest Bain-Altagamma Luxury Goods Worldwide Market Study forecasts increased resilience to recession after robust 2022 growth. Online and monobrand, key channels for 2021 recovery, will lead the mid term growth of the industry. Retailers have seen a decrease in footfall amid a recent surge in COVID-19 cases across the UK due to the Omicron variant. Prospects for personal luxury goods market out to 2030 are also highly positive, today's analysis concludes. Boosted by a strong market performance across quarters, and despite macro-economic indicators worsening globally, as well as specific challenges in China, the personal luxury sector is set to see the value of its sales jump to 353 billion in 2022, marking an advance of 22% at current exchange rates (or 15% at constant exchange rates) versus the previous year, the study projects. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Bain & Co. partner: Luxury brands seen a 'roaring start' to 2022 CNBC International TV 331K subscribers Subscribe 694 views 1 year ago Federica Levato, a partner at Bain & Company,. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. Globally the Americas (31% SOM) and China (21% share) will top 2019, up 12% and 3% respectively, but Europe (-10% with 25% share) and Japan (-9% with 7% share) will remain underwater. One can argue that the secondhand luxury goods buyer isnt the same as the primary market buyer. The online personal luxury goods alone almost doubled in 2 years. The overall luxury industry tracked by Bain & Company encompasses both luxury goods and experiences. South-east Asia and Korea are winning in terms of growth and potential. Local consumptions impacted by the slow vaccine adoption. Our 11th annual report looks at the pandemics effects, the industrys impressive recovery, and the possibilities ahead. Opportunities include entering a growing market, developing a network-based business model, showing commitment to sustainability, gathering data on customers and more. Despite recessionary conditions expected across leading economies in 2023, personal luxury goods should see further expansion. Commenting on the critical trends and themes for the luxury industry up to 2030, Federica Levato, partner at Bain & Company and leader of the firms EMEA Luxury Goods and Fashion practice, co-author of todays report, said: In their path to 2030, luxury brands will need to leverage their cultural avant-garde position and insurgent excellence to overcome the challenges ahead and shape the world. From insights to the performance of the market, through estimates for the approaching us 2022, all the way up to some key recommendations this study contains data no one from the Luxury Goods industry should overlook. A powerful factor for sector growth in the rest of the decade will be generational trends, the analysis reports. New types of activities, often powered by technology, should also spark an additional 60 billion to 120 billion in sales by 2030, from sources such as the metaverse and brand-related media content. However, the spots will be replaced by new consumers, mostly Generation Y and Z. Agile and proactive brands that are radically customer-centric have a chance to win, he advised. Your email address will not be published. But that too will favor power brands that have long practiced concessions, leaving emerging brands out in the cold. Lighting and living/bedroom categories benefited the most, as consumers looked for more comfort, functionality, and beauty. In coming years, the spending of Gen Z and Gen Alpha is set to grow some three times faster than for other generations until 2030, making up a third of the market. The impact of a possible global recession on the industry in 2023 could differ from the impact of the 200809 global financial crisis. Rather than selling into stores wholesale and lose margin, power brands are going to pay rent instead, as they are already doing in their mono-brand stores which advanced 3% from 2019 to capture 32% share of market. Asia (excluding Japan) switched to second position, followed by Europe. Stay ahead in a rapidly changing world. Interestingly enough, the pandemic caused this market to experience its worst dip in history. The pandemic literally closed the doors in physical retail and theyve only partly opened in 2021. This market growth is driven by factors that go beyond aspiration, with consumers becoming more knowledgeable and choosy, and intensified competition for loyalty and advocacy. Core high quality design market, already showing stronger-than-forecasted performance in last quarters of 2020, continuing on its growth path sustained by continued refocus of consumer spending on home, in particular on Living& Bedroom, outdoor and lighting. India Private Equity Report 2023. Abstracts are available in the press releases area. The pandemic-fueled interest in consuming gourmet food at home continued, boosting select food retailers and fostering demand for culinary education. Luxury is back to the future is the title of the latest market study worldwide by Bain Altagamma. That ratio has come down from 3.4 times in 2018. All of the Top 5 companies saw their luxury goods sales rebound in FY2021, as the impact of the COVID-19 pandemic on consumer demand, retail and supply chain constraints reduced. Even in the face of recessionary conditions expected across leading economies into 2023, the Bain and Altagamma analysis forecasts further expansion in sales and market value for luxury goods through the coming year and decade. Taken together, the study characterizes these trends as the nouvelle vague or new wave of developments for the sector. In 2021, they accounted for around 30% of new customers that entered the market since 2019, which is a total of 25% of the Personal Luxury Goods market. Now more than ever, the industry is facing paradigm shifts in all areas: production and resources, life cycle, customer relationships, corporate responsibility, and globalization. Success online at least partly depends on the amount of advertising dollars pumped into online channels. Online should become the leading channel for luxury purchases with an estimated 32%34% market share, followed by monobrand stores (30%32% market share). What Sadove sees shifting in distribution is a move toward more concession models in retail from traditional wholesale-to-retail distribution. The secondhand luxury goods market rose to 43 billion in 2022. The economic model will continue to evolve. Now, brands are multi-price points to answer to different customer needs. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic. The luxury goods sales of the top two companies in FY2021 was more than the total luxury goods sales of the Top 5 in FY2016. Womenswear and menswear grew at about the same pace. The customer centricity honed in recent years is another source of resilience for the industry, as is the multi-touchpoint ecosystem that luxury has developed. MA For information, contact Deloitte Global. Omnichannel retailing and a major shift in passenger mix are poised to transform traditional airport shopping. With 2022 already knocking on our doors, its time to step into another year full of new and interesting trends, figures and actions for the Luxury Goods market. The study also reinforced previous projections that China and Chinese consumers will become the dominant force in global luxury by 2025 (see below). Later on in 2021 that dip turned into a V-shaped recovery, with the value in 2021 being slightly bigger than before the pandemic. Stay ahead in a rapidly changing world. International travel disruptions, duty-free opportunities, and digitalization continue to strengthen domestic spending in 2021. Prospects for personal luxury goods market out to 2030 are also highly positive, todays analysis concludes. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. The online channel's market share remained in line with 2021. Please read and agree to the Privacy Policy. The estimated value for the whole market in 2021 is B 1.140. The global luxury market is projected to grow by 21% in 2022, reaching 1.4 trillion; the personal luxury goods market is expected to show accelerated growth of 22% to 353 billion As sales of secondhand goods on online platforms soared, brands are moving to increase their direct control of the market. Ongoing Covid-19 restrictions and economic uncertainty caused the first personal luxury market decline in five years. Spirits grew faster than wine, with status spirits growing internationally and across categories, tapping into usage occasions once reserved for wines. Four growth engines will profoundly reshape the luxury market by 2030: Chinese consumers should regain their pre-Covid status as the dominant nationality for luxury, growing to represent 38%40% of global purchases. Department stores experienced faster growth than in previous years, gaining 20%. Between 2017 and 2021, the market size of second-hand luxury ballooned by 27 percent (first-hand luxury only grew by 12 percent over that same period.) Before Covid, emerging luxury brands had hope to find traction online where the power brands were reluctant to venture, but thats all changed. Demand for high-end furniture and fixtures in commercial spaces was driven by an increasing appetite for refined aesthetics and higher quality. 2022 Diversity, Equity, and Inclusion Report. Already it is about half the size of each of the three leading personal luxury goods categories leather accessories, beauty and apparel and its 27% growth from 2019 leaves every other personal luxury goods category in the dust. The luxury markets consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. "):e("#nl2go_form").html("Unexpected error. The Top 5 companies saw their luxury goods sales rebound in FY2021, as operations recovered from the adverse impact of the COVID-19 pandemic on consumer demand, retail, and supply chains. Consumer expectations for service levels are rising too, with brands embracing direct-to-consumer models to create a more luxurious shopping experience at every stage. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Generation Y (millennials) and Generation Z accounted for all of the markets growth in 2022. Photo: Shutterstock Around 21 per cent of global consumer spending on luxury goods in 2021. Among the rising stars, India stands out for growth potential, which could see its luxury market expand to 3.5 times today's size by 2030, propelled by an increasing interest and evolving attitudes and behaviors among (young) customers towards luxury goods. ")},function(n){console.log(n),e("#nl2go_form").html("Unexpected error")})})})}(jQuery); 2023 E-commerce Germany and E-commerce Berlin. (Photo by Hollie Adams/Getty Images). Despite the uneven recovery in personal luxury goods, it is projected to post CAGR between 6% to 8% and reach sales of 360 to 380 billion ( $409 to $432 billion) by 2025. A deliberate (and effective) elevation strategy has driven a progressive price increase across the industry (driving around 60% of the 2019-2022 growth) without damaging volume growth. In coming years, the spending of Gen Z and 'Gen Alpha' is set to grow some three times faster than for other generations until 2030, making up a third of the market. Please select an industry from the dropdown list. The most likely outcome in the fourth quarter of 2022 is a 19% year-over-year rise in sales, which would be a slight slowdown from 23% growth in the third quarter. This article is a preview of the Top 5 companies which will be listed in the upcoming Global Powers of Luxury Goods 2022. Broader meanings and business models will emerge. The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. All personal luxury goods categories performed well in 2022, with double-digit growth rates across the board. Retail continues to dominate, while online channels are seeing a normalization in their growth. MILAN, Nov. 15, 2022 /PRNewswire/ -- The global luxury goods market took a further leap forward during 2022, despite highly uncertain economic and consumer market conditions. Read the report. Travel retail is in recovery mode, at least in Western markets, but not yet back on its pre-Covid track. That reflected a renewed value proposition in the US and successful reengagement with tourists in Europe. Sales of luxury cars, the biggest portion of the overall market, hit a new record, reaching an estimated 566 billion, 6% more than 2021 at current exchange rates and 3% above 2019. This provides both opportunities as well as potential threats to brand, fashion platforms and investors. Fashion jewelry showed solid growth. Bain & Company recently released its 20 th annual Luxury Study, which underlines the resurgence in the global luxury market in 2021 after a contraction in 2020. Art-based NFTs still represent a limitedalbeit expandingportion of the overall market; artists are looking for ways to meaningfully integrate NFTs into fine arts. This could include revenues generated by: the metaverse and NFTs (such as through collectibles and other new products and services); the monetization of communities (through virtual events and data monetization, for instance); brand-related media content (such as movies, music, and art); secondhand luxury goods (by bringing more secondhand sales in-house, for instance); and. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. Hong Kong and Macau were weaker spots, while Taiwan slowly recovered. Monobrand websites gained further ground, raising their share to about 45% of the online segment, up from 43% in 2021. All segments gained momentum, but only luxury hospitality and cruises havent yet closed the gap with pre-Covid levels. The top wealth segments stand out more now than ever before a . Luxury spending trends in 2022 The overall luxury market tracked by Bain & Company comprises nine segments: luxury cars, personal luxury goods, luxury hospitality, fine wines and spirits, gourmet food and fine dining, high-end furniture and housewares, fine art, private jets and yachts, and luxury cruises. , describes them. How To Run A Mobile-First Web-To-Print Ecommerce Website In 2022. Europe managed to recover beyond pre-Covid 2019 levels thanks to solid domestic demand, alongside a boost from US and Middle Eastern tourist shoppers. The analysis notes that, even with a possible global recession next year, the impact on the industry could be different from that of the 2008-2009 global financial crisis. A powerful factor for sector growth in the rest of the decade will be generational trends,the analysis reports. Carina Lau, Pansy Ho, Michelle . Intuitive service that goes beyond merely offering the human touch is becoming more crucial, and operators are increasingly looking to technology to automate predictable tasks and free employees to focus on the most important interactions. Only fine wines and spirits (77 or $88 billion) and high-end furniture and housewares (45 or $51 billion) will exceed 2019 levels, up between 12% to 14% and 13% to 15% respectively. Over-performance of all categories, restocking wardrobe in the rising post-streetwear era. For any questions or to arrange an interview, please contact: Gary Duncan (London) Email: gary.duncan@bain.com, Orsola Randi (Milan) Email: orsola.randi@bain.com Tel: +39 339 327 3672. Sales growth accelerated to 28%, equivalent to 1.3 times the growth rate for new luxury goods. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. The luxury markets consumer base will expand from some 400 million people in 2022 to 500 million by 2030. Driven by the dichotomic impact of pandemic outbreak in 2020, the luxury food market is showing significant difference in growth rates within its components. Consumption was very strong in Europe. The coming years will see a further blurring of the boundaries between monobrand outlets and e-commerce, which will increasingly push brands to take an omnichannel 3.0 approach, enabled and enhanced by new technologies. Performance was particularly robust in the first half of the year. (Getty Images) By Tamison O'Connor 21 June 2022 The higher and top end of the luxury market have been expanding and accounted for some 40 percent of market value in 2022 compared with 35 percent in 2021. "Luxury is back to the future" is the title of the latest market study worldwide by Bain - Altagamma. Seventy-three of the Top 100 companies reported growth in luxury goods sales in FY2021, compared to only 20 companies in FY2020. Meanwhile, China, which remains crucial to the long-term future of the luxury market, was challenged due to Covid lockdowns, and sales are likely to be down vs. 2021. Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. Chinese customers will be back by 2022-23, Japan by 2023 and Europe in 2024. Overall, we estimate that in 2022 the luxury markets overall retail sales value grew by 19%21% to 1.38 trillion, or 8%10% above 2019 levels. Based on a preliminary assessment covering both sales in the luxury goods and experiences market in nine major categories, it reports total revenues will increase between 13% to 15% over the 2020 pandemic year to end at 1.14 trillion ($1.3 trillion). As they seek new ways to connect with their customers, they are changing their approach and mindset by incorporating sustainability and digitalization into their long-term strategies, to align with consumers demands and new regulatory requirements. All personal luxury goods categories have now recovered to 2019 levels or better, with hard luxury, leather, and apparel leading the resurgence following the pandemic. As a result, two scenarios could play out in 2023, with sales growth in the personal luxury goods market ranging from 3% to 5% in the base case and up to 6% to 8% (at constant exchange rates) in a more positive case, depending on the strength of economic recovery in China and the ability of the US and Europe to withstand economic headwinds. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. The global ranking of luxury sales by region changed in 2022, as the Americas regained the top position for personal luxury goods sales. The industry is poised to see further expansion next year and for the rest of the decade to 2030, even in the face of economic turbulence. While he believes that Chinese luxury brands will not suddenly replace aspiration for Western luxury brands, he cautioned, There are clear signs that a fundamental shift is happening, and like so many disruptions in the luxury space it is being driven by Gen Z.. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. What will it bring? After softening in Aug-Sept, consumption restarted strong in October despite scattered lockdowns. But what's the current scenario? Luxury goods sales growth for the year ended March 2022 for Richemont was 50.1%. Now distribution is split virtually down the middle, half through wholesale and half through retail. This database, known as the Luxury Goods Worldwide Market Observatory, has become a leading and much-studied source in the international luxury goods industry.
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