Global Luxury Goods Market Seen Growing 21% in 2022 to 1.4 Trillion Euros China's luxury market is expected to recover between H1 and H2 2023. The year of 2021 confirmed Chinas growing importance in luxury, together with a bright evolution for European and American customers. "):e("#nl2go_form").html("Unexpected error. Demand for luxury experiences has been improving, but this segment will be the last of the three to regain its 2019 levels, probably in 2023. And it remains poised to see further expansion next year, and for the rest of the decade to 2030, even in the face of present economic turbulence, the 21st edition of the Bain & CompanyAltagamma Luxury Study, says today. Although there will never be another China in terms of growth contribution to the industry, India and emerging Southeast Asian and African countries have a significant potential nevertheless. Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says The global luxury market accelerated sharply in early 2022, the consultancy found, but risks slowing due to macroeconomic pressures and Covid-19 lockdowns in China. Southeast Asia and South Korea have been excelling in both growth and future potential. 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. 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. Bain: China's Luxury Market Contracted 10 Percent in 2022 Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. Read the report. Despite recessionary conditions expected across leading economies in 2023, personal luxury goods should see further expansion. The prospects for personal luxury goods out to 2030 are positive. Opportunities include entering a growing market, developing a network-based business model, showing commitment to sustainability, gathering data on customers and more. In order to extend the lifetime of luxury products, the second hand market will be booming in the years to come. April 19, 2023. 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 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. 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. The online channel's market share remained in line with 2021. Bain & Company analyzes for Fondazione Altagamma the market and financial performance of more than 280 leading luxury goods companies and brands. Cision Distribution 888-776-0942 As a result, Bain-Altagamma analysis sets out two scenarios, with sales growth in the personal luxury goods market set to be between 3 to 5% or 6 to 8% (at constant exchange rates), depending on the strength of economic recovery in China and the ability of the US and Europe to withstand economic headwinds. Art benefited from being seen by the wealthy as an alternative asset to hedge against volatility in financial markets. 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. In spite of 110% year-over-year growth at current exchange rates, sales were still down 7% from their 2019 level. But what's the current scenario? By 2030, luxury should have expanded beyond its traditional business model, typically defined by sales of products, transcending an original form rooted in craftmanship and functional excellence. The New ROI: Defy Uncertainty by Boosting Return on Innovation | Bain 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. 'Gen Y' and 'Gen Z' accounted for the entire growth of the market in 2022, it notes. 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. All markets fared well throughout the year, aided by healthy domestic demand and the return of tourists from the US and Middle East. After a severe contraction in 2020 due to the Covid-19 pandemic, the market grew back to 1.15 trillion in 2021 and surprised everyone in 2022 by further growing 19%21%, according to our estimates. In addition to exploring the trends impacting the luxury goods market, the report will identify the hundred largest personal luxury goods companies (owned or licensed luxury brands). How To Run A Mobile-First Web-To-Print Ecommerce Website In 2022. Please enable JavaScript to view the site. However, the report also states the total market remains 9% to 11% below 2019 levels, owing largely to a shortfall in experiences. 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). 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. (Getty Images) By Tamison O'Connor 21 June 2022 Required fields are marked *. Examples include: acceleration of middle class and consumption upgrade, pressure on uber-wealth, delayed spending given current uncertainty. After softening in Aug-Sept, consumption restarted strong in October despite scattered lockdowns. Sales of secondhand watches, estimated at an additional 2530 billion, rapidly grew in 2022, fueled by the appetite of Generation Z and millennials for investment and resale opportunities, given the high resilience of the category during crises. 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. London and the UK suffer the most, while Russia is championing thanks to a strong repatriation. *I have read thePrivacy Policyand agree to its terms. Iconic models and new hero products were the most desirable items. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (DTTL), its global network of member firms, and their related entities (collectively, the Deloitte organization). Air Travel Forecast to 2030: The Recovery and the - Bain & Company Europe managed to recover beyond pre-Covid 2019 levels thanks to solid domestic demand, alongside a boost from US and Middle Eastern tourist shoppers. Banks should adapt lending strategies to account for - bain.com 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.) 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. One can argue that the secondhand luxury goods buyer isnt the same as the primary market buyer. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. The apparel category grew by 22%24% in 2022, aided by wardrobe restocking. Jewelry sales in 2022 are estimated to have risen to 28 billion, up 23%25% from 2021. In contrast, Mainland China lost a little ground, dropping 1% from 2021. All personal luxury goods categories performed well in 2022, with double-digit growth rates across the board. The luxury hospitality market surged to an estimated 191 billion, more than doubling in value in 2022. In Europe, high-end Asian automakers, particularly Chinese brands, have gained share from local rivals. In May 2020, we began making regular forecasts of how soon aviation demand would recover from the effects of the Covid-19 pandemic. 3.0 experiences (such as virtual stores, digital shopping assistants, and ultra-luxury travel and hospitality). Bain & Company is estimating growth for the personal luxury goods market to reach 360-380 billion euros, or $378-400 billion at the current exchange rate, by 2025. Many reported sales above pre-pandemic levels, driven mainly by store re-openings, strong ecommerce growth and normalizing consumer demand for their luxury brands. The retail channel has now reached parity with the wholesale channel. This article is a preview of the Top 10 companies listed in the upcoming Global Powers of Luxury Goods 2022, The top 5 companies are the powerhouses of luxury brand sales, About the Global Powers of Luxury Goods report, Global Powers of Luxury Goods | Deloitte | global economy, Luxury Consumer, Infrastructure, Transport & Regional Government, Telecommunications, Media & Entertainment, update your settings to accept analytics and performance cookies. Interest from high-net-worth individuals continued to rise, reflecting a desire for deeper connections with nature and comfort; designs increasingly reflect these preoccupations, through features such as enlarged stern areas or a preference for explorer yachts able to sail to the remotest areas. After 20 years of large expansion and deep evolution, Covid-19 has fast forwarded and anticipated some of the key changes for the next 20 years of the global luxury market. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. Luxury goods sales growth for the year ended March 2022 for Richemont was 50.1%. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. Among the rising stars, India stands out for growth potential, which could see its luxury market expand to 3.5 times todays size by 2030, propelled by an increasing interest and evolving attitudes and behaviors among (young) customers towards luxury goods. Later on in 2021 that dip turned into a V-shaped recovery, with the value in 2021 being slightly bigger than before the pandemic. Strong market share shift towards European brands. Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. SEA is still suffering from a lack of tourism. However, the spots will be replaced by new consumers, mostly Generation Y and Z. As in last years report, there will be a section on the impact of COVID-19 on financial results. Younger generations (Generations Y, Z, and Alpha) will become the biggest buyers of luxury by far, representing 80% of global purchases. Sustainability remains a focus for both consumers and shipyards, from greener propulsion systems to design-for-disassembly solutions that make yacht materials more recyclable. Meanwhile, China itself, which remains crucial to the long-term of the luxury market, continues to confront a challenging phase due to Covid lockdowns and is still performing below 2021 figures. Fashion jewelry showed solid growth. 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. Spirits grew faster than wine, with status spirits growing internationally and across categories, tapping into usage occasions once reserved for wines. The economic model will continue to evolve. According to report co-author . What other changes can we expect looking at consumers age? It finds that solid market fundamentals and new tech-enabled profit pools, are set to boost the markets value to 540-580 billion by the end of the present decade, from 353 billion estimated for 2022 a rise of 60% or more. Latin America experienced solid growth, especially in Mexico and Brazil. The steepest growth rate between 2019 and 2022 belonged to personal luxury goods, followed by experience-based goods, such as fine art and luxury cars. 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. Some tourists bounce back over the summer. Local consumptions are strong everywhere. 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. What will it bring? This generational factor is one of the critical trends affecting the development of the luxury market in 2022, and for the rest of the decade, that are highlighted by todays report. 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 luxury market now appears better equipped to cope with economic turbulence with its consumer base both larger and more concentrated, and customer-centricity and a multi-touchpoint ecosystem set to provide resiliency amid disruptions, the report finds. The report reserves the most ink to the personal luxury market, the second largest at 283 billion ($322 billion) in sales, up 29% over 2020 to end the year +1% ahead of 2019. Travel retail is in recovery mode, at least in Western markets, but not yet back on its pre-Covid track. Prospects for personal luxury goods market out to 2030 are also highly positive, today's analysis concludes. 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.
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