The personal luxury goods market reached €288 billion (US$ 300 billion) in value in 2021. The market benefited from the 2021 holiday shopping season across regions, with a 7 percent increase over the same period in 2019.
China continued to see double-digit growth last year and Western markets experience sustained local demand. The United States, in particular, maintained momentum, even after federal stimulus ended.
These are the key findings from Bain & Company, an advisor to the global luxury goods industry, in its Luxury 2022 Spring Update, ‘Rerouting the Future’. The study was released Tuesday in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers’ industry foundation.
The personal luxury goods market experienced remarkable performance in the first quarter of 2022, growing by 17-19 percent, at current exchange rates (13-15 percent at constant exchange rates), over the same period in 2021 for several reasons.
Europe economy’s is improving despite the war’s shadow. The region is on the path to recovery to 2019 levels one year before expectations, thanks to booming local demand driven by a ‘back to normal’ attitude and a rebound in intraregional tourism.
The impact of the Russia-Ukraine conflict has so far been restricted to local markets, showing limited consequences on global luxury customer sentiment and spending.
The US luxury market is experiencing unprecedented growth.
China showed strong momentum during the Chinese New Year and through March 2022. However, the country’s spending has been challenged by its strict Covid restrictions.
In South Korea winning brands successfully reinvented their business model in the country to cater growing local demand and influence.
In addition to growth delivered by traditional luxury products, digital assets and the virtual world —the metaverse, social media and gaming— will play an increasingly relevant role in luxury brands’ value propositions.
By the end of 2030, digital assets and the metaverse will comprise 5-10 percent of the luxury market. Luxury brands have the opportunity to play a key role in shaping the virtual worlds on the rise, acting as creators and builders.
“Despite significant macro-economic challenges, including hyperinflation, slowing GDP growth and the Russia-Ukraine conflict, the personal luxury goods market proved resilient once again,” said Claudia D’Arpizo, a Bain & Company partner and lead author of the study.
Despite the challenges and disruptions that happened in early 2022, the mid-term direction of the luxury market remains unchanged. Bain & Company estimates market growth to reach €360-380 billion by 2025. highlighting two possible trajectories for 2022.
An optimistic scenario where the first half of 2022 growth path continues throughout the entire year. In this scenario, the market would reach around €320-330 billion by the end of 2022, growing 10-15 percent over 2021.
A slower pace scenario, which projects a potentially reduced growth pace due to a slower recovery of mainland China and challenged spending in mature markets caused by inflationary pressure and macroeconomic slowdown. According to this scenario, the market will reach €305-320 billion by the end of 2022, growing 5-10 percent over 2021.