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. Solid fundamentals are set to boost the markets value to between 540 billion and 580 billion by the end of the present decade, from an estimated 353 billion in 2022a rise of 50% or more. We work with ambitious leaders who want to define the future, not hide from it. And even more troubling, only seven brands control one-third of the personal luxury goods market. Watches have evolved from a challenged category to the new object of desire. Bain has published its annual findings in the Luxury Goods Worldwide Market Study since 2000. Sales are set to hit a new record in 2022, with the market forecast to grow by 22% at current exchange rates to 353 billion. The surging recovery Bain speaks about only applies to the power brands. Uber-luxury jewelry outperformed globally, as did iconic pieces and lines. 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. This is, in part, driven by a more precocious attitude towards luxury, with Gen Z consumers starting to buy luxury items some 3 to 5 years earlier than Millennials (at 15 years-old, versus at 18-20), and Gen Alpha expected to behave in a similar way. Struggling Australia which only recently reopened after months of lockdown. 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. 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. We observed a rebound when and where Covid restrictions were lifted, yet not enough to offset the performance of the second quarter. 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%. The prospects for personal luxury goods out to 2030 are positive. All rights reserved. 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. The Middle East is very strong throughout markets, with Dubai and Saudi Arabia leading growth. More specifically, they make up for almost 50% of the whole market. Ongoing Covid-19 restrictions and economic uncertainty caused the first personal luxury market decline in five years. It finds that solid market fundamentals and new tech-enabled profit pools, are set to boost the market's value to 540-580 billion by the end of the present decade, from 353 billion estimated for 2022 a rise of 60% or more. Despite the slow recovery process, however, the demand for experiences to be allowed back is higher than ever. , describes them. What Sadove sees shifting in distribution is a move toward more concession models in retail from traditional wholesale-to-retail distribution. 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. The year of 2021 confirmed Chinas growing importance in luxury, together with a bright evolution for European and American customers. Recent studies Altagamma Studies archive About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. London and the UK suffer the most, while Russia is championing thanks to a strong repatriation. Altagamma Studies | Altagamma Demand for personalization and digital connectivity rose. The higher and top end of the luxury market is also expanding at the same time and accounted for some 40% of market value in 2022 compared with 35% last year, with these consumers hungry for unique products and experiences, and putting brands VIC (Very Important Client) strategies into overdrive. Between 2021 and 2022, about 70% of leather category growth has been driven by price increases; by contrast, price increases accounted for only about 50% of category growth from 2019 to 2021. 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. Power Luxury Brands Take Control Of The Luxury Market In 2021, Leaving Accessories remained the largest personal luxury goods category and grew by 21%23%. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. Abstracts are available in the press releases area. Please read and agree to the Privacy Policy. 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. Bain & Co. partner: Luxury brands seen a 'roaring start' to 2022 While the industry has benefited from increased prices and a continued shift to higher-margin direct channels, the lower profit levels reflect luxury brands investment in future growth, particularly through increased marketing spending and ambitious transformation programs. Performance was particularly robust in the first half of the year. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. By Claudia D'Arpizio, Federica Levato, Filippo Prete, and Jolle de Montgolfier. The luxury markets are analysed by looking at demand and supply with specific in-depth analysis and forecasts on consumption, consumer profiling, digital, retail and specific product category. Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says Now more than ever, the industry is facing paradigm shifts in all areas: production and resources, life cycle, customer relationships, corporate responsibility, and globalization. If we have selected the wrong experience for you, please change it above. 2022 Diversity, Equity, and Inclusion Report. Specialty retailers went from 20% share of the personal luxury goods market in 2019 to 16% in 2021, a 10% decline in sales. 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. Heels and formal shoes are now back to their 2019 levels. The coming years will see a further blurring of the boundaries between mono-brand and ecommerce, which will increasingly push brands to take an Omnichannel 3.0 approach, enabled and enhanced by new technologies. There will be some changes in the growth in luxury spending by nationality. 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,. 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. The luxury markets consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. Global Powers of Luxury Goods 2022 | Deloitte Global Photo: Shutterstock Around 21 per cent of global consumer spending on luxury goods in 2021. Although there will never be another China in terms of growth contribution to the industry, new markets (such as India and emerging Southeast Asian and African countries) have significant potential, assuming their luxury shopping infrastructure can evolve quickly enough. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. Taken together, the study characterizes these trends as the nouvelle vague or new wave of developments for the sector. The major brands moved aggressively into the online space over the past two years, which grew from 12% share of the personal luxury market in 2019 to 22% in 2021, a stunning 38% uptick since 2019. 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. Beauty companies Este Lauder and LOral Luxe have seen slower growth in the sales of their owned and licensed luxury goods brands than multiple luxury goods companies LVMH, Kering and Chanel. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. Bains insights are based on triangulating information and sources available as of November 10, 2022, including: The scenarios do not consider disruptive changes to the Covid-19 status quo (e.g., potential future waves of Covid-19 related to variations of the virus) nor to the global sociopolitical situation. 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. Luxury yachts confirming positive momentum, with growth in deliveries paired with sharp growth in order books. ESG activities correlate to stronger financial performance - bain.com Renaissance in Uncertainty: Luxury Builds on Its Rebound Please select an industry from the dropdown list. South-east Asia and Korea are winning in terms of growth and potential. 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. Luxury goods leader LVMH increased its share of the Top 5 from 39.1% in FY2016 to 44.9% in FY2021. Chart 2: Luxury goods sales YoY growth FY2019-FY2021. Young and affluent Chinese Gen Z consumers find local brands much more aspirational and desirable than millennials or Gen Xers, he wrote, as he observes the native Gen Z consumers are exceptionally proud of their Chinese culture heritage and its future potential. 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. Meanwhile, the effect of the airline industry's CO2 mitigation costs has already begun to reshape medium- to long . Across 63 offices in 38 countries, we work alongside our clients as one team with a. Bain & Company analyzes for Fondazione Altagamma the market and financial performance of more than 280 leading luxury goods companies and brands. China represented 12 percent of total sales in 2022, but Luca Lisandroni, the company's co-CEO, is already calling 2023 a "golden year" for the China market. Chinas luxury market is expected to recover between H1 and H2 2023. DTTL (also referred to as Deloitte Global) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. Required fields are marked *. The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. In 2021, the personal luxury market is expected to grow 1 percent compared to 2019 and 29 percent compared to 2020. Asia surged by 43% when mainland China and Japan were excluded, reflecting the booming performance of Thailand and other Southeast Asian countries, as well as a stellar year for South Korea, which narrowed the gap with Japan in terms of market size. 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 Sparkling wine (and not just Champagne) gained share over still. When segmented into goods vs. experiences, spending continued to skew to tangible products in 2022. The share of top customers has been expanding and accounted for some 40% of market value in 2022, compared with 35% last year. Despite worsening macroeconomic indicators globally and specific challenges in China, the sector performed strongly across quarters, and it is likely to have reached 353 billion in retail sales value in 2022, marking an advance of 22% at current exchange rates (or 15% at constant exchange rates) vs. 2021. Opportunities include entering a growing market, developing a network-based business model, showing commitment to sustainability, gathering data on customers and more. While US luxury market is still strong, and Europe managed to recover beyond 2019 thanks to solid local demand alongside an extra-boost from US and Middle Eastern tourist shoppers, new markets are surprising the industry. 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. The higher and top end of the luxury market is also expanding at the same time and accounted for some 40% of market value in 2022 compared with 35% last year, with these consumers hungry for unique products and experiences, and putting brands VIC (Very Important Client) strategies into overdrive. 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. The studys lead author is Claudia DArpizio, a Bain partner in Milan. Consumption was very strong in Europe. Fashion ranking: Top 20 clothing retailers in Germany. But that too will favor power brands that have long practiced concessions, leaving emerging brands out in the cold. This database, known as the Luxury Goods Worldwide Market Observatory, has become a leading and much-studied source in the international luxury goods industry. Italy and France were the 2022 growth champions, followed by Turkey, the UK, and Spain, while Germany softened. 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. Global luxury goods market takes 2022 leap forward and remains poised A powerful factor for sector growth in the rest of the decade will be generational trends,the analysis reports. 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. Monobrand websites share grew from 30% in 2019. Source: Deloitte Touche Tohmatsu Limited. What other changes can we expect looking at consumers age? Casual categories, such as fussbett sandals and Wellington boots, are on the rise. 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 & Company expects the industry to recover by 2022 or 2023. 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. MILANNovember 15, 2022The global luxury goods market took a further leap forward during 2022, despite highly uncertain economic and consumer market conditions. South Korea back to 2019 levels: full repatriation of local customers over-compensate for the lack of tourism.
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