In 2022, the luxury market generated positive growth for 95% of brands. Online should become the leading channel for luxury purchases with an estimated 32%34% market share, followed by monobrand stores (30%32% market share). 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. Luxury brands have faced three years of tremendous turbulence and uncertainty, but the industry shows more strength, resilience, and ability to innovate than before. 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. The economic model will continue to evolve. But with the future of the luxury market now on the shoulders of next-generation customers, expected to represent 70% of global purchases by 2025, and these customers keen on sustainability, a shift from firsthand to secondhand luxury goods can be expected. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic. Weak Hong Kong vs mixed Taiwan and Macau. Global luxury markets include items and services like personal luxury goods, cars, hospitality, gourmet food & fine dining, fine art, private jets & yachts, and even luxury cruises. 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. Now more than ever, the industry is facing paradigm shifts in all areas: production and resources, life cycle, customer relationships, corporate responsibility, and globalization. Broader meanings and business models will emerge. 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 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. 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. Strong cross category, generation and price growth. 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. Online and monobrand, key channels for 2021 recovery, will lead the mid term growth of the industry. However, the spots will be replaced by new consumers, mostly Generation Y and Z. Gourmet food and fine dining grew 12% at current exchange rates to 57 billion, completing its recovery to prepandemic levels, as social restrictions were lifted across major cities. When it comes to the overall value of this market, luxury cars significantly outperform all of the other components combined. By Claudia D'Arpizio, Federica Levato, Filippo Prete, and Jolle de Montgolfier. India Private Equity Report 2023. 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. In contrast, Mainland China lost a little ground, dropping 1% from 2021. Prospects for personal luxury goods market out to 2030 are also highly positive, today's analysis concludes. Abstracts are available in the press releases area. South-east Asia and Korea are winning in terms of growth and potential. Bookmark content that interests you and it will be saved here for you to read or share later. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. Demand for personalization and digital connectivity rose. 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. The global luxury market is projected to grow by 21% in 2022, reaching 1.4 trillion; the personal luxury goods. Travel retail is in recovery mode, at least in Western markets, but not yet back on its pre-Covid track. Hong Kong and Macau were weaker spots, while Taiwan slowly recovered. 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. 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). Taken together, the study characterizes these trends as the nouvelle vague or new wave of developments for the sector. The high-end furniture and housewares market reached 53 billion, up 13% from 2021. This reflects a more precocious attitude toward luxury, with Gen Z consumers starting to buy luxury items some three to five years earlier than millennials did (at 15 vs. at 1820); Gen Alpha is expected to behave in a similar way. 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. But with more turbulence ahead, the power luxury brands are best positioned to power on through. 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. Beauty (60 or $68 billion) and watches (40 or $45 billion) will be flat and apparel (57 or $65 billion) will remain -5% down relative to 2019. 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. 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. But despite present and continuing economic challenges, the luxury market continued to perform strongly throughout this year to date, with winners for brands across the board, and positive growth for some 95% of brands, today's report concludes. "Luxury is back to the future" is the title of the latest market study worldwide by Bain - Altagamma. Gen Y and Gen Z accounted for the entire growth of the market in 2022, it notes. The estimated value for the whole market in 2021 is B 1.140. Commenting on the critical trends and themes for the luxury industry up to 2030, Federica Levato, partner at Bain & Company and leader of the firm's EMEA Luxury Goods and Fashion practice, co-author of today's 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. Prospects for personal luxury goods market out to 2030 are also highly positive, todays analysis concludes. When segmented into goods vs. experiences, spending continued to skew to tangible products in 2022. 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. China chic is only trouble for brands that continue doing what they always did. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report. Womenswear and menswear grew at about the same pace. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. But the Global State of the Consumer Tracker makes it easy for you to access consistent, high-quality data on consumer sentiment and behavior in retail, consumer products, automotive, and travel. There are sectors that were affected by the pandemic much more, and one of them is experiences. (Photo by Hollie Adams/Getty Images), Cinco De Mayo Is Only One Day, Yet Latino Consumers Deserve Attention All Year, Retail Alert: Philippines May Talk Trade As President Marcos Arrives In The USA, Gebr. Physical stores are distribution centers for online. Its not an either-or question but both. 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. Examples include: acceleration of middle class and consumption upgrade, pressure on uber-wealth, delayed spending given current uncertainty. Please select an industry from the dropdown list. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Analysis of financial performance and operations for financial years ended through 31 December 2021 using company annual reports, industry estimates and other sources. MA While the report states, there is still a place for rising stars in the industry, one wonders where? All segments gained momentum, but only luxury hospitality and cruises havent yet closed the gap with pre-Covid levels. 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,. Not all sectors can enjoy stable recovery, however. Despite the slow recovery process, however, the demand for experiences to be allowed back is higher than ever. Uber-luxury jewelry outperformed globally, as did iconic pieces and lines. These domains are rich with opportunities for luxury brands but investments for future growth are crucial.. Worst dip in history for the personal luxury goods market: Personal luxury goods are items like jewelry, luggage, haute couture clothing, sports cars and more. Driven by the dichotomic impact of pandemic outbreak in 2020, the luxury food market is showing significant difference in growth rates within its components. 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. Ongoing Covid-19 restrictions and economic uncertainty caused the first personal luxury market decline in five years. Shoes, leather, jewelry, watches, beauty and apparel these categories can expect changes, with the highest growth between 2019 and 2021 being the shoes category. Bain has published its annual findings in the Luxury Goods Worldwide Market Study since 2000. 3.0 experiences (such as virtual stores, digital shopping assistants, and ultra-luxury travel and hospitality). Luxury yacht orders rose to a record level, amid solid growth in deliveries. Please see www.deloitte.com/about to learn more. 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. Luxury is back to the future is the title of the latest market study worldwide by Bain Altagamma. In general, luxury brands have the chance to secure common prosperity, but they will need to challenge and adapt their strategy. In 2021, profits are already back at 2019 levels. 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. 'Gen Y' and 'Gen Z' accounted for the entire growth of the market in 2022, it notes. Sadove suggests these numbers may not be as stark as they first appear. The companies making up the Top 5 have been relatively stable, with only LOral Luxe entering the Top 5, replacing Richemont*, Chart 1: Luxury goods sales US$ million: FY2016 & FY2021. The customer is going to shop and going to shop in different ways, Sadove affirms. 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. Strong market share shift towards European brands. What other changes can we expect looking at consumers age? Opinions expressed by Forbes Contributors are their own. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling todays urgent challenges in education, racial equity, social justice, economic development, and the environment. The luxury hospitality market surged to an estimated 191 billion, more than doubling in value in 2022. "The nouvelle vague thenew 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 D'Arpizio, a Bain & Company partner and leader of Bain's Global Luxury Goods and Fashion practice, the lead author of the study. The secondhand luxury goods market rose to 43 billion in 2022. A powerful factor for sector growth this decade will be generational trends. Art-based NFTs still represent a limitedalbeit expandingportion of the overall market; artists are looking for ways to meaningfully integrate NFTs into fine arts. That reflected a renewed value proposition in the US and successful reengagement with tourists in Europe. 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. (Photo by Hollie Adams/Getty Images). Please read and agree to the Privacy Policy. Best performing categories of 2020 are already beyond 2019 in 2021, watches and beauty on par, apparel is still lagging. The performance of the last quarter of this year, in determining the final outcome for 2022, will largely depend on the progressive lifting of Covid-19 pandemic restrictions in China, as well as evolution of European and American luxury consumer confidence in the face of rising inflation and cost of living pressures, and potential recession in the US and European economies, the report notes. Carina Lau, Pansy Ho, Michelle . Recent studies Altagamma Studies archive Some countries will finally see some long awaited recoveries: China, Japan and European countries. A powerful factor for sector growth in the rest of the decade will be generational trends, the analysis reports. Bain estimates that global sales of personal luxury goods will reach at least 305 billion euros ($320 billion) this year, according to its most conservative estimate and up to 330 billion. This reports reveals and describes what they are: China doubling and Americas booming, Europe and Japan are still in recovery mode. 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. The latest Bain-Altagamma Luxury Goods Worldwide Market Study forecasts increased resilience to recession after robust 2022 growth. 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. The market for personal luxury goodsthe core of the core of luxury segments and the focus of this analysissaw impressive growth in 2022, coming on the heels of the V-shaped Covid rebound enjoyed in 2021. 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. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. In 2022, we estimate that 95% of brands experienced positive growth, but most luxury players continued to invest for the future, which resulted in a slight erosion of average profitability following an unprecedented increase in 2021. Many of them reported sales above their pre-pandemic levels, driven partly by increasing e-commerce sales and the re-opening of physical stores. 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. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. 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 The overall luxury industry tracked by Bain & Company encompasses both luxury goods and experiences. As in last years report, there will be a section on the impact of COVID-19 on financial results. Watches have evolved from a challenged category to the new object of desire. India stands out; its luxury market could expand to 3.5 times todays size by 2030, propelled by younger customers and an expanding upper and middle class. The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. The start-up world also became a less secure option for innovation talent during this period, with investment size falling and the number of start-up investments dropping 59%, from 14,400 in the last quarter of 2021 . Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. , describes them. Before Covid, emerging luxury brands had hope to find traction online where the power brands were reluctant to venture, but thats all changed. A deliberate (and effective) elevation strategy has driven a progressive price increase across the leather categoryaccounting for about 60% of 201922 growthwithout damaging volume growth. Sales of private yachts and jets grew by 18% at current exchange rates relative to 2021, reaching 26 billion. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. 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. The US and Europe still command the lions share of the market, but Asia (especially China) accelerated as consumer acceptance increased. 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. Fine art market rebounding thanks to gradual reopening of public auctions and art fairs. Within accessories, leather goods grew by 23%25%, far surpassing its pre-Covid levels (up 39%41% compared with 2019). Major technology growth companies shed 140,000 employees in 2022, followed by a second wave of layoffs in the first weeks of 2023. 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. The luxury market's consumer base is broadening with some 400 million consumers in 2022 forecast to expand to 500 million by 2030. The prospects for personal luxury goods out to 2030 are positive. They are expected to account for between 40% to 45% of purchases by 2025 when the China mainland will overcome the Americas and Europe as the worlds largest market. Older generations will be permanently leaving the luxury market. 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. 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. This is a BETA experience. The top growth drivers are Chinese consumers in China, online channels and younger generations. Younger generations (Generations Y, Z, and Alpha) will become the biggest buyers of luxury by far, representing 80% of global purchases. 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.. The Middle East is very strong throughout markets, with Dubai and Saudi Arabia leading growth. Italy and France were the 2022 growth champions, followed by Turkey, the UK, and Spain, while Germany softened. Struggling Australia which only recently reopened after months of lockdown. 2023 luxury market now set to be more resilient to recession than during the 2009 global financial crisis. 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. South-east Asia and Korea are winning in terms of growth and potential. Even though this market is constantly improving since Q3 2020, there still is some uncertainty when it comes to the next holiday season. I study the world's most powerful consumers -- The American Affluent, December 27, 2021 in London, England. The Russian market was mostly inactive due to war-related suspension of operations.