Luxury will grow up to 8% despite fears of recession
The 21st edition of the Bain & Company–Altagamma Luxury Study is bullish on the future of luxury goods. Despite uncertain economic and consumer market conditions, the global luxury goods market saw growth in 2022 and remains poised for further expansion through 2030 despite economic volatility. The sector is projected to achieve a market value of some €1.4 trillion in sales revenue this year, growing by 21% from 2021.
"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 D'Arpizio, a Bain & Company partner and leader of Bain's Global Luxury Goods and Fashion practice, the lead author of the study.
The Bain-Altagamma analysis sets out two scenarios, with sales growth set to be between 3 to 5% or 6 to 8%, depending on the strength of the economic recovery in China and the ability of the US and Europe to withstand economic headwinds.
- The US and Europe are still leading while new luxury markets are emerging.
- In 2022, the luxury market generated positive growth for 95% of brands and 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 and is projected to see further growth of at least 3-8% next year. By 2030, the market value is expected to climb to around €540-€580 billion, a rise of 60% or more compared to 2022.
- Gen Z and Gen Alpha spending is set to grow three times faster than other generations until 2030, making up a third of the market.
- Gen Z consumers are starting to buy luxury items some 3 to 5 years earlier than Millennials (at age 15 versus 18-20), and Gen Alpha is expected to behave similarly.
- The luxury market's consumer base is broadening, with 400 million consumers in 2022, and is expected to expand to 500 million by 2030.
- The higher and top end of the luxury market is also expanding, accounting for some 40% of market value in 2022 compared with 35% last year.
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 and co-author of the 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. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. These domains are rich with opportunities for luxury brands—but investments for future growth are crucial."
Luxury beauty has taken a backseat as brands scramble for accessibility riding the wave of the premiumization of mass. However, luxury skincare brand Augustinus Bader, founded in 2018, supports the findings of the Bain & Company–Altagamma Luxury Study, landing $25 million in new funding that values the business at $1 billion.
