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%. Heinemann Outperforms Travel Retail Rivals With 81% Growth To $4.2 Billion In 2022, Airport Retail Confectionery Firsts From Oreo And Lindt, Both With Live Chefs, Consumer Demand Is Slowing, Good For Government Policy Wonks, Bad For Retailers, An Exclusive Retail Service Experience Is At The Center Of CB2's New Design Shop, Whats Working - And Not - In Mobile Commerce (Part 1 Of 2), Magna reports global digital media grew by nearly one-third year-over- year in 2021, China can be a risky bet for Western luxury brands, Chinese Gen Z consumers find local brands. Moreover, Gen Y and Gen Z are expected to contribute roughly 180% of the total growth from 2019 to 2025. 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 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. Many reported sales above pre-pandemic levels, driven mainly by store re-openings, strong ecommerce growth and normalizing consumer demand for their luxury brands. LONDON, ENGLAND - DECEMBER 27: A woman holds a Louis Vuitton shopping bag on Clifford Street on [+] December 27, 2021 in London, England. Struggling Australia which only recently reopened after months of lockdown. 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. But with more turbulence ahead, the power luxury brands are best positioned to power on through. Chinese customers will be back by 2022-23, Japan by 2023 and Europe in 2024. This is a BETA experience. Even in the face of recessionary conditions expected across leading economies into 2023, the Bain and Altagamma analysis forecasts further expansion in sales and market value for luxury goods through the coming year and decade. 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. Retailers have seen a decrease in footfall amid a recent surge in COVID-19 cases across the UK due to the Omicron variant. The personal luxury goods industry, in particular, saw a further growth acceleration this year, coming on the heels of the V-shaped rebound enjoyed in 2021, the research shows. Retail continued to grow faster than wholesale and reached parity in terms of market share. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. That ratio has come down from 3.4 times in 2018. 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. Monobrand websites gained further ground, raising their share to about 45% of the online segment, up from 43% in 2021. 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. The most likely outcome in the fourth quarter of 2022 is a 19% year-over-year rise in sales, which would be a slight slowdown from 23% growth in the third quarter. London and the UK suffer the most, while Russia is championing thanks to a strong repatriation. The growth was fueled by the greater emphasis consumers have been placing on their home lifeas both shelter and source of self-definitionsince the pandemic. Specialty retailers went from 20% share of the personal luxury goods market in 2019 to 16% in 2021, a 10% decline in sales. As sales of secondhand goods on online platforms soared, brands are moving to increase their direct control of the market. 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. The retail channel has now reached parity with the wholesale channel. Accessories remained the largest personal luxury goods category and grew by 21%23%. Before Covid, emerging luxury brands had hope to find traction online where the power brands were reluctant to venture, but thats all changed. The economic model will continue to evolve. Global Retail, Wholesale & Distribution Sector Leader, Managing Director | Deloitte Consulting LLP. Among the rising stars, India stands out for growth potential, which could see its luxury market expand to 3.5 times today's size by 2030, propelled by an increasing interest and evolving attitudes and behaviors among (young) customers towards luxury goods. Rather than selling into stores wholesale and lose margin, power brands are going to pay rent instead, as they are already doing in their mono-brand stores which advanced 3% from 2019 to capture 32% share of market. Opportunities include entering a growing market, developing a network-based business model, showing commitment to sustainability, gathering data on customers and more. 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. The US and Europe still command the lions share of the market, but Asia (especially China) accelerated as consumer acceptance increased. These are key findings from the 21st edition of the Bain & Company-Altagamma Luxury Study, a collaboration between Bain & Company and Fondazione Altagamma, the trade association of Italian luxury goods manufacturers. Watches have evolved from a challenged category to the new object of desire. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. We expect that the growth of new types of activities, often powered by technology, will result in an additional 60 billion to 120 billion of luxury industry sales. 2023. 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. 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. 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. 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. Consumer expectations for service levels are rising too, with brands embracing direct-to-consumer models to create a more luxurious shopping experience at every stage. Distribution is a complex discussion.. Please select an industry from the dropdown list. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. The threats revolve mostly around understanding the winning value proposition, cracking operation complexity and defining logo and rebranding strategies. 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. The top growth drivers are Chinese consumers in China, online channels and younger generations. Carina Lau, Pansy Ho, Michelle . Internationally, secondhand growth was aided by sustained demand for watches, which account for 60%70% of the total market. 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. 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). "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. Latin America experienced solid growth, especially in Mexico and Brazil. Asia (excluding Japan) switched to second position, followed by Europe. 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). The FY2021 composite net profit margin for the 78 Top 100 companies reporting net profits more than doubled to 12.2% year-on-year, higher than pre-pandemic levels. 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. Over-performance of all categories, restocking wardrobe in the rising "post-streetwear" era. Meanwhile, the effect of the airline industry's CO2 mitigation costs has already begun to reshape medium- to long . MILANNovember 15, 2022The global luxury goods market took a further leap forward during 2022, despite highly uncertain economic and consumer market conditions. 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. Bookmark content that interests you and it will be saved here for you to read or share later. ")},function(n){console.log(n),e("#nl2go_form").html("Unexpected error")})})})}(jQuery); 2023 E-commerce Germany and E-commerce Berlin. Top 5 Five-year view The composite luxury goods sales of the Top 5 companies grew by 91% over the five years FY2016-FY2021. Brands invested heavily (and successfully) to fuel demand. Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. Now, brands are multi-price points to answer to different customer needs. Sales of fine wines and spirits hit 96 billion, up 16% on 2021. The online channel's market share remained in line with 2021. Fashion ranking: Top 20 clothing retailers in Germany. 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. Luxury is back to the future is the title of the latest market study worldwide by Bain Altagamma. 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. Abstracts are available in the press releases area. Demand for personalization and digital connectivity rose. Luxury spending continued to skew toward products, with steep growth in personal luxury goods and more moderate growth in experience-based goods. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Required fields are marked *. 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. 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. Despite recessionary conditions expected across leading economies in 2023, personal luxury goods should see further expansion. 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. The year of 2021 confirmed Chinas growing importance in luxury, together with a bright evolution for European and American customers. 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). *I have read thePrivacy Policyand agree to its terms. By Claudia D'Arpizio, Federica Levato, Filippo Prete, and Jolle de Montgolfier. Further, some 40% of the online segment is now controlled by websites devoted to a single brand, rather than multi-brand marketplaces. 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.