Opinions expressed by Forbes Contributors are their own. And yet, underneath the topline results are other findings that should give one pause, specifically how the balance of power in the luxury market is now firmly in the hands of the power brands, as Steve Sadove, former CEO of Saks and currently advisor to Mastercard Stay ahead in a rapidly changing world. Despite the slow recovery process, however, the demand for experiences to be allowed back is higher than ever. The year of 2021 confirmed Chinas growing importance in luxury, together with a bright evolution for European and American customers. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. 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. And even more troubling, only seven brands control one-third of the personal luxury goods market. Iconic models and new hero products were the most desirable items. Luxury cars, luxury hospitality, and personal luxury goods together account for 80% of the total market. Sales of private yachts and jets grew by 18% at current exchange rates relative to 2021, reaching 26 billion. April 19, 2023. Hong Kong and Macau were weaker spots, while Taiwan slowly recovered. The luxury market's consumer base is broadening with some 400 million consumers in 2022 forecast to expand to 500 million by 2030. Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says 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. 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. Beauty reached 69 billion, up a mere 14%16% on 2021 (but still double its pre-Covid growth rate in 2019). 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. We work with ambitious leaders who want to define the future, not hide from it. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American, New Bain & Company-backed venture aims to help companies better trace data, achieve sustainability goals, ESG activities correlate to stronger financial performance, reveals new study from Bain & Company and EcoVadis. Yet luxury brand players are continuing to invest in future growth, even in the face of high inflation and rising costs, so that their profitability is slightly decreasing, following an unprecedented increase in 2021. It seems that traditional market segmentation lost its relevance. 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. In Europe, high-end Asian automakers, particularly Chinese brands, have gained share from local rivals. The luxury market now appears better equipped to cope with economic turbulence with its consumer base both larger and more concentrated, and customer-centricity and a multi-touchpoint ecosystem set to provide resiliency amid disruptions, the report finds. It maintains some elements of streetwear (such as gender fluidity, a disregard for occasion, inclusiveness, and sports-driven inspiration), but goes beyond its style codes through new and enhanced techniques, materials, and functions. Global Luxury Goods Market Seen Growing 21% in 2022 to 1.4 Trillion Euros. 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). 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. Department stores experienced faster growth than in previous years, gaining 20%. South-east Asia and Korea are winning in terms of growth and potential. Strong market share shift towards European brands. Struggling Australia which only recently reopened after months of lockdown. The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. Federica Levato, Bain & Company's partner and the report's co-author, said: "The speed of future market growth will depend on luxury players' strategic responses to the current crisis and their ability to transform the industry on behalf of the customer.". A customer carries shopping bags from Louis Vuitton, Chanel and Christian Dior. continued focus for large established brands, with few exceptions intercepting the next gen of customers. By Claudia D'Arpizio, Federica Levato, Filippo Prete, and Jolle de Montgolfier. 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. data regarding the outbreak of Covid-19 and consequential lockdowns across countries; macroeconomic data (e.g., GDP, consumer confidence index) and latest forecasts; current trading performance from relevant luxury industry players; annual reports, quarterly results, and analyst reports; and. 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. Bain & Company is the global consulting firm that helps ambitious leaders transform their companies into tomorrow's world leaders. While the report states, there is still a place for rising stars in the industry, one wonders where? 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. Bain & Company study underlines strength of luxury market rebound and All segments gained momentum, but only luxury hospitality and cruises havent yet closed the gap with pre-Covid levels. The New ROI: Defy Uncertainty by Boosting Return on Innovation | Bain Accessories remained the largest personal luxury goods category and grew by 21%23%. Luxury is converting into art, with the ultimate objective of transcending from its original form, rooted in craftmanship and functional excellence, towards broader meanings, empowered by imagination and symbolic power, to build its handmade creations. Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. 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. 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. Now, brands are multi-price points to answer to different customer needs. LONDON, ENGLAND - DECEMBER 27: A woman holds a Louis Vuitton shopping bag on Clifford Street on [+] December 27, 2021 in London, England. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic. Generation Y (millennials) and Generation Z accounted for all of the markets growth in 2022. Bain & Company expects the industry to recover by 2022 or 2023. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. Only fine wines and spirits (77 or $88 billion) and high-end furniture and housewares (45 or $51 billion) will exceed 2019 levels, up between 12% to 14% and 13% to 15% respectively. The study reveals that some of the consumption fundamentals of China will go through changes. Omnichannel retailing and a major shift in passenger mix are poised to transform traditional airport shopping. Performance was particularly robust in the first half of the year. 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. (Photo by Hollie Adams/Getty Images). Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. Europe managed to recover beyond pre-Covid 2019 levels thanks to solid domestic demand, alongside a boost from US and Middle Eastern tourist shoppers. 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. 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. 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. But what's the current scenario? 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. I study the world's most powerful consumers -- The American Affluent, December 27, 2021 in London, England. Prospects for personal luxury goods market out to 2030 are also highly positive, todays analysis concludes. What other changes can we expect looking at consumers age? 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 today's report. Although there will never be "another China" in terms of growth' contribution to the industry, India and emerging Southeast Asian and African countries have a significant potential nevertheless. Both LVMH and Kering have seen their luxury goods sales more than double. Luxury goods leader LVMH increased its share of the Top 5 from 39.1% in FY2016 to 44.9% in FY2021. The customer centricity honed in recent years is another source of resilience for the industry, as is the multi-touchpoint ecosystem that luxury has developed. From insights to the performance of the market, through estimates for the approaching us 2022, all the way up to some key recommendations this study contains data no one from the Luxury Goods industry should overlook. 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. We expect that solid market fundamentals will result in annual growth rates between 5% and 7% until 2030. 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. This is a BETA experience. Recent studies Altagamma Studies archive Not all sectors can enjoy stable recovery, however. Overall, we estimate that in 2022 the luxury markets overall retail sales value grew by 19%21% to 1.38 trillion, or 8%10% above 2019 levels. 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. Success online at least partly depends on the amount of advertising dollars pumped into online channels. 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. Within the personal luxury segment, only shoes (23 or $26 billion), jewelry (22 or $25 billion), and leather accessories (62 or $70 billion) will beat 2019 results, up 5%, 3% and 4% respectively. Please enable JavaScript to view the site. Air Travel Forecast to 2030: The Recovery and the - Bain & Company Examples include: acceleration of middle class and consumption upgrade, pressure on uber-wealth, delayed spending given current uncertainty. 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. Global Retail, Wholesale & Distribution Sector Leader, Managing Director | Deloitte Consulting LLP. Lighting and living/bedroom categories benefited the most, as consumers looked for more comfort, functionality, and beauty. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report.
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