The latest half-yearly report from Bain & Company and Altagamma confirms the scenario of a less invigorating 2024 for the global personal luxury goods market, with growth of just 0-4% at constant exchange rates. And all this while luxury continues to flourish in the field of experience. Joëlle de Montgolfier, Global Director of Research for Bain & Company’s Global Consumer, Retail and Luxury business, commented on this latest study for LUXUS PLUS.
2024 will not be a prosperous year for the luxury goods industry, according to the latest half-yearly report published on June 18 by Bain & Company in collaboration with Altagamma, the Italian business organization for the sector.
The Bain/Altagamma study has slightly lowered its estimates of last November, assuming a growth scenario of 0 to 4% compared to 2023 for the personal luxury goods market (including fashion, accessories, beauty and fragrances, jewelry and watches).
Although, as Joëlle de Montgolfier, Global Director of Bain & Company’s Consumer, Retail and Luxury Goods Research, points out, a more optimistic scenario of “+4 to +6%” is not entirely out of the question…
Whatever the case, luxury brands, especially those positioned in the personal goods category, will have to pull the right levers to stay in the race…
The limits of the elevation strategy…
The recipes of the future will not necessarily be those of the past… Joëlle de Montgolfier (Bain & Company) refers in particular to the problem of the “elevation” strategy, “a modest word for price increases”, pursued for several years by luxury players.
“The idea was to target a much more resilient clientele, because they were wealthier, with rarer and more exclusive products,” stresses the expert. That’s all well and good, but it has its limits, because luxury must also rely on a less affluent, aspirational clientele, and we’re starting to see points of inflection. In 2022, we said “watch out” in the face of stagnating volumes, with growth driven solely by price rises. In 2023, we saw the first indications of a decline in volume…Yet the luxury industry cannot turn solely to ultra-luxury and cut itself off from an aspirational and more occasional clientele…”.
As a reminder, still according to Bain & Company/Altagamma estimates, the global luxury market, all categories combined (luxury products, including luxury personal goods and high-end furniture; products with a strong experiential dimension, including automobiles, jets, yachts, objets d’art, etc.; pure experiences, including hotels, high-end restaurants and cruises), had grown at a real rate of 8% to 10% in 2023 compared to 2022. Despite the geopolitical and economic turbulence, it had reached a record 1,500 billion euros!
This was mainly driven by the upturn in tourism and the taste for luxury experiences, which in 2023 grew five times faster than personal luxury goods, while the personal luxury goods market grew “only” by +4% to 362 billion euros, driven by product categories such as fashion and jewelry.
Record in 2023
Despite this record, luxury had landed softly after two years of post-Covid euphoria, with growth in 2023 for only two-thirds of luxury brands, compared with 95% in 2022…
The new Bain & Company/Altagamma study provides useful insights and recommendations in a field where it has become more difficult to evolve…
In a nutshell, Bain & Company and Altagamma point out that “luxury personal goods brands are going through a temporary crisis” “due to macroeconomic pressures and a polarized customer base“. They see this as a “unique opportunity for luxury brands to define a new direction” in their strategy, favoring a “more personal connection” with their customers.
The essence of “experiential luxury
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