As 2024 draws to a close, it’s time to take stock. After a year marked by many unforeseen economic and geopolitical events, what has been the impact on the luxury world ? Let’s take a look back at the main results of some of the luxury groups that had to cope with the fluctuations in the sector’s performance this year.
In the luxury goods sector, an unexpected scenario has finally struck in 2024, after three sumptuous years.
While consultancy firm Bain & Company had anticipated annual growth of between 0 and 4% for its annual study conducted with the Fondazione Altagamma and published in mid-November, a 2% downturn is finally expected for the year to come. This is in stark contrast to the 18-20% growth seen between 2019 and 2023.
This situation is the result ofa downturn in the Chinese market, the sector’s key market, which accounts for up to 40% of sales for some brands. Faced with the turbulence in the Middle Kingdom, many players have made the United States, the leading luxury market by value, the growth driver par excellence for 2024, with numerous brand activations and store openings.
New challenges
In 2024, the luxury goods sector experienced a marked slowdown after several years of strong growth. In its annual study, Bain & Company notes that this is the first time since the 2008 recession that the luxury sector has suffered such a slowdown. Despite sustained demand in certain regions, brands have had to deal more than ever with the various issues of our time: geopolitical tensions, ecological transition and economic uncertainties.
The industry is faced with a delicate balance: continuing to grow while meeting growing expectations in terms of price and sustainability. The major houses have had to rethink their strategies: between innovation, respect for heritage and the implementation of ethical practices, adapting to these new challenges has challenged the dominance of some of the sector’s major groups.
Luxury has also been impacted by the slower-than-expected economic recovery in its key market: China. The first effects of the reorientation of the economy, massive youth unemployment and a persistent property crisis began to be felt by most players in the sector in the second quarter. At the same time, the consequences of the COVID-19 pandemic and persistent travel restrictions have somewhat altered purchasing behaviour and weakened investor confidence.
Read also > Hermès achieves double-digit growth in the first quarter of 2024
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