The global luxury goods market is set to reach a record 1,500 billion euros in 2023

According to a recent study by Bain & Company, the global luxury goods market is set to reach a record value of €1,500 billion by 2023. Despite positive growth, brands are at a turning point, and will have to overcome the challenges posed by a complex geopolitical and macroeconomic context.

 

By 2023, the global luxury goods market is expected to reach 1,500 billion euros, representing growth of 8-10% compared to 2022. These are the findings of a recent report produced by Bain & Company in collaboration with Altagamma, the foundation of Italian luxury companies. Customer spending in the luxury sector, particularly on experiences, has thus reached historic levels, underpinned by a resurgence in social activities and travel.

 

Despite a complex geopolitical and macroeconomic context, the market as a whole succeeded in maintaining robust growth of 11-13% at constant exchange rates. This growth is aligned with that of 2022, and translates into an increase in spending of around 160 billion euros in various luxury product and service categories.

 

The key segment of luxury personal goods is expected to reach 362 billion euros by the end of the year, an increase of 4% (at current exchange rates) over 2022. However, the luxury sector will face headwinds in the fourth quarter, notably due to fragile consumer confidence, macroeconomic tensions in China and the absence of signs of recovery in the United States.

 

“The luxury market will enable positive growth for only 65% to 70% of brands in 2023, compared with 95% in 2022. To stay in the race, it will be crucial for brands to make bold decisions for their customers,” said Claudia D’Arpizio, Bain & Company partner and global head of the Luxury competence cluster, lead author of the study.

 

“Brands will encounter new rivals from other industrial sectors, and will have to compete with ingenuity to stay in the race, make their move to the next size up, or survive!” added Joëlle de Montgolfier, Director of Research and Foresight for Bain’s Retail, Luxury and Consumer Goods competence clusters.

 

Uneven regional dynamics

 

The study reveals that luxury goods purchases by tourists worldwide have almost returned to pre-pandemic levels. In Europe, the gradual recovery of tourism has stimulated growth in all countries. The main luxury metropolises attracted a large number of customers. Despite the macroeconomic instability that impacted “aspirational” customers, the most loyal customers maintained a positive momentum, contributing to the market’s growth.

 

The Americas region recorded a deceleration throughout the year, posting an 8% decline on 2022. Widespread uncertainty continued to influence spending by “aspirational” customers. The most loyal customers maintained their spending abroad, due to the persistent strength of the US dollar against the euro. Saudi Arabia, on the other hand, is experiencing an acceleration, attracting investment from major luxury brands.

 

In mainland China, after a solid performance in the first quarter, growth gradually slowed due to the deterioration of certain macroeconomic indicators. Hainan is poised to become a luxury hub by becoming a fully zero-rated island by 2025. Japan is prospering thanks to local customers and the weak yen, which is encouraging tourist flows. South Korea, on the other hand, is having a complicated year, with unfavorable macroeconomic conditions impacting local consumption, and a strong currency encouraging tourists to shop elsewhere. The countries of Southeast Asia showed positive momentum, thanks to sustained intra-regional tourism and growing interest from local customers, particularly in Thailand.

 

Jewelry booms, leather goods slow down

 

The analysis shows growth in all luxury goods categories, supported by steadily rising prices. The jewelry sector is expected to reach a value of 30 billion euros by 2023, with fine jewelry emerging as a promising investment.

 



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Picture of Hugues Reydellet
Hugues Reydellet
Hugues Reydellet is a young and passionate journalist whose favorite subjects are economy, culture, gastronomy, but also cars, and sports. With a sharp pen and an insatiable curiosity, Hugues is constantly on the lookout for new hot information to report.

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