Bain & Company and the Altagamma Foundation, the trade association of Italian luxury brands, today published their Spring 2023 report on the personal luxury goods market. And its tone is rather optimistic, even if several challenges, including that of sustainable development, await the players around the corner.
The global luxury goods market achieved a record year in 2022, reaching a value of €345 billion, despite geopolitical tensions and macroeconomic uncertainty. This momentum was maintained in the first quarter of 2023, with growth of between 9% and 11% compared to the first quarter of 2022. This is one of the key findings of the Luxury Goods Worldwide Market Study Spring 2023, just published by Bain & Company and the Altagamma Foundation, the trade association of Italian luxury brands.
The study attributes this growth in the first quarter of 2023 to a number of factors, including the gradual easing of hyperinflation, the restoration of consumer confidence in Europe, the reopening of China, which lifted the restrictions of its zero Covid policy before the Chinese New Year, and positive momentum in Japan and Southeast Asia, supported by intra-regional tourism.
However, the situation needs to be qualified by geographical region. A slowdown is expected in the United States, where consumers are cautious in the face of a possible recession.
Despite unused savings of around $900 billion, the United States has already cut spending in the face of economic uncertainty. Wealthier US customers are holding out, but shifting some of their spending abroad as price differentials widen. Against this backdrop, American luxury consumers are focusing on the purchase of prestigious pieces. We are also witnessing a rebalancing of the luxury map. Major players such as New York and California are regaining their place at the forefront, while tourist destinations such as Hawaii and Las Vegas are slowly climbing back up the slope without yet reaching the record levels of 2019.
Europe has started the year strongly, recording solid first-quarter performances, mainly thanks to its largest customers. However, the region is gearing up for a “litmus test” that will test its resilience over the summer, as the steady influx of tourists from the US and Middle East over the first half of the year is set to taper off. However, in recent months, Europe has seen the return of its first Chinese tourists, and an increasingly steady return is expected later in the year.
Mainland China, which saw growth in the first quarter, should also see a further increase this year, enabling some brands to return to 2021 levels. Meanwhile, the Asian market is undergoing changes, with the emergence of new luxury hubs. Since the reopening of the country, Hong Kong and Macau have become major tourist destinations for the Chinese, recording strong growth (with a market value of around 5 billion euros in 2022). Southeast Asia continues its impressive growth, supported by spending by Russian tourists, the arrival of the first Chinese consumers and a growing appetite for jewelry and watches (with a market value of around 12 billion euros in 2022).
South Korea, on the other hand, is slowing down, although the travel-retail sector there is stimulated by spending by tourists from Southeast Asia (with a market value of around 21 billion euros in 2022). Japan is once again becoming a rising star for the sector: while local customers are maintaining their spending pace, growth is coming from foreign tourists fond of trendy accessories, reaching a market value of around 24 billion euros in 2022).
Buy less but better
Featured photo : © Shutterstock