It hasn’t been a stellar year for the luxury goods market.
According to Bain & Company, annual luxury reportThe entire industry is expected to decline in 2024 as China and South Korea face severe economic headwinds.
Consulting group analysis, in collaboration with Italian luxury goods group Fondazione Altagamma, predicts the market will fall by 2% this year. Only one-third of luxury retailers are expected to see positive growth in 2024, compared to two-thirds of brands last year.
The report comes days after the luxury department store chain sax fifth avenue The brand abruptly canceled its annual holiday light show at its flagship Manhattan Building.
“For many years, Saks Fifth Avenue’s holiday season has included a light show at our flagship store, but for some time we have been considering a change in approach,” a spokesperson told the New York Post. Ta.
“This has been a challenging year for the luxury goods industry and, like all companies, we are carefully managing our business to ensure we are best placed for the future,” the representative said. ” he added.
This year’s decline marks the industry’s third slowdown in 20 years. The previous cases were in 2009, at the height of the financial crisis, and in 2020, during the first months of the coronavirus pandemic.
The decline in 2020 saw the global personal luxury goods market fall from $300 billion to $236 billion. This decline is smaller than the pandemic-era decline. The industry was worth $390 billion last year and is expected to be worth $384 billion this year.
In addition to mainland China’s economic slowdown, Bain’s report also highlights changing purchasing patterns, especially among younger consumers. Gen Z’s declining interest in luxury goods is part of an estimated 50 million shrinking luxury customer base.
The industry continues to shift spending towards experiences such as travel and experiential products such as yachts and cars.
“Despite macroeconomic uncertainty, luxury spending this year has shown remarkable stability, driven primarily by consumers seeking luxury experiences,” Claudia Dalpizio, lead author of the study, said in a statement. Desire is the driving force.”
“Yet, over the past two years, 50 million luxury consumers have exited or been forced to exit the luxury market, making it a time for brands to recalibrate their value proposition. It’s a sign that it’s coming.”
Customers also continued to purchase “small luxuries” such as beauty products, fragrances and eyewear. This may be an example of “.”lipstick effect” – a phenomenon in which people spend more on small items such as cosmetics during times of economic stress.
