Luxury sector revenue will decline by 2% in 2024, according to research by Altagamma-Bain & Co.

The luxury sector appears to be slowing down in 2024, as we learned more from the latest Alta Gamma Bain Global Luxury Market Monitor 2024, which we covered last week. Revenues from the entire luxury goods sector will fall to €1.478 trillion in 2024. From 1.5 trillion euros in 2023, this would be a decrease of 2% at current exchange rates. Instead, experiential luxury goods record a 5% revenue increase.

The personal luxury sector is expected to generate revenues of €363 billion in 2024, led by beauty products, jewellery, and eyewear. The slowdown in luxury goods has been felt primarily in Asia, which has been hit by negative results from China, while Japan and other countries are flat on the previous year. There is also an increasingly pronounced polarization in consumption between the generally healthy high-end luxury segment and the clearly struggling aspirational segment.

“The prevailing uncertainties in the global economic and geopolitical scenario are having a significant impact on our sectors and supply chains, including the normalization process in the wake of the strong post-pandemic recovery. We expect a gradual recovery in 2025, driven by experiential luxury goods (hospitality, fine dining, wellness), strong markets such as Europe and the United States, and strong performance in jewelry and cosmetics.” he said. President of Alta Gamma.

“It is essential that Italy and Europe work together in order to protect our businesses from the increasing risks of international protectionism. We must also work together in solidarity with manufacturing and supply chain know-how, creativity and innovation, and sustainability. It is also important to make the most of the key success factors of Italian-made luxury goods, such as the ability to connect with consumers in all parts of the world with authenticity and authentic style,” Lunelli added.

Altagamma also released a consensus study confirming some of Bain & Company’s research forecasts, estimating that global luxury goods market revenue and EBITDA will grow 3% in 2025. Positive impact on second half. The division is expected to see revenue growth of 2% in Europe.

The US market is expected to grow by 3.5%, but the possibility of tariffs being imposed on European products is looming as President Trump takes office. The Latin American market is expected to grow by 4%. After a sharp rise, Japan’s growth is expected to slow to just 2% in 2024, while China’s growth rate remains uncertain and is estimated at 3%. On the contrary, the Middle East market continues to trend and is expected to grow by an estimated 5%.

The “luxury shame” phenomenon in China is expected to continue to have an impact in 2025, with the number of luxury goods consumers in the country expected to increase by only 2%, compared to US consumers expected to increase by 4.5%. We are expected to lose. The number of consumers is expected to grow by 3% across Asia Pacific and 1% in Japan. In Europe, the number of luxury goods consumers is expected to grow by a relatively modest 2%.

Cosmetics is the fastest growing luxury sector, with an estimated growth of 6%. Jewelery is expected to continue improving, driven by demand for investment assets, with sales expected to increase by 4.5%. Revenues for the watch division are expected to increase by 1%. Leather goods (up 2%) and footwear (up 1%) are also expected to see moderate growth. Apparel is expected to grow by 3%, creating a growing polarization between thriving, quiet luxury brands and others that are not as strong.

Among sales channels, brick-and-mortar retail is the strongest and is expected to grow by 5%. Online retail is expected to grow by 3%. Rather, wholesale channels, both physical and digital, are predicted to come to a complete halt.

The Altagamma Bain & Co. study envisions a scenario in which the luxury goods market will slow for the first time since the Great Recession, excluding the pandemic crisis. A key factor will be Gen Z’s decline in luxury goods consumption. The Gen Z customer base has significantly decreased by approximately 50 million people over the past two years.

A Bain & Company study found that consumers are increasingly shifting their spending toward travel, dining, and events, while prioritizing personal care and health over products. The resale market is also booming, especially for jewelry, vintage clothing, and leather goods.

Luxury stores are suffering from a decline in foot traffic, but outlet stores are doing well as consumers shy away from full-price retail. E-tail is expected to normalize after the post-pandemic fluctuations.

Although there are signs of growth from the US, Japan will likely lead the market thanks to its favorable exchange rate. A sharp economic slowdown is expected in mainland China. Europe is expected to achieve stable growth. The situation is even more diverse in the Middle East, where regional tensions are impacting tourist flows. Emerging markets such as Latin America, India, Southeast Asia and Africa are expected to add more than 50 million upper-middle class luxury consumers by 2030.

Therefore, in 2025, the global luxury goods market is expected to show some improvement, with an increasingly large consumer base, and to be on a long-term upward trajectory by 2030.