Showcasing remarkable stability in the face of geopolitical and economic turbulence, the global luxury market exceeded a record EUR 1.5 trillion in 2023. However, the first quarter of 2024 saw a slowdown across a majority of regions, with consumers shifting their preferences towards more accessible goods, according to the latest study from Bain & Company.
After reaching a record high in 2023, partly due to a resurgence of luxury travel and a robust US holiday season in the fourth quarter, the global luxury market slowed down sharply across a majority of regions in the first quarter of 2024, according to the latest Bain & Company Luxury Goods Worldwide Market Study, released in collaboration with Altagamma, the Italian luxury goods manufacturers’ industry association.
Tourism drives sales in Japan and in Europe
Hence, the first quarter of the year is estimated to decrease between one and three percent, at current exchange rates, with significant variability in brands’ performance across and within regions.
Buoyed by tourism inflows in the first quarter of 2024, Europe and Japan have demonstrated notable resilience, with Japan thriving as it attracts a growing number of nationalities beyond the historical predominance of nearby Chinese travellers.
However, China’s market is under pressure due to two primary factors: the revival of outbound tourism and weakening local demand caused by rising economic uncertainties. The latter is undermining middle-class consumer confidence, leading to “luxury shame” behaviour similar to what occurred in the Americas during the 2008-09 financial crisis.
Likewise, the US continues to face with macroeconomic pressures despite signs of gradual improvement in GDP and consumer confidence.
New consumer preferences
The study also highlights the impact of the new macroeconomic environment on consumer choices. Facing rising unemployment levels and weakening future outlooks, younger generations are delaying spending in luxury goods.
In this context, jewellery stands out as a top performer in the current landscape, with consumers making investment-led purchase decisions, surpassing watches in growth and showcasing strength in both uber- and entry-luxury segments. Meanwhile, aspirational consumers are also redirecting spending toward makeup, fragrances, and eyewear, viewed as small indulgences. Simultaneously, apparel has outgrown accessories on an elevation strategy aimed at capturing the attention of top-tier customers, with shoes suffering from a slowdown among aspirational shoppers.
“A dual strategy, framed around the allure of top-tier clientele and the appeal of smaller luxury indulgences, is driving growth at both ends of the price spectrum,” said Federica Levato, partner at Bain & Company. “But now is not the time to for brands to rest on their laurels. As brands continue to face turbulence in the market, the winners will be those that rethink the way they craft and deliver their value propositions across multiple price points and touchpoints, growing their reach while building advocacy and loyalty among their customers.”
