Forecasting the Future of Personal Luxury Goods Market: Analysing Emerging Trends and Opportunities 2023-2028 (2023)

FAQs

What is the luxury market forecast? ›

The luxury market's consumer base will expand from some 400 million people in 2022 to 500 million by 2030. The share of top customers has been expanding and accounted for some 40% of market value in 2022, compared with 35% last year.

Global Personal Luxury Goods Market Definition

Luxury goods consist includes cosmetics, perfumes, watches, handbags, jewelry, etc. The technical term 'luxury good' is independent of the quality of the good, they are generally considered to be goods at the end of the market in terms of quality and price.

Revenue in the Luxury Goods market amounts to US$354.80bn in 2023. The market is expected to grow annually by 3.38% (CAGR 2023-2028). The market's largest segment is the segment Luxury Fashion with a market volume of US$111.50bn in 2023.

By 2025, China is estimated to represent between 40% and 45% of global luxury goods sales, compared to the Americas' 21%-23% and Europe's 16%-18%.

Luxury resale will boom in 2023 as more brands take control of their second-hand markets. The 1% will continue to buy luxury goods, but other classes may pull back. The personal luxury market is expected to grow 3%-8% over the next year, according to Bain & Company.

The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. This market growth is driven by factors that go beyond aspiration, with consumers becoming more knowledgeable and choosy, and intensified competition for loyalty and advocacy.

Bain & Company is estimating growth for the personal luxury goods market to reach 360-380 billion euros, or $378-400 billion at the current exchange rate, by 2025.

Changing customer expectations, social and environmental concerns, and geopolitical events fundamentally shift how luxury retailers must operate. To thrive in this new paradigm, luxury brands must rewrite the story of who they are and how they interact with their consumers.

Total spending on personal luxury goods by South Koreans year-on-year grew around 24% to $16.8 billion, amounting to $325 per capita.

They are not only timeless classics, but they can be a great investment as well. According to The Business Of Fashion, designer bags in particular have been seen to retain their value over time thanks to brand trust and classic styles.

Why do rich people buy luxury brands? ›

A sense of accomplishment is another reason why some people buy luxury goods. They want to reward themselves for their hard work by treating themselves to something they typically could not afford.

While many consumers are trying to curb their spending in the face of high inflation, the richest shoppers continue to snap up luxury goods at a record pace, The Wall Street Journal reports.

Gen Z and millennials are the largest drivers of the luxury-goods market, per Bain & Co. Gen Zers purchase luxury items three to five years earlier than millennials, the study found. The luxury-goods market is valued at more than a trillion dollars and is expected to withstand a recession.

New York Remains the World's Top Super-Luxury Property Market. Barron's.

If you're building a luxury brand, you might find yourself grappling with some particularly stubborn challenges — how to curate a sense of prestige and exclusivity that helps justify your prices, how to find audiences that can fuel your growth, and, indeed, how to grow without compromising your brand's identity.

The idea of sustainability hinges on meeting our needs without compromising the ability of future generations to meet theirs. Luxury seems an ideal industry to adopt sustainable measures; since quality, craftsmanship and durability are among its cornerstones.

Luxury customers feel power from spending big and satisfaction from obtaining exclusive, rare, and quality products. Luxury shoppers demand their brands to be 'woke'. They are concerned with the environment, including social and political issues.

Global Luxury Goods Market Outlook. The global luxury goods market stood at a value of around USD 331.6 billion in 2022 and expected to grow in the forecast period of 2023-2028 at a CAGR of 4.4% to reach USD 429.36 billion by 2028.

Luxury good demand of individuals spending according to their budget is likely to be higher than those who don't spend according to the planned budget. Individuals having positive economic behavior might spend for luxury within their budget limits.

What happens to luxury during a recession? ›

Luxury tends to fare better than other sectors during a downturn because of its exposure to high-income consumers. Wealthy shoppers do pay attention to their net worth, and are less likely to spend when the market is down, but the impact is often less dramatic than for other groups.

Luxury goods have a high-income elasticity of demand, meaning consumers' purchasing of luxury goods is highly sensitive to income fluctuation. As inflation drives purchasing power down, middle-class consumers may fall out of the luxury market.

Rising Costs Of Production And Inflation

There is also an argument that the cost of production has spiked in designer items, and this is reflected in the price tag. Factors including sourcing materials and shipping have all impacted the prices being charged by luxury retailers to their customers.

Millennials and Gen Z accounted for the entire growth of the global luxury market in 2022 according to Bain and Altagamma's latest study. Younger generations will continue to assert their position as critical growth levers for the luxury sector in 2023.

In the universe of luxury we face specific challenges such as significant seasonal swings in demand or the capacity to handle large volumes of new products.

Younger generations (Y, Z, and Alpha) will become the biggest luxury buyers by far, representing 80 percent of global purchases by 2030. Bain estimates that the market for personal luxury goods surged 22 percent in 2022 to roughly $381 billion.

Which luxury brand is the best investment? ›

The best luxury brands to invest in are Dior, Hermes, Chanel, and Louis Vuitton. They normally hold their value the best and are easier to resell. Some items even go up in value if you choose the right classic piece.

distinction is that rich people buy luxuries last, while the poor and middle. class tend to buy luxuries first.”

Today's luxury brand target audience is 25 to 44 years old. They comprise 64 percent of this overall audience. Don't sleep on the younger generation between 16 and 24 years old, also known as Generation Z. They're another big chunk of your target market.

Generally, the industries known to fare better during recessions are those that supply the population with essentials we cannot live without that. They include utilities, health care, consumer staples, and, in some pundits' opinions, maybe even technology.

While no investment is guaranteed to be recession-proof, some tend to perform better than others during downturns. These include health care and consumer staples stocks (or funds tracking those sectors), large-cap stocks and income investments.

One of the key problems facing the luxury industry is the lack of workers. Up to 65 percent of craft positions sit unfilled, according to 2021 numbers. LVMH, Chanel and Hermès are among the companies that have created programs to attract young people into careers in crafts.

What state has the most luxury? ›

1. In December, 2022, the most expensive shopping street in the world is New York City's Fifth Avenue. Fifth Avenue may be New York's most recognizable street, running north-south through Manhattan past Central Park.

San Francisco, California

Many tourist and shopaholics choose San Francisco to spend time and money as it offers some of the best shopping in the world. Its shopping market varies from shopping centers, districts and malls.

After ending the year down nearly 20%, the S&P 500 index is in the green for 2023. And the Nasdaq Composite — which plunged 33% in 2022 — is up more than 4.5% this year. So when will stocks fully recover from the bear market? Many experts appear optimistic it will happen in 2023.

While many consumers are trying to curb their spending in the face of high inflation, the richest shoppers continue to snap up luxury goods at a record pace, The Wall Street Journal reports.

Luxury tends to fare better than other sectors during a downturn because of its exposure to high-income consumers. Wealthy shoppers do pay attention to their net worth, and are less likely to spend when the market is down, but the impact is often less dramatic than for other groups.

The demand curve for luxury good is upward sloping and not downward sloping. It is because the luxury goods are the status symbols.

Global growth is projected to fall from an estimated 3.4 percent in 2022 to 2.9 percent in 2023, then rise to 3.1 percent in 2024. The forecast for 2023 is 0.2 percentage point higher than predicted in the October 2022 World Economic Outlook (WEO) but below the historical (2000–19) average of 3.8 percent.

We forecast that real GDP growth will slow to 0.3 percent in 2023, and then rebound to 1.6 percent in 2024. US GDP growth defied expectations in late 2022, but we expect persistently high inflation and rising interest rates to tip the economy into a brief and mild recession starting in Q1 2023.

What industry will be hit hardest by recession? ›

Real estate. Eventually, most recessions plunder the housing market, which involves real estate agents, mortgage lenders and everything connected to construction, from workers to suppliers.

Many countries have seen an increase in spending on luxury items, but one country now stands out as the world's biggest spender on luxury goods per capita: South Korea. According to analysts from Morgan Stanley, South Korea's spend on luxury goods saw a 24% increase in 2022 to €15.4 billion or about €300 per capita.

Generally, the industries known to fare better during recessions are those that supply the population with essentials we cannot live without that. They include utilities, health care, consumer staples, and, in some pundits' opinions, maybe even technology.

They are not only timeless classics, but they can be a great investment as well. According to The Business Of Fashion, designer bags in particular have been seen to retain their value over time thanks to brand trust and classic styles.

Luxury goods have an income elasticity of demand greater than 1, which means its consumptions increase more than income (Costa-Font et al. 2011). Income elasticity reflects the responsiveness of the demand for a consumer's income changes.

In economics, a luxury good is a good for which demand increases more than proportionally as income rises. Luxury goods are said to have high income elasticity of demand. In other words, as people become wealthier, they will buy more and more of the luxury good.