A new report by Bain & Company has said that the global luxury market took a “further leap forward” during 2022, despite uncertain economic conditions.
In the 21st edition of its ‘Luxury Study’, which was carried out alongside Italian luxury goods’ manufacturer Altagamma, the consulting agency suggested that the sector “remains poised” to see even further expansion next year, as well as into the next decade to 2030.
According to Bain, the luxury goods industry overall is projected to achieve a market value of 1.4 trillion euros in sales revenue this year, a 21 percent growth to that of 2021.
The personal luxury goods sector, in particular, saw a further growth acceleration this year, with it set to see the value of its sales jump to 353 billion euros, as it continues to rebound in spite of macroeconomic issues.
Bain noted that performance in Q4 strongly relied on the lifting of pandemic restrictions in China, as well as the evolution of consumer confidence in Europe and America, as rising inflation and cost-of-living take hold.
Luxury market to be recession proof in 2023
In comparison to the 2008 to 2009 global financial crisis, the analysis suggested that the luxury industry could be impacted differently, as it is potentially better equipped to cope with economic turbulence through the engagement of a larger, more concentrated consumer base.
Furthermore, Bain noted that “tech-enabled profit pools” and “strong generational trends” could drive a rise of over 60 percent in market growth for the coming years.
The report found that Gen Y and Gen Z had accounted for the entire growth of the market in 2022, with the latter expected to increase its spending three times faster than other generations, alongside the upcoming Gen Alpha.
Bain said the root of this comes as Gen Z has begun to purchase luxury items three to five years earlier than Millennials.
Bain’s key trends
As part of the report, the firm highlighted a series of key trends that will lead the luxury industry forward, including that of “new markets” that are “surprising” the sector. These consisted of South-East Asia and Korea, each of which were said to be “winning” in terms of growth and potential, while still requiring an infrastructure to support expansion locally.
The report’s emphasis on luxury’s expanding consumer base was also touched on, with it now boasting around 400 million consumers in 2022, a figure that is expected to grow to 500 million by 2030. It comes as consumers begin adapting their shopping habits in favour of knowledgeable and more selective purchasing, with brand loyalty also an important competitive factor.
Progressive price increases as part of ‘elevation strategies’ were further spotlighted, alongside the normalisation of retail growth and the merging of luxury and art, in which brands put a focus on craftsmanship and symbolic power.