Gen Y and Gen Z continue to lead growth in the global luxury goods market, which is set to increase by 21% to reach €1.4 trillion in 2022. While the US and Europe remain major markets, South-east Asia and South Korea stand out for their growth potential. Price increases are also playing their part.
In times of turbulence, the luxury market is proving resilient, according to the Luxury Study from Bain & Company and Italian luxury goods manufacturers' association Altagamma. The global luxury market is forecast to grow by 21% to €1.4 trillion this year, driven by Gen Y and Gen Z consumers.
The personal luxury goods market is predicted to increase 22% (15% at constant exchange rates) to €353bn in 2022. Hard luxury, leather and apparel are the market’s top performers. All categories have now recovered to at least 2019 levels, with price increases driving around 60% of 2019-22 growth.
Forecast growth of the personal luxury goods market for 2023 should be between either 3-5% or 6-8%, depending on China’s economic recovery and how well Europe and the US can withstand economic headwinds, say Bain & Altagamma. China’s luxury market - currently below 2021 levels - is expected to recover next year.
“The luxury goods market's nouvelle vague will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics – all while new trends and concepts develop,” comments Claudia D’Arpizio, a Bain & Company partner and leader of Bain’s Global Luxury Goods and Fashion practice.
500 million luxury consumers by 2030
By 2030, the personal luxury market is expected to rise by at least 60% to around €540-580bn. During the period, Gen Z and Gen Alpha spending is set to grow three times faster than that of other generations, making up a third of the market by 2030.
The luxury market’s consumer base is expected to expand from 400 million luxury consumers in 2022 to 500 million by 2030. Offering unique products and experiences is paramount for brands looking to capture the top-end of the luxury market, which accounted for 40% of market value in 2022 vs 35% in 2021.
SE Asia & South Korea spell potential
In regional terms, the US luxury market remains strong, while solid local demand and tourist shoppers from the US and the Middle East has helped to boost consumption in Europe, which has now recovered beyond 2019 levels.
The report highlighted India and South Korea for their performance and potential.
“Although there will never be ‘another China’ in terms of growth contribution to the industry, India and emerging Southeast Asian and African countries have a significant potential nevertheless," notes the report, while pointing out however that infrastructure is required to facilitate local expansion. India’s luxury market could expand to 3.5 times today’s size by 2030, driven by young consumers.