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Global luxury spending to hold steady in 2024

Nov 29, 2024 World

Growth in luxury experiences and shrinking demand for luxury goods highlight a shift in consumer priorities as brands navigate changing market dynamics and regional challenges

“Luxury spending has shown remarkable stability this year, despite macroeconomic uncertainty, largely driven by consumers’ appetite for luxury experiences”, commented Claudia D’Arpizio, Partner at Bain & Company and leader of the firm’s global Fashion & Luxury practice.

“Yet,” – she continued – “50 million luxury consumers have either opted out of the luxury goods market or been forced out of it in the last two years. This is a signal for brands that it’s time to readjust their value propositions”.

Global luxury spending is projected to reach approximately 1.5 trillion euros in 2024, reflecting minimal growth compared to 2023, according to the latest Bain & Company report in collaboration with Altagamma.

Luxury Goods

Macroeconomic uncertainty and elevated pricing are prompting luxury consumers to cut back on discretionary spending. This trend is evident in the personal luxury goods category, which is expected to decline by up to 2% at current exchange rates.

Generation Z’s diminishing enthusiasm for luxury brands has contributed to a shrinking consumer base, offset slightly by increased spending from top-tier customers who feel a growing disconnect with exclusivity.

Luxury Experiences and Experiential Goods

While traditional personal luxury goods experience a slowdown, luxury experiences and high-end experiential goods show resilience.

Consumers are shifting their focus to travel, wellness and personalised experiences. Additionally, high-net-worth individuals are driving interest in luxury yachts, cars and private jets.

Personal Adornments

The beauty and eyewear segments are thriving, with fragrances and innovative eyewear designs capturing attention as small, accessible indulgences.

Jewellery continues to perform strongly, particularly within the high-jewellery category and the US market. In contrast, watches, leather goods and shoes are seeing slower demand due to more selective consumer spending.

The secondhand luxury market is emerging as a key growth area, gaining traction in jewellery, heritage apparel and leather accessories.

Distribution Trends

In distribution, outlets are outperforming traditional full-price stores, benefiting from consumer preferences for value-driven purchases.

Online shopping has stabilised after the pandemic boom, and luxury brands are increasingly focused on creating immersive in-store experiences to draw customers back to brick-and-mortar locations.

Regional Breakdown

Regionally, the luxury landscape remains uneven. The Americas are showing positive signs, particularly in the US, though confidence and foot traffic vary. In contrast, Canada struggles with a lack of Chinese tourists, while Mexico and Brazil experience growth.

Japan stands out in Asia Pacific, benefiting from favourable currency conditions and tourism, though momentum is slowing. Mainland China, however, is experiencing a sharp decline, with weak domestic spending and reduced confidence.

Europe’s performance remains robust, sustained by tourist demand in southern regions, though northern areas and the UK face more subdued activity. The picture varies across the Middle East as regional tensions impact touristic inflows.

Emerging markets in Latin America, India, Southeast Asia and Africa present growth opportunities, with these regions expected to add millions of new luxury consumers by 2030.

The Future

Looking ahead, the luxury market is anticipated to face an improved economic context in 2025, though regional performance will depend on macroeconomic conditions. Long-term prospects remain favourable, with the sector poised for expansion through 2030, supported by a growing and increasingly affluent consumer base globally.

Federica Levato, Partner at Bain & Company, shared her perspective: “To secure future growth, brands will need to rethink their luxury equations, re-establishing creativity and blending old and new playbooks”.

Image Credits: luxxu.net

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