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Executive summary
Despite challenging macroeconomic conditions, we estimate the overall luxury market reached €1.5 trillion globally in 2023, a robust 8% to 10% growth over 2022 at current exchange rates (11% to 13% at constant exchange rates), setting a record for the industry and proving its unparalleled resilience. These are key findings from the 22nd edition of the annual Luxury Study, released by Bain & Company and Fondazione Altagamma, the trade association of Italian luxury goods manufacturers.
The overall luxury industry tracked by Bain & Company encompasses both luxury goods and experiences. It comprises nine segments, led by luxury cars, luxury hospitality, and personal luxury goods, which together account for more than 80% of the total market. The growth in total spending was consistent with the growth rate in 2022 and translated to a nearly €160 billion increment in spending across all luxury segments. In particular, spending on experiences recovered to historic highs, fueled by a resurgence in social interactions and travel.
The market for personal luxury goods—the “core of the core” of luxury segments and the focus of this analysis—continued growing and is likely to have reached €362 billion in 2023, 4% higher than 2022 at current exchange rates (8% at constant exchange rates). However, the market performance softened quarter by quarter, and uncertainty remained heading into the fourth quarter, with diverging signals coming from a reaccelerating Chinese market and decelerating markets in the US and Europe.
This slowdown has resulted in growing performance polarization. In 2023, we estimate that about two-thirds of brands experienced growth (vs. 95% in 2022). Average profitability stabilized as a result of the counterbalancing forces of inflationary pressure and continued investment for the future against sustained price elevation.
Asia and Europe propelled luxury through 2023
Global luxury tourist purchases have nearly returned to prepandemic levels in absolute value, but upside potential remains (in particular, to catch up to pre–Covid-19 market share).
Asia set the pace for growth thanks to strong domestic demand and a renewed influx of Chinese tourists across the region. Japan boomed due to local customers and a weak yen favoring touristic inflows. Mainland China posted a strong performance after its first quarter reopening but slowed progressively as new macroeconomic concerns arose. Southeast Asian countries experienced positive momentum from strong intraregional tourism and growing interest from local consumers, especially in Thailand. Conversely, South Korea faced a challenging year, with unfavorable macroeconomic headwinds slowing local consumption, a strong currency that led tourists to buy elsewhere, and Korean outflows to international destinations.
Europe continued to benefit from the progressive pickup of tourism, which stimulated growth across all countries, with resort locations attracting high spenders alongside key luxury cities. Even if macroeconomic instability impacted local aspirational customers, the top customers maintained a positive momentum that fueled market growth.
Meanwhile, the Americas region has decelerated throughout the year, posting an 8% drop from 2022 as widespread uncertainty put a dent in aspirational customers’ spending. Top customers remained confident but shifted their spending abroad, as the US dollar remained strong against the Euro and price differentials favored overseas purchases.
In the rest of the world, Saudi Arabia accelerated, attracting investments from major luxury brands, and Australia provided fertile ground for growth.
An unprecedented quest for in-store experiences … infused with digital
Monobrand stores led the distribution ecosystem, favored by consumers’ thirst for a return to in-person interactions. Stores continued to blend physical and digital experiences, as epitomized by the increasing role of clienteling in sales. Multi-brand environments suffered from a sharp slowdown in both department and specialty stores, with rising questions on their role and value proposition to best serve consumer needs in the future. Online market share, which is increasingly difficult to track separately from stores, saw a marginal erosion; within that channel, monobrand websites experienced a normalization of their growth, while online retailers’ quest for traffic has pushed toward increased markdowns.
Jewelry shines
All personal luxury goods categories grew due to continued price elevation, partially undermining volumes for the first time in a decade. Fueled by an investment mindset, jewelry was set to reach €30 billion in market value in 2023, with fine jewelry affirming itself as a bright spot for investments amid uncertainty. Ready-to-wear was on a positive trend, favored by top spenders in the ultra-high offering, with unfolding demand for excellence and durability. Beauty, propelled by makeup and fragrances, enjoyed positive momentum thanks to the notorious “lipstick effect”—the phenomenon that consumers feel inclined to treat themselves to less costly luxury goods in times of economic crisis—in the Americas and Europe. Watches continued to thrive despite a rising polarization around a few industry winners. And after overperformance in recent years, growth in leather goods and shoes slowed.
Multigenerational complexity unfolds
Brands must navigate through rising multigenerational complexity. Generations X and Y are in their peak income years, representing the bulk of luxury purchases and the key pool of income growth in the near future. However, Generation Z is positioned at the forefront of social and cultural change, inspiring other generations’ value systems, with a strong desire for lived experiences and a quest for meaning. By 2030, Gen Z will account for 25% to 30% of luxury market purchases, while millennials will account for 50% to 55%.
What’s next for luxury in 2024 and beyond?
Our research suggests a relatively soft personal luxury goods performance in 2024, achieving low- to mid-single-digit growth over 2023, based on current scenarios. Looking ahead to 2030, solid fundamentals are poised to continue propelling market growth, despite possible bumps along the way. In an increasingly crowded market, brands must focus on creativity and innovation to enhance relevance to consumers, with the ultimate goal of continuing to expand their client bases while cultivating brand lovers. In a period of growth deceleration, brands will also need to pay attention to profit levels and rein in costs across the value chain. This can include initiatives targeted at higher accuracy of business planning and demand forecasting with the help of artificial intelligence, tighter inventory management, cost variabilization, and more. We should see a new season of M&A born of the necessity to address key challenges of the industry—for instance, to support category growth, expand in a new geography, or secure control of critical resources or know-how. Leading on sustainability and embracing technology will continue to be key, in particular, to redesign supply chain setups for more transparency, agility, resiliency, and a lower carbon footprint.
1. Luxury spending trends in 2023
- The overall luxury market tracked by Bain & Company comprises nine segments: luxury cars, personal luxury goods, luxury hospitality, fine wines and spirits, gourmet food and fine dining, high-end furniture and housewares, fine art, private jets and yachts, and luxury cruises. Luxury cars, luxury hospitality, and personal luxury goods together account for 80% of the total market. We estimate that in 2023 the luxury market’s overall retail sales value grew to €1.51 trillion, an 11% to 13% increase over 2022 at constant exchange rates, in line with last year’s growth rate of 12% over 2021. All luxury segments grew and have finally closed the gap with pre–Covid-19 levels (including luxury hospitality, which has been the slowest to rebound). Since 2019, the Americas and Asia have been the two main sources of growth for overall luxury spending.
- Sales of luxury cars, the biggest portion of the overall market, hit a new record, reaching an estimated €635 billion, 12% more than 2022 at current exchange rates and 15% above 2019. Following years of restricted growth from supply chain disruptions, luxury cars achieved substantial expansion across all segments, building on a robust order book. The absolute luxury segment grew the fastest due to increased demand for ultra-customized solutions, confirming the continued interest in sustainable powertrains. The aspirational segment grew steadily, led by the rising popularity of electric vehicles. Within accessible segments, new Asian market entrants gained ground due to shifting consumer loyalty in the region. All brands continue to push to establish more direct relationships with their clients to enhance both the purchase and after-sales experiences. The role of online expanded, becoming an increasingly relevant purchasing channel.
- The luxury hospitality market rose to an estimated €213 billion. It finally surpassed its pre–Covid-19 levels, propelled by increased occupancy and a stabilizing Average Daily Rate. US and Latin America experienced positive momentum fueled by intraregional tourism. China remained below prepandemic levels despite reopening borders. Across regions, consumer expectations are rising as room rates stabilize at higher levels than in the past. We’ve seen a surge in the appetite for unique, personalized, and transformative experiences that foster a “disconnection” from normal life. High Net Worth and Ultra High Net Worth Individuals have heightened experience expectations beyond traditional luxury amenities. Impact-consciousness, particularly among younger generations, favors more authentic and culturally immersive experiences and accelerates sustainable practices. Rising service expectations call for new technology solutions and data usage.
- Sales of fine wines and spirits hit €100 billion, up 5% on 2022. Fine wines posted mild growth, with the resurgence of social interactions and conviviality occasions partially hampered by a downtrading of aspirational consumers. Sparkling and rosé wines showed the strongest momentum. Spirits were on an upward trajectory; however, there were stark variations between meditation-driven (at-home) spirits, which decelerated, and mixology-led (out-of-home) spirits, which accelerated. While cognac and whiskey were impacted by reduced at-home time and the normalization of US consumption, agave-based spirits maintained strong momentum, stealing “share of throat” from gins in mixology occasions.
- Gourmet food and fine dining grew 10% at current exchange rates to €69 billion. The strong growth in fine dining primarily stems from the growth of an “entertainment-is-the-star” segment.
- The high-end furniture and housewares market remained steady at €53 billion. After the postpandemic hypergrowth, the segment normalized, with the real estate market cooling down, although high-end residential projects continued demonstrating notable resilience.
- The fine art market grew 2% to €42 billion. Public auctions underwent a gradual downturn attributable to a lethargic US market and recent geopolitical disruptions, further compounded by inconsistent performance in Asia. In contrast, dealerships expanded, extending their physical locations as collectors seek in-person interactions in the post–Covid-19 era. A shift toward Gen Y and female clientele is noticeable, fueling an interest in subjects related to diversity, equity, and inclusion (DEI) and favoring the online channel. Following a continuous rise of prices in previous years, only select masterpieces held their anticipated valuations in 2023.
- Sales of private yachts and jets grew by 11% at current exchange rates relative to 2022, reaching €29 billion. Luxury yachts continued growing, fueled by a strong order book accrued in previous years. Europe confirmed its role as a key region, while US and China experienced slower growth due to more challenging macroeconomic fundamentals. The private jet market also continued growing, propelled by increasing enthusiasm for custom-made interior designs and rising interest in shared-ownership models and sustainable aviation fuels.
- The market for luxury cruises reached €4 billion, more than doubling from 2022 as pandemic-related restrictions lifted. Consumers affirmed interest in the new ultra-luxury segment as well as unconventional voyages. Several high-end hospitality and travel players have progressively entered the segment, with one ship already launched and more than five planned for the near future.
- When segmented into goods vs. experiences, discretionary spending rebalanced toward experiences in 2023. They observed the steepest growth rate at 15%, followed by experience-based goods (such as fine art and luxury cars) at 10%, and products at 3%. Demand for luxury experiences reached historic highs as consumers, fueled by a sense of longing for social life and traveling, reengaged with luxury beyond products.
- The market for personal luxury goods—the heart of the entire luxury industry—saw its growth rate normalize at 4% at current exchange rates. Sales, however, hit a new record in 2023, with the market forecast to reach €362 billion by year end. The most likely outcome in the fourth quarter of 2023 is a stabilization of sales compared to the last quarter of 2022.
Global luxury spending hit a new record this year, with hospitality finally recovering above prepandemic levels
Luxury spending continued to grow around the same pace as last year
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