With the resurgence of tourism and the search for exclusive experiences, the global luxury market demonstrated significant stability and surpassed €1.5 trillion in 2023, even amidst the economic and geopolitical turbulence of the period. The new Bain & Company Global Luxury Report, prepared in partnership with Altagamma, the Italian association of luxury goods manufacturers, shows that despite this, the pace in 2024 indicates a slight deceleration.
The research highlights a trend of demand for luxury experiences, rather than tangible goods. The pursuit of gourmet food and refined gastronomy has been fueled by the tourism industry's recovery and a growing desire for immersive activities, such as more intimate luxury cruises. Furthermore, the market has seen consistent growth in private jets and yachts, while witnessing a slight downturn in segments like fine art auctions and personal luxury items.
To maintain their relevance and resilience, luxury brands must rethink how their value proposition is built and prioritize trust and connection with their consumers," explains Gabriele Zucarelli, Bain partner and leader of the Retail practice in South America. "To distance themselves from instability, the best path is to create a more personal connection between brands and customers. Companies' positioning regarding their purpose and the attention paid to consumers will be the differentiators for highlighting successful businesses in an increasingly competitive landscape."
Fueled by tourism flows in the first quarter of 2024, Europe and Japan demonstrated greater resilience. A growing number of people worldwide have been seeking the cities of the Japanese archipelago, and tourism flows in the country have surpassed pre-pandemic levels, supported by favorable exchange rates.
Conversely, the Chinese market remains under pressure, with the resurgence of outbound tourism and weakening local demand due to economic uncertainties. A "luxury shame" behavior, similar to that observed in the US during the 2008-09 financial crisis, is growing, particularly among middle-class consumers. Similarly, Americans continue to face macroeconomic pressures, despite gradual signs of improving GDP and consumer confidence.
Globally, younger generations are delaying luxury goods purchases due to rising unemployment and weakened future prospects. Generation X and Baby Boomers, meanwhile, continue to enjoy accumulated wealth, drawing the attention of luxury brands. This dynamic fuels the continued growth of the high-net-worth consumer base.
To expand their reach, many brands have adopted a dichotomous approach, focusing on key clients and large-scale events while also seeking to broaden their audience by entering new territories, such as sports. This segment, long viewed as a branding opportunity for luxury goods, is now attracting brands eager to invest in new sports. With the anticipated spotlight on the 2024 Olympic Games in Paris, branding opportunities to reach new audiences and engage existing clients in novel ways promise significant results in 2024.
