With the resumption of tourism and the pursuit of exclusive experiences, the global luxury market showed significant stability and surpassed 1.5 trillion euros in 2023, despite the economic and geopolitical turbulence of the period. The new Bain & Company Global Luxury Report, developed in partnership with Altagamma, the Italian association of luxury goods manufacturers, shows that even so, the pace in 2024 indicates a slight slowdown.
The research highlights the trend of demand for luxury experiences, to the detriment of tangible goods. The pursuit of gourmet food and fine dining has been driven by the recovery of the tourism industry and the growing demand for immersive activities, such as more intimate luxury cruises. Furthermore, the market has seen steady growth in private jets and yachts, while experiencing a slight decline in the segments of art auctions and luxury personal items.
"To maintain their relevance and resilience, luxury brands must rethink how their value proposition is built and need to prioritize trust and connection with their consumers," explains Gabriele Zucarelli, Bain partner and leader of the Retail practice in South America. To distance oneself from instability, the best approach is to create a more personal connection between brands and customers. The companies' positioning regarding their purposes and the attention given to consumers will be the differentiators to highlight successful businesses in an increasingly competitive landscape.
Driven by tourism flows in the first quarter of 2024, Europe and Japan demonstrated greater resilience. An increasing number of people worldwide have been seeking out the cities of the Japanese archipelago, and tourist flows in the country have surpassed pre-pandemic levels, supported by favorable exchange rates.
On the other hand, the Chinese market remains under pressure, with the resurgence of outbound tourism and the weakening of local demand caused by economic uncertainties. Especially among middle-class consumers, the behavior of "shame of luxury" has been growing, similar to what happened in the US during the 2008-09 financial crisis. Similarly, Americans continue to face macroeconomic pressures despite signs of gradual improvement in GDP and consumer confidence.
Worldwide, younger generations have been delaying spending on luxury goods due to rising unemployment levels and weakened future prospects. Generation X and Baby Boomers continue to enjoy their accumulated wealth while attracting the attention of luxury brands. This positioning fuels the continuous growth of high-end consumers.
To expand, many brands have adopted a dichotomous approach, focusing on key clients and large-scale events while also seeking to broaden their reach by entering new territories, such as sports. This segment, long seen as a branding opportunity for luxury goods, is now targeted by brands looking to invest in new sports. With the spotlight on the 2024 Paris Olympics, branding opportunities to reach new audiences and engage existing customers in new ways promise significant results for 2024.
