This audio is auto-generated. Please let us know if you have feedback.Dive Brief:The personal luxury goods market is in the midst of its first slowdown since the Great Recession, excluding the Covid-19 pandemic, according to a luxury report released last week by Bain & Company in partnership with Italy luxury goods manufacturers’ industry association Altagamma. That represents a 2% erosion at current exchange rates compared to 2023.
Global luxury spending is projected to hover between -1% and 1% in year-over-year growth in 2024, reaching 1.5 trillion euros, or about $1.6 trillion, as consumers cut back on discretionary items.
Despite “pockets of luxury growth center[ed] around experiences” the report stated that the overall luxury customer base was shrinking “amid continuing economic uncertainty, price elevation, and declining customer advocacy, particularly among younger generations.”
Dive Insight:The decline in luxury spending is especially noticeable when it comes to Gen Z, whose support for luxury brands has continued to decline, reducing the number of luxury customers by “a magnitude of about 50 million over the last two years,” per the report. At the same time, report authors said luxury’s top customers have increased their share of consumption in the sector.“Luxury spending has shown remarkable stability this year, despite macroeconomic uncertainty, largely driven by consumers’ appetite for luxury experiences,” wrote Claudia D’Arpizio, Bain & Company partner, leader of its global Fashion & Luxury practice, in the report.D’Arpizio added that the shrinking luxury consumer market should be a signal to brands that it’s time to rethink what kind of value they’re offering while focusing on personalization and learning to leverage technology at scale.“To win back customers, particularly the younger ones, brands will need to lead with creativity and expand conversation topics,” D’Arpizio said. “Simultaneously, they must keep their top customers front and center, surprising and delighting them while rediscovering one-to-one human interactions.”Categories that performed well in 2024 included beauty, particularly fragrances, because consumers gravitated toward “small indulgences.” Luxury eyewear saw momentum, and jewelry thrived, especially in the U.S. market.New watches, leather goods, and footwear markets slowed due to consumer downtrading and selectivity, although small leather accessories and luxury entry-items still interested Gen Z customers, per the report.Brick-and-mortar luxury stores are “suffering from plummeting walk-in traffic” but outlets are overperforming, which Bain attributed to a consumer quest for value.Meanwhile, online luxury shopping is “entering a normalization trajectory following post-pandemic swings.” The report said successful luxury brands could drive traffic back to brick-and-mortar stores “by delivering differentiated value propositions and broadening in
