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To say that the past year has been a turbulent one for our world would be quite the understatement, and there can be no doubt that high-end brands have had to be inventive and resilient in combatting the ups and downs of an ever-changing market.
Nonetheless, a new Bain & Company report with the Italian luxury goods manufacturers’ industry association, Altagamma, has also drawn attention to the worldwide luxury industry’s continuing strength, with the market projected to reach €1.5 trillion in 2023.
This figure, representing growth of 8% to 10% compared to 2022, would constitute a new record for the sector. This, in turn, indicates the extent to which – even amid tricky macroeconomic conditions – consumers around the globe are still determined to immerse themselves in new luxury experiences.
Indeed, that word “experiences” seems to be very much a key one in 2023, as high-end brands look to the New Year in partnership with their chosen luxury advertising agency. This year saw spending on experiences recover to historic highs, as a resurgence was seen in social interactions and travel.
“This is a defining moment for brands”
Bain & Company observed that although 2023 had been marked by “pronounced geopolitical and macroeconomic shifts”, the high-end market had nonetheless “proven unparalleled resilience this year.”
The global management consulting firm said that the key segment, personal luxury goods, had recorded continued growth during 2023, and was projected to reach €362 billion by the end of the year. This would be 4% higher than 2022’s figure at current exchange rates.
However, the company went on to note persistent “headwinds” into the fourth quarter. These included “fragile consumer confidence, macroeconomic tensions in China, and sparse signs of recovery in the US.”
According to the firm, research findings pointed to the performance of the personal luxury goods sector softening during 2024, with only low-to-mid single digit growth anticipated for the year ahead compared to 2023, presuming that “current scenarios” stayed the same.
In the words of the study’s lead author, and leader of Bain’s global Luxury Goods and Fashion practice, Claudia D’Arpizio: “This is a defining moment for brands, and the winners will separate themselves through resilience, relevance, and renewal – the basics of the new value-centred luxury equation.”
Ms D’Arpizio said that the luxury market was generating positive growth for 65% to 70% of brands in 2023, compared to 95% of brands the previous year. She emphasised that brands wishing to stay competitive in such a climate would need to “take bold decisions on behalf of their customers.”
The right foundations would seem to be in place for sustained growth
Overall, the study findings painted a picture of a market that was “set for long-term growth, rooted on strong fundamentals”, to quote the report’s co-author, Federica Levato, who leads Bain & Company’s EMEA Luxury Goods and Fashion practice.
It was discovered through the research that global luxury tourist purchases had nearly reached the levels seen prior to the COVID-19 pandemic, with potential still waiting to be “untapped” in a lot of areas.
Looking ahead to what state the global luxury market might be in by the end of this decade, the company said that “solid fundamentals are poised to continue to drive market growth, despite possible bumps along the route… maintaining a purposeful approach will continue to be pivotal to long-term success.”
Those sound like encouraging enough words to this particular luxury advertising agency. Still, high-end brands should probably be cautious in their assessments of the level of growth that they can expect in the year or so immediately ahead.
To learn more about how you could work most effectively with our own digital and strategic experts at Skywire London in order to unlock genuinely sustained growth, please don’t hesitate to reach out to us.
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