The market for personal luxury goods is projected to see its first slowdown since the financial crisis, excluding the Covid lockdown period, according to a new report by consulting firm Bain & Company.
The annual report was released on Wednesday in partnership with the Italian luxury goods manufacturers’ industry association Altagamma. It suggests a 2% decline for the sector this year, to €363 billion ($384 billion), amid macroeconomic uncertainty and a slowdown in China, all of which is weighing on consumer spending.
The trend is particularly acute among the Generation Z, or zoomers (born between 1997 and 2012), according to the report, as higher costs and declining customer loyalty pushed shoppers to cut back on high-end brands.
Around 50 million luxury consumers “have either opted out of the luxury goods market or been forced out of it in the last two years,” the report stated.
Overall, luxury spending in the world on items such as clothing, bags, jewelry and cosmetics is forecast to be flat year-on-year in 2024 at around €1.5 trillion ($1.6 trillion).
Globally, the strongest category growth was found in beauty and eyewear. Jewelry was the most resilient core luxury category, while shoes and watches struggled.
“We estimate that only about a third of luxury brands will emerge from 2024 with positive growth, down from two-thirds a year earlier–many brands are set to suffer a drop in their revenue,” Bain & Company wrote.
In contrast to high-end personal goods, spending on luxury experiences, such as hospitality and dining, is expected to increase this year.
“To secure future growth, brands will need to rethink their luxury equations, re-establishing creativity and blending old and new playbooks,” said Federica Levato, partner at Bain & Company.
The report pointed out that emerging markets represent new potential avenues of growth–including Latin America, India, Southeast Asia, and Africa. Collectively, they are expected to add more than 50 million upper-middle-class luxury consumers by 2030.