Yesterday Bain & Company released its Luxury 2022 Spring Update – “Rerouting the Future.”
They predict that luxury sales are set to grow by between 5% and 15% this year and that the global luxury market accelerated sharply in early 2022 but risks slowing due to macroeconomic pressures (supply chain, energy prices and the conflict in Ukraine) along with Covid-19 lockdowns in China.
In 2022 market growth is being driven by strong demand in Europe, where Bain now expects sales to surpass 2019 levels this year, as well as the US, with consumers keen to return to pre-pandemic lifestyles. Growth in South Korea is accelerating, with the country playing an increasingly prominent role in the global luxury market.
The pandemic has forced brands to think more creatively about how to reach their consumers and tapping new opportunities that could benefit growth longer term. In North America brands have appealed to a more diverse group of consumers across generations, locations, and ethnicities
Performance in China was strong during the first quarter, but a fresh wave of Covid-19 restrictions in key cities has since hampered luxury spending. According to Bain estimates, the market is unlikely to recover before the end of the year or early 2023.
“In the last few months, luxury brands have been forced to reroute their futures” said Federica Levato, a Bain & Company partner and co-author of the report. “Winners will rapidly embrace the changes, ensuring they fully understand the implications of new geopolitical dynamics and cultural trends for all of their stakeholders: consumers, investors, employees, and society at large. Those that come out ahead will take advantage of the opportunities presented by the virtual world, the sustainability transformation, and preferences of younger generations.”
- In 2021 the luxury goods market grew 7% above pre-pandemic levels to total €288 billion
- Global Q1 sales rose 17-19% in 2022
- Growth could be between 10-15% this year
- A slower-growth scenario could see sales rise by only 5%
- 2021 holiday shopping increased 7% 2019
- By 2025 non-white consumers will account for 25-30% of luxury spend in the US
- In 2030, digital assets and the metaverse will comprise 5-10% of the luxury market