After a record year, the stagnant luxury goods market faces a dilemma between serving core clientele and reaching new audiences amid current complexities, according to Bain's latest global luxury goods market study. & Company published today in collaboration with Altagamma, the Italian luxury goods manufacturers. ' Industry Association.
The luxury goods market faces challenges in the first quarter of 2024, with a slight decline amid rising prices. The Bain & Company study highlights the need for luxury brands to balance serving core customers and reaching new audiences. Japan continues to prosper, but China and the United States face pressures. Brands focus on experiential offerings and strategic investments.
The luxury personal goods market experienced a slight decline in the first quarter (Q1) of 2024. The key to maintaining stable growth across all subsectors will be the ability of luxury brands to address rising prices while also time maintain a solid price-value equation in the eyes of consumers. according to the study.
The global luxury market showed remarkable stability in the face of geopolitical and economic turbulence in 2023, surpassing a record of 1.5 trillion euros. This growth was driven by a resurgence in luxury travel and a strong US holiday season in the fourth quarter. However, the first quarter of 2024 saw a slowdown in most regions amid macroeconomic pressures, and Japan continued to prosper.
The study highlights a continuing trend favoring experiential offerings over tangible goods. This change is particularly evident in China, where the market is under pressure from two main factors: the revival of outbound tourism and the weakening of local demand caused by growing economic uncertainties. This uncertainty is undermining the confidence of middle-class consumers, leading to “luxury shaming” behavior similar to that seen in the Americas during the 2008-09 financial crisis. Similarly, the United States faces macroeconomic pressures despite signs of gradual improvement in GDP and consumer confidence.
Generation Z faces increasing pressures as luxury brands adopt a dichotomous customer strategy. With rising unemployment levels and weakened future prospects, younger generations are delaying spending on luxury items. In contrast, Generation X and Baby Boomers, who benefit from accumulated wealth, continue to increase their spending and attract the attention of luxury brands. This trend complements the continued growth of the top tier of consumers.
Many luxury brands are employing a dichotomous approach, focusing on core customers with large-scale one-to-many events, while expanding their reach by entering new territories, including sports. Traditionally seen as a branding opportunity for luxury goods, the focus on sport is expanding to include newer sports such as padel, racing and soccer. Additionally, luxury brands will feature prominently at the Paris 2024 Olympic Games, offering a platform to reach new audiences and engage existing customers in innovative ways.
To navigate these uncertain times, brands must invest in growth enablers, defend core business elements, maintain agility in decision-making, and optimize stock management to ensure efficiency and responsiveness to market demand. .
Fiber2Fashion News Desk (DP)
