Bains insights are based on triangulating information and sources available as of November 10, 2022, including: The scenarios do not consider disruptive changes to the Covid-19 status quo (e.g., potential future waves of Covid-19 related to variations of the virus) nor to the global sociopolitical situation. Stay ahead in a rapidly changing world. The high-end furniture and housewares market reached 53 billion, up 13% from 2021. Demand for luxury experiences has been improving, but this segment will be the last of the three to regain its 2019 levels, probably in 2023. Here it comes: the second stage of our E-commerce Germany Awards 2022! It finds that solid market fundamentals and new tech-enabled profit pools, are set to boost the market's value to 540-580 billion by the end of the present decade, from 353 billion estimated for 2022 a rise of 60% or more. Bain & Company analyzes for Fondazione Altagamma the market and financial performance of more than 280 leading luxury goods companies and brands. Rather than selling into stores wholesale and lose margin, power brands are going to pay rent instead, as they are already doing in their mono-brand stores which advanced 3% from 2019 to capture 32% share of market. This is, in part, driven by a more precocious attitude towards luxury, with Gen Z consumers starting to buy luxury items some 3 to 5 years earlier than Millennials (at 15 years-old, versus at 18-20), and Gen Alpha expected to behave in a similar way. Retailers have seen a decrease in footfall amid a recent surge in COVID-19 cases across the UK due to the Omicron variant. In keeping with greater social interest in diversity, equity, and inclusion, galleries and collectors focused more on areas such as women artists and African art. The major brands moved aggressively into the online space over the past two years, which grew from 12% share of the personal luxury market in 2019 to 22% in 2021, a stunning 38% uptick since 2019. All personal luxury goods categories performed well in 2022, with double-digit growth rates across the board. Distribution is a complex discussion.. This is, in part, driven by a more precocious attitude towards luxury, with Gen Z consumers starting to buy luxury items some 3 to 5 years earlier than Millennials (at 15 years-old, versus at 18-20), and Gen Alpha expected to behave in a similar way. The experiences sector, including travel and any in-person brand experiences, is still way below its pre-covid levels, mostly because of travel restrictions. The global ranking of luxury sales by region changed in 2022, as the Americas regained the top position for personal luxury goods sales. Specialty retailers went from 20% share of the personal luxury goods market in 2019 to 16% in 2021, a 10% decline in sales. These domains are rich with opportunities for luxury brands but investments for future growth are crucial.. Beauty (60 or $68 billion) and watches (40 or $45 billion) will be flat and apparel (57 or $65 billion) will remain -5% down relative to 2019. Uber-luxury jewelry outperformed globally, as did iconic pieces and lines. The nouvelle vague the new wave of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics all while new trends and concepts develop, said Claudia DArpizio, a Bain & Company partner and leader of Bains Global Luxury Goods and Fashion practice, the lead author of the study. Global Powers of Luxury Goods 2022. Sadove suggests these numbers may not be as stark as they first appear. The coming years will see a further blurring of the boundaries between 'mono-brand' and ecommerce, which will increasingly push brands to take an 'Omnichannel 3.0' approach, enabled and enhanced by new technologies. The nonfungible token (NFT) market stabilized after a wave of speculative interest from investors. 2022 Diversity, Equity, and Inclusion Report. 2023 luxury market now set to be more resilient to recession than during the 2009 global financial crisis. Broader meanings and business models will emerge. Meanwhile, China itself, which remains crucial to the long-term of the luxury market, continues to confront a challenging phase due to Covid lockdowns and is still performing below 2021 figures. The Russian market was mostly inactive due to war-related suspension of operations. Photo: Shutterstock Around 21 per cent of global consumer spending on luxury goods in 2021. This provides both opportunities as well as potential threats to brand, fashion platforms and investors. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. Analysis of financial performance and operations for financial years ended through 31 December 2021 using company annual reports, industry estimates and other sources. South-east Asia and Korea are winning in terms of growth and potential. Countries coped with high inflationary . Top 5 Five-year view The composite luxury goods sales of the Top 5 companies grew by 91% over the five years FY2016-FY2021. Luxury Goods: trends and predictions for 2022 (Bain Report). Not all sectors can enjoy stable recovery, however. But the Global State of the Consumer Tracker makes it easy for you to access consistent, high-quality data on consumer sentiment and behavior in retail, consumer products, automotive, and travel. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. Luxury is converting into art, with the ultimate objective of transcending from its original form, rooted in craftmanship and functional excellence, towards broader meanings, empowered by imagination and symbolic power, to build its handmade creations. 2022 Luxury Study Renaissance in Uncertainty: Luxury Builds on Its Rebound Download By Bain & Company Scope: Global Apr 8, 2022 2022 From Surging Recovery to Elegant Advance: The evolving Future of Luxury A Market Study that shows how brands can build on their historic rebound. A powerful factor for sector growth in the rest of the decade will be generational trends,the analysis reports. Evolving luxury map: new cities emerging, large cities back and persisting suburban areas. Clear overperformance driver: the focus will be on local customers, exposure to China, multi-touch and price value proposition these will be the top drivers of resilience. The spending of Gen Z and the even younger Generation Alpha is set to grow three times faster than other generations through 2030, making up a third of the market. And even more troubling, only seven brands control one-third of the personal luxury goods market. Interestingly enough, the pandemic caused this market to experience its worst dip in history. Over-performance of all categories, restocking wardrobe in the rising "post-streetwear" era. You may opt-out by. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. Bain & Company recently released its 20 th annual Luxury Study, which underlines the resurgence in the global luxury market in 2021 after a contraction in 2020. But with more turbulence ahead, the power luxury brands are best positioned to power on through. These consumers are hungry for unique products and experiences, putting brands VIC (very important client) strategies into overdrive. China chic is only trouble for brands that continue doing what they always did. As a result, two scenarios could play out in 2023, with sales growth in the personal luxury goods market ranging from 3% to 5% in the base case and up to 6% to 8% (at constant exchange rates) in a more positive case, depending on the strength of economic recovery in China and the ability of the US and Europe to withstand economic headwinds. Struggling Australia which only recently reopened after months of lockdown. In 2021, profits are already back at 2019 levels. The companies making up the Top 5 have been relatively stable, with only LOral Luxe entering the Top 5, replacing Richemont*, Chart 1: Luxury goods sales US$ million: FY2016 & FY2021. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. Iconic models and new hero products were the most desirable items. Yet luxury brand players are continuing to invest in future growth, even in the face of high inflation and rising costs, so that their profitability is slightly decreasing, following an unprecedented increase in 2021. The luxury market now appears better equipped to cope with economic turbulence, thanks to a consumer base that is both larger and more concentrated on top customers who are less sensitive to downturns. The apparel category grew by 22%24% in 2022, aided by wardrobe restocking. For information, contact Deloitte Global. Bain and Company and the Italian trade association Fondazione Altagamma are out with their 2021 study of the global luxury market. As in last years report, there will be a section on the impact of COVID-19 on financial results. The top growth drivers are Chinese consumers in China, online channels and younger generations. Strong market share shift towards European brands. Between 2021 and 2022, about 70% of leather category growth has been driven by price increases; by contrast, price increases accounted for only about 50% of category growth from 2019 to 2021. There will be some changes in the growth in luxury spending by nationality. New types of activities, often powered by technology, should also spark an additional 60 billion to 120 billion in sales by 2030, from sources such as the metaverse and brand-related media content. I study the world's most powerful consumers -- The American Affluent, December 27, 2021 in London, England. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (DTTL), its global network of member firms, and their related entities (collectively, the Deloitte organization). Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. Chart 2: Luxury goods sales YoY growth FY2019-FY2021. The fine art market grew 13% to 39 billion, as the ranks of potential buyers swelled and new Asian art hubs strengthened. The luxury goods sales of the top two companies in FY2021 was more than the total luxury goods sales of the Top 5 in FY2016. There are sectors that were affected by the pandemic much more, and one of them is experiences. The FY2021 composite net profit margin for the 78 Top 100 companies reporting net profits more than doubled to 12.2% year-on-year, higher than pre-pandemic levels. London and the UK suffer the most, while Russia is championing thanks to a strong repatriation. A deliberate (and effective) 'elevation strategy' has driven a progressive price increase across the industry (driving around 60% of the 2019-2022 growth) without damaging volume growth. Casual categories, such as fussbett sandals and Wellington boots, are on the rise. Beauty companies Este Lauder and LOral Luxe have seen slower growth in the sales of their owned and licensed luxury goods brands than multiple luxury goods companies LVMH, Kering and Chanel. The share of top customers has been expanding and accounted for some 40% of market value in 2022, compared with 35% last year. India stands out; its luxury market could expand to 3.5 times todays size by 2030, propelled by younger customers and an expanding upper and middle class. The customer is going to shop and going to shop in different ways, Sadove affirms. Even in the face of recessionary conditions expected across leading economies into 2023, the Bain and Altagamma analysis forecasts further expansion in sales and market value for luxury goods through the coming year and decade. The full report, which will be published in late 2022, will include a full analysis of the Top 100 companies, as well as luxury trends and special focus sections. The Top 5 companies saw their luxury goods sales rebound in FY2021, as operations recovered from the adverse impact of the COVID-19 pandemic on consumer demand, retail, and supply chains. Translating wholesale and licensing revenue to its retail equivalent, Bain estimates global personal luxury goods sales will reach 283 billion ($324 billion) by year end, marking a 1% increase. Accessories remained the largest personal luxury goods category and grew by 21%23%. In 2022, we estimate that 95% of brands experienced positive growth, but most luxury players continued to invest for the future, which resulted in a slight erosion of average profitability following an unprecedented increase in 2021. The most likely outcome in the fourth quarter of 2022 is a 19% year-over-year rise in sales, which would be a slight slowdown from 23% growth in the third quarter. The study reveals that some of the consumption fundamentals of China will go through changes. 'Gen Y' and 'Gen Z' accounted for the entire growth of the market in 2022, it notes. As a result, Bain-Altagamma analysis sets out two scenarios, with sales growth in the personal luxury goods market set to be between 3 to 5% or 6 to 8% (at constant exchange rates), depending on the strength of economic recovery in China and the ability of the US and Europe to withstand economic headwinds. Boosted by a strong market performance across quarters, and despite macro-economic indicators worsening globally, as well as specific challenges in China, the personal luxury sector is set to see the value of its sales jump to 353 billion in 2022, marking an advance of 22% at current exchange rates (or 15% at constant exchange rates) versus the previous year, the study projects. Between 2017 and 2021, the market size of second-hand luxury ballooned by 27 percent (first-hand luxury only grew by 12 percent over that same period.) Before Covid, emerging luxury brands had hope to find traction online where the power brands were reluctant to venture, but thats all changed. In coming years, the spending of Gen Z and Gen Alpha is set to grow some three times faster than for other generations until 2030, making up a third of the market. Meanwhile, the online channels market share is normalizing. Four growth engines will profoundly reshape the luxury market by 2030: Chinese consumers should regain their pre-Covid status as the dominant nationality for luxury, growing to represent 38%40% of global purchases. In May 2020, we began making regular forecasts of how soon aviation demand would recover from the effects of the Covid-19 pandemic. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report. With digital advertising expenses growing and more power brands moving into the space Magna reports global digital media grew by nearly one-third year-over- year in 2021 smaller brands cant begin to match the online marketing muscle of the major brands. There are few sources for data-driven insights to help consumer businesses understand and navigate these fast-changing times. Demand for high-end furniture and fixtures in commercial spaces was driven by an increasing appetite for refined aesthetics and higher quality. The estimated value for the whole market in 2021 is B 1.140. As sales of secondhand goods on online platforms soared, brands are moving to increase their direct control of the market. Please read and agree to the Privacy Policy. Success online at least partly depends on the amount of advertising dollars pumped into online channels. Now, brands are multi-price points to answer to different customer needs. Boosted by a strong market performance across quarters, and despite macro-economic indicators worsening globally, as well as specific challenges in China, the personal luxury sector is set to see the value of its sales jump to 353 billion in 2022, marking an advance of 22% at current exchange rates (or 15% at constant exchange rates) versus the previous year, the study projects. Over-performance of all categories, restocking wardrobe in the rising post-streetwear era. The top wealth segments stand out more now than ever before a . The makeup and fragrances categories led growth. Even in the face of recessionary conditions expected across leading economies into 2023, the Bain and Altagamma analysis forecasts further expansion in sales and market value for luxury goods through the coming year and decade. When it comes to the overall value of this market, luxury cars significantly outperform all of the other components combined. 2022 Diversity, Equity, and Inclusion Report. The latest Bain-Altagamma Luxury Goods Worldwide Market Study forecasts increased resilience to recession after robust 2022 growth. Bain & Company is a global consultancy that helps the worlds most ambitious change makers define the future. Younger generations (Generations Y, Z, and Alpha) will become the biggest buyers of luxury by far, representing 80% of global purchases. Global luxury markets include items and services like personal luxury goods, cars, hospitality, gourmet food & fine dining, fine art, private jets & yachts, and even luxury cruises. Among the rising stars, India stands out for growth potential, which could see its luxury market expand to 3.5 times today's size by 2030, propelled by an increasing interest and evolving attitudes and behaviors among (young) customers towards luxury goods. The pandemic was the catalyst for change as luxury goods companies adopted new paradigms of value creation. In 2022, the luxury market generated positive growth for 95% of brands. If you would like to help improve Deloitte.com further, please complete a 3-minute survey, To tell us what you think, pleaseupdate your settings to accept analytics and performance cookies. While US luxury market is still strong, and Europe managed to recover beyond 2019 thanks to solid local demand alongside an extra-boost from US and Middle Eastern tourist shoppers, new markets are surprising the industry. By 2030, luxury should have expanded beyond its traditional business model, typically defined by sales of products, transcending an original form rooted in craftmanship and functional excellence. Sparkling wine (and not just Champagne) gained share over still. Profit levels that had quickly recovered post-Covid to an average 21% in 2021 have slightly eroded in 2022, down to 19%21%. The luxury goods sales of the top two companies in FY2021 was more than the total luxury goods sales of the Top 5 in FY2016. Best performing categories of 2020 are already beyond 2019 in 2021, watches and beauty on par, apparel is still lagging. Chinese customers will be back by 2022-23, Japan by 2023 and Europe in 2024. In order to extend the lifetime of luxury products, the second hand market will be booming in the years to come. The US and Europe still command the lions share of the market, but Asia (especially China) accelerated as consumer acceptance increased. Opinions expressed by Forbes Contributors are their own. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic. The higher and top end of the luxury market have been expanding and accounted for some 40 percent of market value in 2022 compared with 35 percent in 2021. This trend has also been reflected in product categories, through the shift to the post-streetwear era, which maintains some elements of so-called streetwear (such as gender fluidity, occasion-less apparel, inclusivity and sports-driven inspiration) but goes beyond its style codes through new and enhanced techniques, materials and functionalities. It seems that traditional market segmentation lost its relevance. There will be a new value creation model (high tech & high touch), new KPIs to track (earned growth rate) and clear positive results (churn rate reduction) a lot to look forward to. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. Italy and France were the 2022 growth champions, followed by Turkey, the UK, and Spain, while Germany softened. Strong cross category, generation and price growth. The economic model will continue to evolve. Cultural relevance and evolving values ask for a new value-creation model in customer engagement. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. Prospects for personal luxury goods market out to 2030 are also highly positive, today's analysis concludes. Secondhand luxury goods sales are not included in Bains personal luxury goods market size estimate, but in 2021, Bain reports they will account for 33 billion or $38 billion in sales, up 27% from 2019. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. However, the spots will be replaced by new consumers, mostly Generation Y and Z. It comprises nine segments, led by luxury cars, luxury hospitality, and personal luxury goods, which together account for more than 80% of the total market. Lighting and living/bedroom categories benefited the most, as consumers looked for more comfort, functionality, and beauty. Hong Kong and Macau were weaker spots, while Taiwan slowly recovered. *I have read thePrivacy Policyand agree to its terms. While he believes that Chinese luxury brands will not suddenly replace aspiration for Western luxury brands, he cautioned, There are clear signs that a fundamental shift is happening, and like so many disruptions in the luxury space it is being driven by Gen Z.. But despite present and continuing economic challenges, the luxury market continued to perform strongly throughout this year to date, with winners for brands across the board, and positive growth for some 95% of brands, today's report concludes. In 2021, the personal luxury market is expected to grow 1 percent compared to 2019 and 29 percent compared to 2020. Report. Among the rising stars, India stands out for growth potential, which could see its luxury market expand to 3.5 times todays size by 2030, propelled by an increasing interest and evolving attitudes and behaviors among (young) customers towards luxury goods. Department stores experienced faster growth than in previous years, gaining 20%. That reflected a renewed value proposition in the US and successful reengagement with tourists in Europe. That concludes the studys breathless reporting of the topline findings of the past year in luxury, saying, it has never seen a year of surging performance to match 2021.. Luxury is converting into art, with the ultimate objective of transcending from its original form, rooted in craftmanship and functional excellence, towards broader meanings, empowered by imagination and symbolic power, to build its handmade creations. This article is a preview of the Top 5 companies listed in the upcoming Global Powers of Luxury Goods 2022, which will be published in late 2022. But despite present and continuing economic challenges, the luxury market continued to perform strongly throughout this year to date, with winners for brands across the board, and positive growth for some 95% of brands, todays report concludes. We expect that solid market fundamentals will result in annual growth rates between 5% and 7% until 2030. The global luxury market is projected to grow by 21% in 2022, reaching 1.4 trillion; the personal luxury goods. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. This article is a preview of the Top 5 companies which will be listed in the upcoming Global Powers of Luxury Goods 2022. The worlds Top 5 luxury goods companies generated revenues of US$122 billion in FY2021. In general, luxury brands have the chance to secure common prosperity, but they will need to challenge and adapt their strategy. Within the personal luxury segment, only shoes (23 or $26 billion), jewelry (22 or $25 billion), and leather accessories (62 or $70 billion) will beat 2019 results, up 5%, 3% and 4% respectively. Although there will never be another China in terms of outsize growth contribution to the industry, India and emerging Southeast Asian and African countries have significant potential, if the luxury industrys infrastructure (such as malls) and regulation can evolve quickly enough in those markets. Only luxury cruises are down relative to both 2019 and 2020. Within accessories, leather goods grew by 23%25%, far surpassing its pre-Covid levels (up 39%41% compared with 2019). The year 2022 saw a global tempering of the peak activity witnessed in 2021, triggered by tightening monetary policies across American and European markets as economies emerged from a Covid-19-induced suppression in economic activity. from 8 AM - 9 PM ET. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American, New Bain & Company-backed venture aims to help companies better trace data, achieve sustainability goals, ESG activities correlate to stronger financial performance, reveals new study from Bain & Company and EcoVadis. The year of 2021 confirmed Chinas growing importance in luxury, together with a bright evolution for European and American customers. Gourmet food and fine dining grew 12% at current exchange rates to 57 billion, completing its recovery to prepandemic levels, as social restrictions were lifted across major cities. Get your bi-weekly update on the e-commerce insights: console.log("1"),function(e,n,o,t,l,c,r){e.Newsletter2GoTrackingObject=l,e[l]=e[l]||function(){(e[l].q=e[l].q||[]).push(arguments)},e[l].l=1*new Date,c=n.createElement(o),r=n.getElementsByTagName(o)[0],c.async=1,c.src="https://static.newsletter2go.com/utils.js",r.parentNode.insertBefore(c,r)}(window,document,"script",0,"n2g"),n2g("create","yj76l2pj-nqhljzcz-qvj"),function(e){e(function(){console.log("1"),e("#nl2go_form").on("submit",function(n){n.preventDefault(),console.log("1");var o={email:e("input[name=email]").val()};console.log("1"),n2g("subscribe:send",{recipient:o},function(n){console.log(n),201==n.status?e("#nl2go_form").html("Succes! Sales of new watches grew by 22%24% and reached a record 52 billion, reflecting solid demand for top-of-the-range models and iconic pieces, but growth was capped by low product availability.
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