Altagamma-Bain Worldwide Luxury Market Monitor Sees Growth Slowing Down
Luisa Zargani
11 min read
Story updated at 5:13 p.m. EST
MILAN — Global luxury spending is expected to reach sales of nearly 1.5 trillion euros in 2024, according to the Altagamma-Bain Worldwide Luxury Market Monitor 2024 presented in Milan on Wednesday. Compared with 2023, the decrease is 2 percent, but at constant exchange rates, it represents between a decrease of 1 percent and a gain of 1 percent.
“Uncertainty is weighing on consumers who are favoring experiences, including hospitality and dining, over products,” said Federica Levato, partner at Bain & Company and leader of the firm’s EMEA Fashion & Luxury practice, coauthor of the report.
In an interview, she defined the current situation as “the first slowdown since the Great Recession, excluding COVID-19.”
The estimate for 2025 is “mostly positive, a flat to 4 percent gain, so from low-single-digit to midsingle-digit growth at constant exchange rates,” she said.
In its previous report released in June, Bain expected a 0 to 4 percent growth, or a 4 to 6 percent growth in the best scenario, at constant exchange rates, and Levato said the current report is “on the lower end of the bracket that we shared. Of course, in June we had the first quarter that was still not so negative and the second half of the year has been particularly challenging.
“In particular, the situation in China has not only not recovered, but also worsened in terms of local consumptions in China, which of course, didn’t help for a positive growth of the market,” she continued. “Throughout the year, there has been an increasing macroeconomic and geopolitical uncertainty that is not necessarily strictly impacting KPIs. GDP, unemployment rate, etc. are not worsening this year, but for sure they are impacting the confidence of consumers who were not in the mood to spend in this market.”
Price Hikes Take a Bite
Levato also underscored that luxury brands further raising their prices “hasn’t helped the core luxury customers that are not top customers, alienating them. So one of the key messages this year is we’re not worried because the market is flat, because this happened after two very strong years after COVID-19 and there must be a normalization, also, due to the global downturn and global uncertainty — it’s normal.”
The concern is that the elevation of prices is impacting the luxury customer base, which is shrinking by 50 million from 400 million over the last two years, in particular Gen Z, and cutting back on discretionary items, Levato said.
In addition to depriving customers of an entry into luxury, she identified “a sort of detachment of the consumers from these brands, because they don’t recognize anymore the price/value equation of this industry, breaking their mindset.”
Levato reported that more than 50 percent of customers think that luxury brands are overpriced, and that net promoter score, which measures customer loyalty, is lower than pre-COVID-19, “which is the first time in history that it drops so much.” For this reason, Bain believes this is “a call to action for brands.”
Levato said the fundamentals for a positive growth in the future are there, in light of the 200 million new potential middle-class customers growing in the next 10 years from new markets and existing markets, the positive GDP and positive tourist flows, but “in the end, it’s in the hands of the luxury players and brands to choose, deliberately and intentionally, which of these tradeoffs to choose, whether, for example, to focus on their top customers, like they have done in the last couple of years, or to broaden to a global and broad customer base, or to base their offer on iconic pieces versus innovation. So, you know, there are some choices that will shape this industry, and this is an important, defining moment for brands to think, rethink and refine their choices and their path going forward and also potentially reshaping not only the size, but also the shape of this market.”
Geographic Markets
This forecast implies a sustained positive growth of Europe, a further positive growth of America, which this year is flattish, although already a positive sign as in 2023 it was double-digit negative, and a recovery of China from the second half of the year. The scenario is “still cautious,” she admitted, in terms of China and the Chinese customers.
Asked about the presidential election in the U.S., Levato confirmed this had been taken into account for the study, and she said that, while Bain does not know yet the effects of the Donald Trump win, “for sure, the increased clarity and stability that having a new U.S. president will help in terms of at least consumer confidence and overall consumer stability. Of course, depending on choices about tariffs and other KPIs but, for sure, we believe that the holiday season will benefit from an increased stability at least.”
The rest of Asia-Pacific “is somehow sluggish, including Hong Kong and Macau, negatively affected by the loss of Chinese tourists and investments. Singapore is somehow suffering also with local customers while Thailand and Vietnam are very positive with local customers, but in absolute terms, they are not so many. South Korea is helped by the weak comparables of 2023 but still it’s not driven by huge local customers and is partially helped by some touristic flows from Japan and China,” she said.
Japan was defined as the “superstar market” in Asia with a double-digit positive growth mostly driven by touristic flows from China, mostly aspirational shoppers, and the recently weak yen. “The customer is there if there is the right price, the right product and the right availability,” Levato said. Momentum, however, has recently slowed as pricing realigned.
Europe has been stable, also lifted by the positive influx from American customers traveling, especially in the second quarter and at the end of the third quarter, while July and August “not that much. Local customers have been stronger in the Mediterranean regions and countries such as Spain, Italy and France, much weaker in the U.K., Northern Europe and Germany, because in the moment of macroeconomic uncertainty, these customers are much more rational, and they draw back from consuming premium and luxury brands.”
Category Shifts
Regarding categories, beauty and eyewear are performing better than shoes and watches.
Levato said that niche beauty and specialist eyewear brands “that cater to some specific need, passion or sports with high-tech components” are over-performing.
Watches, after two and a half years of “relentless growth,” have slowed down, “normalized” and consumers have focused on “the three, four brands that are really iconic.” Shoes have also not performed well due to the price elevation. “Shoes used to be the entry price for luxury, but not anymore, and there are very valid, high-performance alternatives at a much lower price point.”
The only core luxury category that is really growing is jewelry, Levanto said, citing two reasons: Prices were not increased too much in general and “because they still have a very wise high, low price strategy and price structure. So they are very well-diversified over all the price points, embracing a large customer base, of course targeting the top customer, because top customer is where the value is, but even targeting the volumes and making the brand relevant to a larger customer base.”
As consumers seek value purchases, the secondhand market is gaining traction, with strong momentum on jewelry and heritage apparel and leather pieces. Also, outlets are over-performing, driven by consumers’ demand for value purchases. The online channel is entering a normalization phase following post-pandemic swings.
“Luxury spending has shown remarkable stability this year, despite macroeconomic uncertainty, largely driven by consumers’ appetite for luxury experiences,” said Claudia D’Arpizio, Bain & Company partner and leader of the firm’s global fashion and luxury practice, the lead author of the study. “To win back customers, particularly the younger ones, brands will need to lead with creativity and expand conversation topics. Simultaneously, they must keep their top customers front and center, surprising and delighting them while rediscovering one-to-one human interactions. For all customers, it will be critical to double down on personalization, leveraging technology to achieve it at scale.”
Consensus Estimates
According to the Altagamma Consensus, earnings before interest, taxes, depreciation and amortization in 2025 is expected to grow 3 percent on a 2 percent gain in sales.
By market, the growth is pegged at 2 percent, fueled in particular by tourist flows, especially from the U.S.
North America is forecast to grow 3.5 percent, while Latin America is seen expanding 4 percent.
After a strong growth in 2024, Japan is expected to slow down and be up 2 percent in light of a less positive yen exchange.
China’s performance continues to be reported as uncertain given the cautious demand of the middle class and the real estate crisis that impacted the confidence of consumers, but government measures could have an effect in the second half of 2025, the study says.
Despite the tensions and the political instability, the Middle East is expected to grow 5 percent, as the Gulf area and Saudi Arabia, in particular, remain relevant markets also in light of significant real estate investments.
By category, leather goods are expected to grow 2 percent, shoes 1 percent and apparel 3 percent.
Beauty is confirmed as the best category, expected to increase 6 percent, with jewelry is seen gaining 4.5 percent.
Watches are forecast to grow 1 percent.
The retail channel is expected to grow 5 percent, digital retail is seen gaining 3 percent and wholesale should be flat.
Andrea Guerra, chief executive officer of Prada Group, considers the price elevation issue as “a total failure” of the industry, caused by brands’ lack of storytelling and “ability to make customers fall in love” with their products, “betraying” consumers. However, he cautioned that a change in strategy should not mean restarting from lower priced products, but on the other hand “aiming to tell a story, to be credible, staying true to one’s values.”
Guerra also underscored the erosion of margins for some companies, despite the increased prices, which means that “attention to costs has been neglected,” and singled out the “strong signal” of brands that have blocked all investments in China — a move he believes is not advantageous.
When Stefania Lazzaroni, general director of Altagamma, pointed out that Prada Group sales reported a 15 percent increase to 3.83 billion euros in the first nine months of the year, Guerra said “companies that have worked on the stability in the management of the brands and the creativity for the long term, with the right tension between brand and creativity” have continued to grow, pointing to the creative and managerial upheaval in the industry that he believes weighs on the performance of a brand.
Laura Burdese, deputy CEO of Bulgari, concurred with Guerra, saying that “choices must be clear and we must stay the course.” This means no disinvestment in China.
She said that the U.S. market is underdeveloped for Bulgari and that Japan will also be a focus area during Expo Osaka next year, adding the brand is planning a major retrospective in Tokyo starting in September for three months. “Next year will be the year of the Snake, a powerful symbol for Bulgari,” she mused, seeing additional opportunities for the brand’s jewelry.
Highlighting the importance of craft, Burdese said Bulgari is doubling the size of its jewelry manufacturing plant in Valenza, Italy. It is currently the biggest in Europe and next year, when it will be unveiled in April, it will be the biggest in the world, she claimed proudly.
The U.S. is also underdeveloped for Prada Group, said Guerra, as is China, where “we are not changing the investments planned from 2024 to 2026.”The U.S. is also underdeveloped for Prada Group, said Guerra, as is China, where “we are not changing the investments planned from 2024 to 2026.”
Matteo Lunelli, president of Altagamma, urged for a “united front” from luxury brands, and for not postponing decisions, working at a European level. He described the slowdown as a normalization after a very strong recover post-pandemic. “Tourism, positioned in the high-end range, can be a driver” for growth, he said. “The year 2025 is a transitional one, but the fundamentals for growth are there.”
Patrick Chalhoub, president of luxury goods retailer and distributor Chalhoub Group, which operates 450 international brands and 10 owned brands, said it was key “to focus on what is important,” adding that the industry has been “too focused on growth, profits and investments, and some complacency. We must go back to the essence, to creativity, crafts, service, added value and excellence.”
He was less concerned about the stability of the Middle East, recalling how the group had over the years moved from Syria to Lebanon and Kuwait and is now headquartered in Dubai, and more of the disconnect with Gen Z, highlighted by Bain and Altagamma, urging to “take care and attract” this cluster, connecting with the younger generations “to build the future.”
