MILAN — The geopolitical and macroeconomic situation pose some major question marks going into 2024. Altagamma – Bain Luxury Goods Worldwide Market Study — Spring 2024, presented on Tuesday with Altagamma in Milan, projects the personal luxury goods market to post up to 4 percent growth in 2024, in line with a previous forecast released in November pegging revenues at between 365 billion and 385 billion euros.
Last year, the sector posted modest growth, following a record year in 2022, reaching a market value of 362 billion euros.
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Amid ongoing global turmoil, with wars ablaze in Ukraine and Gaza, the Altagamma – Bain analysis sets out two scenarios: A positive one driven by a better-than-expected performance of the Chinese market — to be a growth between 4 and 6 percent on 2023. A realistic scenario shows overall growth more severely impacted by a slowdown in mature markets like the U.S., and a slower recovery in China, leading to flat performance to up to 4 percent growth.
“China had once been counterbalancing the markets that were in deep crisis. Now of course, after 15 years, the moment is quite different. All markets are quite mature now and it’s the very first moment in which China is experiencing macroeconomic uncertainty, if not downturn,” said Federica Levato, senior partner at Bain & Company and coauthor with Claudia D’Arpizio of the study “Long Live Luxury.” The report also highlighted the phenomenon of “luxury shame,” sparking stronger demand for discrete and understated products over branded items, especially in countries like China.
In the first quarter of 2024, the personal luxury goods market reported a negative performance down 3 to 1 percent in terms of market value, as China suffered from diverted spending as outbound tourism favored destination cities in Japan and Europe.
European consumer confidence will benefit from announcement of interest rate cuts in June, while Japan saw the yen sink to its lowest level against U.S. dollar in the last 20 years. In addition, growing economic uncertainties dampened the confidence of the middle-class consumer. The U.S. also grappled with consumer confidence as macroeconomic pressures mounted.
“In light of major growth that has happened in the market in the last three years, this isn’t a big market quake.…It’s really a normalization and turns the focus to uncertainty that is preventing some customers, namely middle class and entry consumers, from making purchases,” Levato added.