(BFM Bourse) – Unsurprisingly, sales of luxury products are expected to decline in 2024, due in particular to the slowdown in consumption in China. However, the consulting firm Bain & Company identifies factors that could work in favor of this sector in 2025.
Sales of luxury goods are expected to fall 2% this year, making them one of the lowest on record, as the sector’s customer base shrinks due to rising prices and economic uncertainty, according to a report from the consulting firm Bain & Company published Wednesday.
In its widely followed report on this market valued at 363 billion euros, Bain estimates that sales will fall by 20% to 22% in China, where the sector is running out of steam after years of expansion fueled by the rise of wealthy middle class, before the COVID-19 pandemic.
Bain’s forecasts take into account the effect of currency fluctuations. “This is the first time the luxury personal products industry has declined since the 2008/2009 crisis, with the exception of the pandemic,” Federica Levato, partner at Bain, told Reuters.
A declining consumer base
The study published mid-week will likely reinforce investors’ concerns about the duration and extent of the slowdown observed in the luxury sector.
Global sales of personal products – clothing, accessories and beauty products – are expected to remain stable at constant exchange rates during the holiday season, with China’s performance remaining negative, according to Federica Levato.
The tendency of brands to position their products in a higher price range, coupled with a decline in consumer confidence due to wars, economic difficulties in China and elections, has also driven many customers, especially the most young people, to give up their purchases.
“The luxury consumer base has declined by 50 million over the past two years, out of a total of around 400 million consumers,” said Federica Levato.
A recovery expected in 2025
The market’s growth prospects also depend in part on the strategies that brands choose to implement, particularly in terms of pricing, she added.
The luxury personal products sector, however, is expected to grow by 0% to 4% at constant exchange rates in 2025, supported by sales in Europe and America, with China only recovering in the second part of the year, according to Bath.
According to Federica Levato, Donald Trump’s victory in the US presidential election has removed uncertainty, while possible cuts in interest rates and taxes could encourage Americans to spend more.
Unlike personal goods, luxury spending on experiences, such as hotels and restaurants, is expected to increase this year, Bain said.
(With Reuters)
S. S. – ©2024 BFM Bourse
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