The luxury goods market is expected to see a significant decline in 2024, with sales contracting by 2%. The Bain & Company firm highlights the causes of this slowdown, while citing encouraging signals for 2025.
A historic decline in luxury
According to a report from Bain & Company, global sales of personal luxury goods – clothing, accessories and cosmetics – are expected to decline by 2% in 2024, a first since the 2008-2009 financial crisisoutside of the pandemic period. China, the sector’s key market, recorded a particularly marked fall, with sales down 20% to 22%. This country, a historic engine of industry thanks to an emerging middle class, is suffering from economic slowdown and sluggish consumption.
Currency fluctuations and rising prices also exacerbate this trend. “The luxury consumer base has declined by 50 million in the last two years, from a total of around 400 million,” says Federica Levato, partner at Bain.
Among the most affected are younger generations, facing financial difficulties and loss of confidence linked to global uncertainties, such as geopolitical conflicts and elections. The end-of-year holidays, usually conducive to spending, should record modest performances, in particular due to the persistence of difficulties in the Chinese market.
2025: a glimmer of hope for the industry
Despite the gloomy outlook for 2024, Bain & Company anticipates a possible recovery in 2025. The luxury personal products market could grow by 0% to 4% at constant exchange rateswith an expected recovery in Europe and America. China, for its part, should regain positive momentum in the second half of the year.
Federica Levato underlines the importance of pricing strategies and political decisions in this possible recovery. In the United States, for example, tax measures or interest rate cuts could stimulate consumer spending. At the same time, experiential luxury – encompassing sectors such as hospitality and gastronomy – is showing notable resilience, reinforcing the diversification of revenue sources for major brands.
If 2024 promises to be a year of marked decline for the industry, luxury players can hope for a gradual return to growth, provided they adapt their strategies to economic and social developments.
