Read the report. Luxury yachts confirming positive momentum, with growth in deliveries paired with sharp growth in order books. Japan grew by 18% at current exchange rates to 24 billion, finally catching up to its pre-Covid level. Luxury goods sales growth for the year ended March 2022 for Richemont was 50.1%. Online should become the leading channel for luxury purchases with an estimated 32%34% market share, followed by monobrand stores (30%32% market share). Luxury yacht orders rose to a record level, amid solid growth in deliveries. The personal luxury goods market reached an estimated 113 billion in the Americas, growing 25% over 2021. Spirits driving maret recovery thanks to growth in local consumers interest for Asian spirits, increasing interest for status spirits and better ability vs ine brands in catering interest of younger generations. Physical stores are distribution centers for online. PARIS The luxury industry has shown resilience with a return to pre-COVID performance levels and an estimated sector growth of more than 6% between 2022 and 2026. And it remains poised to see further expansion next year, and for the rest of the decade to 2030, even in the face of present economic turbulence, the 21st edition of the Bain & CompanyAltagamma Luxury Study, says today. Mainland China should overcome the Americas and Europe to become the biggest luxury market globally (25%27% of global purchases). The higher and top end of the luxury market is also expanding at the same time and accounted for some 40% of market value in 2022 compared with 35% last year, with these consumers hungry for unique products and experiences, and putting brands VIC (Very Important Client) strategies into overdrive. 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. 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. Bookmark content that interests you and it will be saved here for you to read or share later. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. According to report co-author . The top wealth segments stand out more now than ever before a . 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. These domains are rich with opportunities for luxury brands but investments for future growth are crucial.". As 2022 draws to a nervy close, the market is headed for a 22% year-over-year increase. 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. We observed a rebound when and where Covid restrictions were lifted, yet not enough to offset the performance of the second quarter. The experiences sector, including travel and any in-person brand experiences, is still way below its pre-covid levels, mostly because of travel restrictions. 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 access to the reports is reserved to Altagamma Companies. Please read and agree to the Privacy Policy. Although there will never be another China in terms of growth contribution to the industry, new markets (such as India and emerging Southeast Asian and African countries) have significant potential, assuming their luxury shopping infrastructure can evolve quickly enough. 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. The luxury hospitality market surged to an estimated 191 billion, more than doubling in value in 2022. Bain & Company, Altagamma Luxury Study Predicts Global Growth Drivers Travel retail is in recovery mode, at least in Western markets, but not yet back on its pre-Covid track. Specialty retailers went from 20% share of the personal luxury goods market in 2019 to 16% in 2021, a 10% decline in sales. In Europe, high-end Asian automakers, particularly Chinese brands, have gained share from local rivals. 2023 luxury market now set to be more resilient to recession than during the 2009 global financial crisis. Later on in 2021 that dip turned into a V-shaped recovery, with the value in 2021 being slightly bigger than before the pandemic. Luxury spending trends in 2022 The overall luxury market tracked by Bain & Company comprises nine segments: luxury cars, personal luxury goods, luxury hospitality, fine wines and spirits, gourmet food and fine dining, high-end furniture and housewares, fine art, private jets and yachts, and luxury cruises. Solid rebound, polarized between entry prices and tops items. 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. All segments gained momentum, but only luxury hospitality and cruises havent yet closed the gap with pre-Covid levels. The makeup and fragrances categories led growth. 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. In spite of 110% year-over-year growth at current exchange rates, sales were still down 7% from their 2019 level. The leather goods category has benefited from a generalized price increase (from the most expensive products to entry-level items) that didnt hamper volume growth. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. Global Powers of Luxury Goods 2022 - Deloitte Uber-luxury jewelry outperformed globally, as did iconic pieces and lines. The luxury market now appears better equipped to cope with economic turbulence with its consumer base both larger and more concentrated, and customer-centricity and a multi-touchpoint ecosystem set to provide resiliency amid disruptions, the report finds. 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. Please read and agree to the Privacy Policy. This market growth is driven by factors that go beyond aspiration, with consumers becoming more knowledgeable and choosy, and intensified competition for loyalty and advocacy. These are key findings from the 21st edition of the Bain & Company-Altagamma Luxury Study, a collaboration between Bain & Company and Fondazione Altagamma, the trade association of Italian luxury goods manufacturers. Carina Lau, Pansy Ho, Michelle . Retail continues to dominate, while online channels are seeing a normalization in their growth. Overall, we estimate that in 2022 the luxury markets overall retail sales value grew by 19%21% to 1.38 trillion, or 8%10% above 2019 levels. While the industry has benefited from increased prices and a continued shift to higher-margin direct channels, the lower profit levels reflect luxury brands investment in future growth, particularly through increased marketing spending and ambitious transformation programs. Consumer expectations for service levels are rising too, with brands embracing direct-to-consumer models to create a more luxurious shopping experience at every stage. Described as the core of the core in the luxury market, personal luxury came roaring back after experiencing a V-shaped recovery. One can argue that the secondhand luxury goods buyer isnt the same as the primary market buyer. Sadove suggests these numbers may not be as stark as they first appear. Moreover, Gen Y and Gen Z are expected to contribute roughly 180% of the total growth from 2019 to 2025. 2023. Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says 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. 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. DTTL (also referred to as Deloitte Global) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. These wildcards secondhand luxury, next-gen consumers and China may continue to test the strength, resilience and agility that Bain observes has enabled luxury brands to overcome the tremendous turbulence of the past two years. Now, even as the pandemic's impact on air travel diminishes, inflation and lower disposable incomes have emerged as constraints on future growth. Best performing categories of 2020 are already beyond 2019 in 2021, watches and beauty on par, apparel is still lagging. The secondhand luxury goods market rose to 43 billion in 2022. Examples include: acceleration of middle class and consumption upgrade, pressure on uber-wealth, delayed spending given current uncertainty. This article is a preview of the Top 5 companies which will be listed in the upcoming Global Powers of Luxury Goods 2022. Womenswear and menswear grew at about the same pace. Now more than ever, the industry is facing paradigm shifts in all areas: production and resources, life cycle, customer relationships, corporate responsibility, and globalization. 3.0 experiences (such as virtual stores, digital shopping assistants, and ultra-luxury travel and hospitality). 1 Richemonts FY2021 financial year ended in March 2021, so saw a greater negative impact of the COVID-19 pandemic on their FY2021 results compared with other Top 5 companies which had later year end dates. Retail continues to dominate, while online channels are seeing a normalization in their growth. 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 share of top customers has been expanding and accounted for some 40% of market value in 2022, compared with 35% last year. Among the rising stars, India stands out; its luxury market could expand to 3.5 times todays size by 2030. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Analysis of financial performance and operations for financial years ended through 31 December 2021 using company annual reports, industry estimates and other sources. This reflects a more precocious attitude toward luxury, with Gen Z consumers starting to buy luxury items some three to five years earlier than millennials did (at 15 vs. at 1820); Gen Alpha is expected to behave in a similar way. The global luxury goods industry overall is projected to achieve a market value of some 1.4 trillion in sales revenue this year, growing by 21%from 2021 (at current exchange rates), according to the latest Bain & Company report with Altagamma, the Italian luxury goods manufacturers' industry association. 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. The studys lead author is Claudia DArpizio, a Bain partner in Milan. 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. Together, we achieve extraordinary outcomes. 2022 Diversity, Equity, and Inclusion Report. Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. The customer centricity honed in recent years is another source of resilience for the industry, as is the multi-touchpoint ecosystem that luxury has developed. Bain has published its annual findings in the Luxury Goods Worldwide Market Study since 2000. Although there will never be "another China" in terms of growth' contribution to the industry, India and emerging Southeast Asian and African countries have a significant potential nevertheless. Online sales rose 20% from 2021 to 2022 to reach an estimated 75 billion. Demand for personalization and digital connectivity rose. 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. However, the report also states the total market remains 9% to 11% below 2019 levels, owing largely to a shortfall in experiences. Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Based on a preliminary assessment covering both sales in the luxury goods and experiences market in nine major categories, it reports total revenues will increase between 13% to 15% over the 2020. While the report states, there is still a place for rising stars in the industry, one wonders where? Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says The global luxury market accelerated sharply in early 2022, the consultancy found, but risks slowing due to macroeconomic pressures and Covid-19 lockdowns in China. Global Wealth and Luxury Report 2022 - Euromonitor The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising.