What: Bain & Company has released its Luxury Goods Worldwide Market Study in collaboration with Fondazione Altagamma for 2022.

Why it is important: Even in the face of economic turbulence, the luxury industry took a leap forward in 2022 and the industry is poised to see further expansion in 2023 into the rest of the decade to 2030.

After Covid-19, the market grew back to EUR 1.15 trillion, and surprised everyone in 2022 by growing 19 to 21 percent according to Bain’s estimates.

Despite uncertain market conditions, the luxury market appears to be better equipped to cope with economic turbulence than in the 2008-9 crisis as a result of a larger consumer base that is more concentrated on top consumers who are less sensitive to turndowns.

In 2023 sales growth in the personal luxury goods market could range from 3% to 5% in the base case and up to 6% to 8% in a more positive case depending on the economic recovery in China and the ability of the US and Europe to withstand economic headwinds.

The US market remained strong, becoming the top region for personal luxury goods sales, with Asia switching to second, and Europe following. The Americas personal luxury goods market reached an estimated EUR 113 billion, growing 25%. China remains crucial to the long-term future of the luxury market and is expected to recover by the second half of 2023.

Additionally, Southeast Asia and South Korea have been excelling in both growth and future potential, making new markets such as India stand out as its luxury market could expand to 3.5 times today’s size by 2030.

The luxury market consumer base is expected to grow from around 400 million in 2022 to 500 million people by 2030. Generational trends will be a powerful factor for this sector growth, with Generation Z and Generation Y (millennials) accounting for all of the market’s growth in 2022. The spending of these younger generations, including Generation Alpha, is set to grow three times faster than other generations through 2030.

Department stores experienced faster growth than in previous years, gaining 20%. That reflected a renewed value proposition in the US and successful reengagement with tourists in Europe.

The study suggests four growth engines that will profoundly shape the luxury market by 2030: Chinese consumers should regain their pre-Covid status as the dominant nationality for luxury and mainland China will overcome the Americas and Europe to become the biggest luxury market globally. Additionally, the younger generations will become the biggest buyers of luxury, representing 80% of global purchases. Lastly, online should become the leading channel for luxury purchases with an estimated 32 to 34 percent market share.

Bain & Company releases annual report with Altagamma