What: Savills decrypts the global trends in luxury from last year and this one, in order to have an idea of the market situation

Why it is important: Headwinds are ahead for luxury, but it is cyclical or a new era?

The Savills Global Luxury Retail 2024 outlook report reveals that the global luxury retail market faced headwinds in 2023, with new store openings down 13% year-on-year. However, this decline was largely cyclical, reflecting a normalization after the post-pandemic acceleration. The long-term fundamentals of the luxury market remain strong, with annual growth forecast between 4-8% by 2030.
Key trends identified in the report include a continued focus on "localization," with luxury brands expanding into domestic markets and resort destinations to get closer to their customers. While global store openings slowed, North America and Asia Pacific (excluding China) bucked the trend with increased store activity. China remains the dominant market for luxury expansion but saw a slowdown due to weaker consumer confidence. Resort markets maintained their appeal, with their share of new openings increasing to 8%. The Middle East is emerging as a key growth market, particularly the UAE and Saudi Arabia. Property acquisitions by luxury brands hit a new high, but leasing remains competitive, with upward pressure on rents in prime locations due to reduced availability and improving demand.
Looking ahead, the report anticipates further deceleration in new store openings, especially in China. Luxury brands are expected to continue focusing on strong domestic markets, particularly in North America and Asia Pacific. Large, growing tourist hotspots are likely to move up the expansion agenda. Availability challenges in key locations are expected to place further upward pressure on rents. The report underscores the importance of market fundamentals, real estate quality, and strategic location selection in luxury retail expansion plans.

Savills report on 2024 luxury trends