Sustainability and a ‘decarbonised’ value chain is the new challenge that the business of personal luxury goods will now increasingly face, even as it posted a record year in 2022, and garnered 9–11% growth over last year in the first quarter of 2023.
- The findings of Bain & Company's Luxury Goods Worldwide Market Study - Spring 2023, presented with Altagamma, the Italian luxury goods manufacturers' industry association, said that the personal luxury goods market value was €345 billion in 2022, in spite of geopolitical tensions and macroeconomic uncertainty.
- Looking further out to 2030, the market is likely to experience growth driven by solid market fundamentals, boosting its value to between €530 and €570 billion—around 2.5 times the size of the 2020 luxury market.
- However, the picture is nuanced across countries. A slowdown is expected in the US due to consumer caution around a potential recession.
The Return of Luxury: The growth in Q1 2023 may be attributed to a number of factors, including:
- the gradual decrease of hyperinflation;
- recovering confidence of local consumers in Europe;
- the reopening in China and lifting of its zero-Covid policy restrictions before Chinese New Year shopping;
- and the positive momentum in Japan and Southeast Asia, bolstered by intraregional tourism.
Key challenges: In response to regulatory ESG pressures, luxury brands over the next three years will see a pressing focus on value chain decarbonisation, known as scope 3 emissions, requiring them to decouple expected business growth from the absolute growth of emissions.
- Generative AI will impact all steps of the luxury value chain, from distribution to creativity—yet only partially—as it revolutionises business enablers across all functions.
- As with digital channels, leaders of tomorrow will be the ones able to stay ahead of the curve and create a competitive advantage through new technologies.