The global luxury industry is encountering significant disruptions, marking its most challenging period in over 15 years, according to a new study by Bain & Company and Altagamma. Economic uncertainties, geopolitical tensions, and cultural shifts are impacting consumer confidence and demand, with the luxury sector experiencing a slowdown after a robust post-pandemic recovery.
Mainland China is witnessing a slowdown due to economic uncertainty, though local luxury brands are gaining traction. Meanwhile, Southeast Asia remains a bright spot, with Singapore and Indonesia leading growth. Experiential luxury, such as hospitality and fine dining, is outperforming tangible goods, particularly amongst Gen Z and Millennial consumers.
The report highlights that over half of new luxury buyers in the next five years will be from Gen Z and Alpha, who prioritise creativity and authenticity. Despite the current volatility, Asia’s long-term outlook remains strong, driven by rising incomes and an expanding affluent consumer base.
Claudia D’Arpizio, Bain & Company’s senior partner, noted, “Although demand is easing in the short term, the luxury sector has consistently demonstrated extraordinary resilience.” Federica Levato, another senior partner, added that the industry is entering a pivotal chapter requiring sharper focus and cultural relevance.
The personal luxury goods segment is expected to see a continued decline, with potential market contraction between 2% and 5% this year. However, experiential luxury continues to thrive, with luxury hospitality and cruises showing strong performance.
As the luxury market navigates these challenges, the report underscores the importance of brands refocusing on fundamentals and maintaining strong brand identities to sustain consumer engagement.
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