The global luxury goods market is expected to reach 1.5 trillion. euros in 2023, marking an increase of 8-10% compared to 2022, achieving a new record for the sector. The above conclusion emerges from the findings of the latest study by Bain & Company in collaboration with Altagamma, the Italian association of luxury goods manufacturers.

Despite challenging macroeconomic conditions, the market recorded high growth of 11-13% at constant exchange rates.

This is in line with last year’s growth rate and translates into an increase in spending of around €160bn across all luxury goods categories.

In the midst of intense geopolitical and macroeconomic realignments, the luxury goods market has once again proven its unparalleled resilience this year. The key sector, personal luxury goods, showed continued growth in 2023 and is expected to reach €362 billion by the end of the year, 4% higher than in 2022 at current exchange rates.

However, headwinds remain ahead of the fourth quarter, including fragile consumer confidence, macroeconomic tensions in China and weak signs of recovery in the US. The study indicates a weakening performance of luxury personal goods in 2024, achieving a low to mid-single digit growth rate in 2023 based on current scenarios.

The study shows that global luxury tourism markets have reached almost pre-pandemic levels, with much potential in various regions remaining untapped.

At the same time, all luxury goods categories increased, supported by continued price increases, which partially undercut volume. Fueled by the investment mindset, the value of the jewelery market is expected to reach €30 billion in 2023, with luxury jewelery a bright spot for investment amid uncertainty. Readytowear is showing positive growth. In the beauty sector, driven by make-up and perfumes, there is a positive dynamic that has been favored by the emerging “lipstick phenomenon” in America and Europe. Watches continue to thrive, despite growing polarization around the industry’s few profiteers. After the outperformance of recent years, the growth of leather goods has started to slow down.

In terms of networks, the monobrand strategy leads the distribution ecosystem, thanks to consumers’ search for physical experiences and the growing role of clienteling in sales. Physical and digital experiences are increasingly blending, requiring branded products to deliver an excellent experience throughout the consumer journey. In contrast, multi-brand shopping is experiencing a sharp slowdown in both department stores and specialty stores, with growing questions about how to evolve their value proposition to better serve consumer needs.

Branded products must navigate growing multigenerational complexity, developing multifaceted actions to serve the diverse needs across the consumer base.

Generations X and Y are in the age group with the highest incomes, accounting for the bulk of luxury goods purchases and the main pool of revenue growth in the near future. However, Gen Z is at the forefront of social and cultural change, inspiring the value systems of other generations, with a strong desire for intense experiences and a search for meaning.

By 2030, Gen Z will account for 25-30% of luxury purchases, while Millennials will account for 50-55%.