bain and company luxury report 2022

Within the personal luxury segment, only shoes (23 or $26 billion), jewelry (22 or $25 billion), and leather accessories (62 or $70 billion) will beat 2019 results, up 5%, 3% and 4% respectively. Already it is about half the size of each of the three leading personal luxury goods categories leather accessories, beauty and apparel and its 27% growth from 2019 leaves every other personal luxury goods category in the dust. China represented 12 percent of total sales in 2022, but Luca Lisandroni, the company's co-CEO, is already calling 2023 a "golden year" for the China market. Bains insights are based on triangulating information and sources available as of November 10, 2022, including: The scenarios do not consider disruptive changes to the Covid-19 status quo (e.g., potential future waves of Covid-19 related to variations of the virus) nor to the global sociopolitical situation. According to report co-author . There will be a new value creation model (high tech & high touch), new KPIs to track (earned growth rate) and clear positive results (churn rate reduction) a lot to look forward to. This reports reveals and describes what they are: China doubling and Americas booming, Europe and Japan are still in recovery mode. Get your bi-weekly update on the e-commerce insights: console.log("1"),function(e,n,o,t,l,c,r){e.Newsletter2GoTrackingObject=l,e[l]=e[l]||function(){(e[l].q=e[l].q||[]).push(arguments)},e[l].l=1*new Date,c=n.createElement(o),r=n.getElementsByTagName(o)[0],c.async=1,c.src="https://static.newsletter2go.com/utils.js",r.parentNode.insertBefore(c,r)}(window,document,"script",0,"n2g"),n2g("create","yj76l2pj-nqhljzcz-qvj"),function(e){e(function(){console.log("1"),e("#nl2go_form").on("submit",function(n){n.preventDefault(),console.log("1");var o={email:e("input[name=email]").val()};console.log("1"),n2g("subscribe:send",{recipient:o},function(n){console.log(n),201==n.status?e("#nl2go_form").html("Succes! Sales of new watches grew by 22%24% and reached a record 52 billion, reflecting solid demand for top-of-the-range models and iconic pieces, but growth was capped by low product availability. Luxury yacht orders rose to a record level, amid solid growth in deliveries. When it comes to the overall value of this market, luxury cars significantly outperform all of the other components combined. Taken together, the study characterizes these trends as the nouvelle vague or new wave of developments for the sector. A powerful factor for sector growth in the rest of the decade will be generational trends,the analysis reports. Your email address will not be published. The global luxury market is projected to grow by 21% in 2022, reaching 1.4 trillion; the personal luxury goods. The performance of the last quarter of this year, in determining the final outcome for 2022, will largely depend on the progressive lifting of Covid-19 pandemic restrictions in China, as well as evolution of European and American luxury consumer confidence in the face of rising inflation and cost of living pressures, and potential recession in the US and European economies, the report notes. Read More USD 1,325 Add To Cart In 2021, they accounted for around 30% of new customers that entered the market since 2019, which is a total of 25% of the Personal Luxury Goods market. We expect that solid market fundamentals will result in annual growth rates between 5% and 7% until 2030. We therefore forecast that the market value of personal luxury goods will rise to between 540 billion and 580 billion by the end of the present decade, from an estimated 353 billion in 2022an increase of more than 50%. Luxury goods leader LVMH increased its share of the Top 5 from 39.1% in FY2016 to 44.9% in FY2021. And finally, Bains positive growth projections hinge on Chinese consumers and their continued appetite for luxury brands. Beauty reached 69 billion, up a mere 14%16% on 2021 (but still double its pre-Covid growth rate in 2019). Watches have evolved from a challenged category to the new object of desire. Recent studies Altagamma Studies archive The performance of the last quarter of this year, in determining the final outcome for 2022, will largely depend on the progressive lifting of Covid-19 pandemic restrictions in China, as well as evolution of European and American luxury consumer confidence in the face of rising inflation and cost of living pressures, and potential recession in the US and European economies, the report notes. Fondazione Altagamma is led by Matteo Lunelli, who was named chairman in 2020. Required fields are marked *. The top growth drivers are Chinese consumers in China, online channels and younger generations. Brands continued to exert more control over their distribution, with directly operated channels increasing in importance again. Luxury Sales Set to Grow by 5 to 15% This Year, Bain Says The global luxury market accelerated sharply in early 2022, the consultancy found, but risks slowing due to macroeconomic pressures and Covid-19 lockdowns in China. The luxury markets consumer base will expand from some 400 million people in 2022 to 500 million by 2030. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. Older generations will be permanently leaving the luxury market. Local consumptions impacted by the slow vaccine adoption. High-end brands want to control their own destiny and how they appear and are presented in the store, he says, adding, So we are not going to move away from department stores but change the economic relationship they have with them to concessions.. I study the world's most powerful consumers -- The American Affluent, December 27, 2021 in London, England. Worst dip in history for the personal luxury goods market: Personal luxury goods are items like jewelry, luggage, haute couture clothing, sports cars and more. These domains are rich with opportunities for luxury brands but investments for future growth are crucial.. The composite luxury goods sales of the Top 5 companies grew by 91% over the five years FY2016-FY2021. Some countries will finally see some long awaited recoveries: China, Japan and European countries. Luxury spending continued to skew toward products, with steep growth in personal luxury goods and more moderate growth in experience-based goods. In spite of 110% year-over-year growth at current exchange rates, sales were still down 7% from their 2019 level. More troubling is they are expected to continue on a downward curve through 2025 when they will hold only between a 10% to 12% share each. Yet luxury brand players are continuing to invest in future growth, even in the face of high inflation and rising costs, so that their profitability is slightly decreasing, following an unprecedented increase in 2021. Sales growth accelerated to 28%, equivalent to 1.3 times the growth rate for new luxury goods. Jewelry sales in 2022 are estimated to have risen to 28 billion, up 23%25% from 2021. Intuitive service that goes beyond merely offering the human touch is becoming more crucial, and operators are increasingly looking to technology to automate predictable tasks and free employees to focus on the most important interactions. We observed a rebound when and where Covid restrictions were lifted, yet not enough to offset the performance of the second quarter. ")},function(n){console.log(n),e("#nl2go_form").html("Unexpected error")})})})}(jQuery); 2023 E-commerce Germany and E-commerce Berlin. Mainland China should overcome the Americas and Europe to become the biggest luxury market globally (25%27% of global purchases). The global luxury goods industry overall is projected to achieve a market value of some 1.4 trillion in sales revenue this year, growing by 21%from 2021 (at current exchange rates), according to the latest Bain & Company report with Altagamma, the Italian luxury goods manufacturers' industry association. And the data is continually updated so that you can track current trends. Casual categories, such as fussbett sandals and Wellington boots, are on the rise. Although there will never be another China in terms of growth contribution to the industry, India and emerging Southeast Asian and African countries have a significant potential nevertheless. The top wealth segments stand out more now than ever before a . All segments gained momentum, but only luxury hospitality and cruises havent yet closed the gap with pre-Covid levels. The study reveals that some of the consumption fundamentals of China will go through changes. The luxury market now appears better equipped to cope with economic turbulence with its consumer base both larger and more concentrated, and customer-centricity and a multi-touchpoint ecosystem set to provide resiliency amid disruptions, the report finds. Seventy-three of the Top 100 companies reported growth in luxury goods sales in FY2021, compared to only 20 companies in FY2020. Luxury is converting into art, with the ultimate objective of transcending from its original form, rooted in craftmanship and functional excellence, towards broader meanings, empowered by imagination and symbolic power, to build its handmade creations. Between 2021 and 2022, about 70% of leather category growth has been driven by price increases; by contrast, price increases accounted for only about 50% of category growth from 2019 to 2021. What Sadove sees shifting in distribution is a move toward more concession models in retail from traditional wholesale-to-retail distribution. INTERNATIONAL. After 20 years of large expansion and deep evolution, Covid-19 has fast forwarded and anticipated some of the key changes for the next 20 years of the global luxury market. This trend has also been reflected in product categories, through the shift to the post-streetwear era, which maintains some elements of so-called streetwear (such as gender fluidity, occasion-less apparel, inclusivity and sports-driven inspiration) but goes beyond its style codes through new and enhanced techniques, materials and functionalities. Overall, we estimate that in 2022 the luxury markets overall retail sales value grew by 19%21% to 1.38 trillion, or 8%10% above 2019 levels. The luxury goods sales of the top two companies in FY2021 was more than the total luxury goods sales of the Top 5 in FY2016. Monobrand stores were boosted by the willingness of customers to return to in-person shopping. The higher and top end of the luxury market is also expanding at the same time and accounted for some 40% of market value in 2022 compared with 35% last year, with these consumers hungry for unique products and experiences, and putting brands VIC (Very Important Client) strategies into overdrive. Monobrand websites gained further ground, raising their share to about 45% of the online segment, up from 43% in 2021. Bookmark content that interests you and it will be saved here for you to read or share later. For any questions or to arrange an interview, please contact: Gary Duncan (London) Email: [emailprotected], Orsola Randi (Milan) Email: [emailprotected]Tel: +39 339 327 3672. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report. Countries coped with high inflationary . Here it comes: the second stage of our E-commerce Germany Awards 2022! Department stores experienced faster growth than in previous years, gaining 20%. The personal luxury goods industry, in particular, saw a further growth acceleration this year, coming on the heels of the V-shaped rebound enjoyed in 2021, the research shows. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Clear overperformance driver: the focus will be on local customers, exposure to China, multi-touch and price value proposition these will be the top drivers of resilience. However, the spots will be replaced by new consumers, mostly Generation Y and Z. Solid rebound, polarized between entry prices and tops items. Sadove suggests these numbers may not be as stark as they first appear. We work with ambitious leaders who want to define the future, not hide from it. Accessories remained the largest personal luxury goods category and grew by 21%23%. Omnichannel retailing and a major shift in passenger mix are poised to transform traditional airport shopping. Later on in 2021 that dip turned into a V-shaped recovery, with the value in 2021 being slightly bigger than before the pandemic. While Bain doesnt predict where wholesale and retail will end up by 2025, its pretty certain that the twenty-year trend away from wholesale will continue. In this webinar, Nirad Jain and Kara Murphy, co-leads of Bain's Healthcare Private Equity practice, share key takeaways from our 2023 Global Healthcare Private Equity Report, and dive into the macroeconomic forces and geopolitical dynamics shaking up the industry. The customer wants a seamless experience to shop anywhere, anytime. All rights reserved. In 2022, we estimate that 95% of brands experienced positive growth, but most luxury players continued to invest for the future, which resulted in a slight erosion of average profitability following an unprecedented increase in 2021. Growth was steady across regions as people finally realized travel ambitions previously blocked by Covid, using money they couldnt spend on trips during the pandemic. Demand for personalization and digital connectivity rose. The market for personal luxury goodsthe heart of the entire luxury industryenjoyed another year of strong double-digit growth. (Photo by Hollie Adams/Getty Images). "):e("#nl2go_form").html("Unexpected error. Chart 2: Luxury goods sales YoY growth FY2019-FY2021. MILANNovember 15, 2022The global luxury goods market took a further leap forward during 2022, despite highly uncertain economic and consumer market conditions. Across 63 offices in 38 countries, we work alongside our clients as one team with a. The FY2021 composite net profit margin for the 78 Top 100 companies reporting net profits more than doubled to 12.2% year-on-year, higher than pre-pandemic levels. That concludes the studys breathless reporting of the topline findings of the past year in luxury, saying, it has never seen a year of surging performance to match 2021.. Best performing categories of 2020 are already beyond 2019 in 2021, watches and beauty on par, apparel is still lagging. This article is a preview of the Top 5 companies which will be listed in the upcoming Global Powers of Luxury Goods 2022. It comprises nine segments, led by luxury cars, luxury hospitality, and personal luxury goods, which together account for more than 80% of the total market. In keeping with greater social interest in diversity, equity, and inclusion, galleries and collectors focused more on areas such as women artists and African art. According to the latest Bain & Company Study with Altagamma, the segment will continue to expand until 2030 despite the . This generational factor is one of the critical trends affecting the development of the luxury market in 2022, and for the rest of the decade, that are highlighted by todays report. By Claudia D'Arpizio, Federica Levato, Filippo Prete, and Jolle de Montgolfier. from 8 AM - 9 PM ET. Luxury cars, luxury hospitality, and personal luxury goods together account for 80% of the total market. In contrast, Mainland China lost a little ground, dropping 1% from 2021. Lighting and living/bedroom categories benefited the most, as consumers looked for more comfort, functionality, and beauty. Young and affluent Chinese Gen Z consumers find local brands much more aspirational and desirable than millennials or Gen Xers, he wrote, as he observes the native Gen Z consumers are exceptionally proud of their Chinese culture heritage and its future potential. SEA is still suffering from a lack of tourism. The pandemic was the catalyst for change as luxury goods companies adopted new paradigms of value creation. And it remains poised to see further expansion next year, and for the rest of the decade to 2030, even in the face of present economic turbulence, the 21st edition of the Bain & CompanyAltagamma Luxury Study, says today. PARIS The luxury industry has shown resilience with a return to pre-COVID performance levels and an estimated sector growth of more than 6% between 2022 and 2026. Analysis of financial performance and operations for financial years ended through 31 December 2021 using company annual reports, industry estimates and other sources. "Luxury is back to the future" is the title of the latest market study worldwide by Bain - Altagamma. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. LONDON, ENGLAND - DECEMBER 27: A woman holds a Louis Vuitton shopping bag on Clifford Street on [+] December 27, 2021 in London, England. Not all sectors can enjoy stable recovery, however. The market was constrained by prolonged Covid lockdowns in the second quarter, which affected consumer confidence and resulted in lackluster performance across all categories and channels (including online). Meanwhile, China itself, which remains crucial to the long-term of the luxury market, continues to confront a challenging phase due to Covid lockdowns and is still performing below 2021 figures. continued focus for large established brands, with few exceptions intercepting the next gen of customers. Local consumptions are strong everywhere. A new section in this year's report will focus on circularity strategies and the secondary/resell market, which has become increasingly important in the luxury sector. Its not an either-or question but both. Daniel Langer, founder of luxury consultancy quit and contributor to Jing Daily, warns of China chic.. Broader meanings and business models will emerge. In general, luxury brands have the chance to secure common prosperity, but they will need to challenge and adapt their strategy. However, the profit erosion also reflects higher energy prices and increased labor costs. Carina Lau, Pansy Ho, Michelle . A deliberate (and effective) 'elevation strategy' has driven a progressive price increase across the industry (driving around 60% of the 2019-2022 growth) without damaging volume growth. In coming years, the spending of Gen Z and Gen Alpha is set to grow some three times faster than for other generations until 2030, making up a third of the market. This is a BETA experience. Get the latest business insights from Dun & Bradstreet. Heinemann Outperforms Travel Retail Rivals With 81% Growth To $4.2 Billion In 2022, Airport Retail Confectionery Firsts From Oreo And Lindt, Both With Live Chefs, Consumer Demand Is Slowing, Good For Government Policy Wonks, Bad For Retailers, An Exclusive Retail Service Experience Is At The Center Of CB2's New Design Shop, Whats Working - And Not - In Mobile Commerce (Part 1 Of 2), Magna reports global digital media grew by nearly one-third year-over- year in 2021, China can be a risky bet for Western luxury brands, Chinese Gen Z consumers find local brands. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. Please read and agree to the Privacy Policy. In addition to exploring the trends impacting the luxury goods market, the report will identify the hundred largest personal luxury goods companies (owned or licensed luxury brands). Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. The pandemic-fueled interest in consuming gourmet food at home continued, boosting select food retailers and fostering demand for culinary education. Retail continued to grow faster than wholesale and reached parity in terms of market share. If we have selected the wrong experience for you, please change it above. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. The study also reinforced previous projections that China and Chinese consumers will become the dominant force in global luxury by 2025 (see below). The nouvelle vague the new wave of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics all while new trends and concepts develop, said Claudia DArpizio, a Bain & Company partner and leader of Bains Global Luxury Goods and Fashion practice, the lead author of the study. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Luxury hospitality, gourmet food and fine dining, fine art, private jets and yachts will remain below 2019 levels, though up compared to 2020. The luxury markets consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. Report. Art benefited from being seen by the wealthy as an alternative asset to hedge against volatility in financial markets. Bain and Company and the Italian trade association Fondazione Altagamma are out with their 2021 study of the global luxury market. People under 40 years old will remain main drivers for growth up to 2020 in the luxury goods market. Major technology growth companies shed 140,000 employees in 2022, followed by a second wave of layoffs in the first weeks of 2023. They are expected to account for between 40% to 45% of purchases by 2025 when the China mainland will overcome the Americas and Europe as the worlds largest market. The economic model will continue to evolve. Interest from high-net-worth individuals continued to rise, reflecting a desire for deeper connections with nature and comfort; designs increasingly reflect these preoccupations, through features such as enlarged stern areas or a preference for explorer yachts able to sail to the remotest areas. This database, known as the Luxury Goods Worldwide Market Observatory, has become a leading and much-studied source in the international luxury goods industry. With 2022 already knocking on our doors, it's time to step into another year full of new and interesting trends, figures and actions for the Luxury Goods market. All personal luxury goods categories have now recovered to 2019 levels or better, with hard luxury, leather, and apparel leading the resurgence following the pandemic. Physical stores are distribution centers for online. Some tourists bounce back over the summer. Success online at least partly depends on the amount of advertising dollars pumped into online channels. "The nouvelle vague thenew wave of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics all while new trends and concepts develop",said Claudia D'Arpizio, a Bain & Company partner and leader of Bain's Global Luxury Goods and Fashion practice, the lead author of the study. However, Chinese lockdowns, a continued shortfall in international Asian tourism, and limited business travel constrained total market growth. Now distribution is split virtually down the middle, half through wholesale and half through retail. Bain & Company expects the industry to recover by 2022 or 2023. Chinas luxury market is expected to recover by the second half of 2023. Please see www.deloitte.com/about to learn more. The leather goods category has benefited from a generalized price increase (from the most expensive products to entry-level items) that didnt hamper volume growth. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American, New Bain & Company-backed venture aims to help companies better trace data, achieve sustainability goals, ESG activities correlate to stronger financial performance, reveals new study from Bain & Company and EcoVadis. 2022 Diversity, Equity, and Inclusion Report. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. The fine art market grew 13% to 39 billion, as the ranks of potential buyers swelled and new Asian art hubs strengthened. There are few sources for data-driven insights to help consumer businesses understand and navigate these fast-changing times. Within accessories, leather goods grew by 23%25%, far surpassing its pre-Covid levels (up 39%41% compared with 2019). Beauty (60 or $68 billion) and watches (40 or $45 billion) will be flat and apparel (57 or $65 billion) will remain -5% down relative to 2019. Luxury brands have faced three years of tremendous turbulence and uncertainty, but the industry shows more strength, resilience, and ability to innovate than before. Sparkling wine (and not just Champagne) gained share over still. The threats revolve mostly around understanding the winning value proposition, cracking operation complexity and defining logo and rebranding strategies. However, the report also states the total market remains 9% to 11% below 2019 levels, owing largely to a shortfall in experiences. Beauty companies Este Lauder and LOral Luxe have seen slower growth in the sales of their owned and licensed luxury goods brands than multiple luxury goods companies LVMH, Kering and Chanel. Spending on experiences will be the last luxury outlay to recover historical highs given its reliance on the resumption of international tourism and business travel. Demand for luxury experiences has been improving, but this segment will be the last of the three to regain its 2019 levels, probably in 2023. While US luxury market is still strong, and Europe managed to recover beyond 2019 thanks to solid local demand alongside an extra-boost from US and Middle Eastern tourist shoppers, new markets are surprising the industry. Among the rising stars, India stands out; its luxury market could expand to 3.5 times todays size by 2030. The higher and top end of the luxury market is also expanding at the same time and accounted for some 40% of market value in 2022 compared with 35% last year, with these consumers hungry for unique products and experiences, and putting brands VIC (Very Important Client) strategies into overdrive. Many reported sales above pre-pandemic levels, driven mainly by store re-openings, strong ecommerce growth and normalizing consumer demand for their luxury brands. Womenswear and menswear grew at about the same pace. On the other hand, luxury cars the largest single category at 551 billion ($626 billion) will end the year at or slightly above 2019 levels. Generation Y (millennials) and Generation Z accounted for all of the markets growth in 2022. In 2021, the personal luxury market is expected to grow 1 percent compared to 2019 and 29 percent compared to 2020. Rather than selling into stores wholesale and lose margin, power brands are going to pay rent instead, as they are already doing in their mono-brand stores which advanced 3% from 2019 to capture 32% share of market. Travel retail is in recovery mode, at least in Western markets, but not yet back on its pre-Covid track. Wealthy individuals turned to private jets more in 2022, due to their perceived safety and efficiency vs. commercial travel. Two-percent share of market is all that small brands (<200 or $277 million) commanded in 2021. The Russian market was mostly inactive due to war-related suspension of operations. *I have read thePrivacy Policyand agree to its terms. The overall luxury market tracked by Bain & Company comprises nine segments: luxury cars, personal luxury goods, luxury hospitality, fine wines and spirits, gourmet food and fine dining, high-end furniture and housewares, fine art, private jets and yachts, and luxury cruises.

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