Global luxury consumers, grappling with macroeconomic uncertainty and continued price elevation among brands, are cutting back on discretionary items. As a result, Bain expects the personal luxury goods market to see its first slowdown since the Great Recession, excluding Covid, experiencing -2% erosion, at current exchange rates, compared to last year. This trend—particularly acute among Generation Z, whose advocacy for luxury brands continues to decline—has led to a shrinking luxury customer base by a magnitude of about 50 million over the last two years. Meanwhile, top customers continue to grow their share of luxury consumption, although they are progressively losing the feeling of exclusivity from brands.
“Luxury spending has shown remarkable stability this year, despite macroeconomic uncertainty, largely driven by consumers’ appetite for luxury experiences,” said Claudia D’Arpizio, Bain & Company partner and leader of the firm’s global Fashion & Luxury practice, the lead author of the study. “And yet, 50 million luxury consumers have either opted out of the luxury goods market or been forced out of it in the last two years. This is a signal for brands that it’s time to readjust their value propositions. To win back customers, particularly the younger ones, brands will need to lead with creativity and expand conversation topics. Simultaneously, they must keep their top customers front and center, surprising and delighting them while rediscovering one-to-one human interactions. For all customers, it will be critical to double down on personalization, leveraging technology to achieve it at scale.”
Pockets of strong growth in luxury experiences and small indulgences
Luxury experiences continue to maintain traction as consumers shift spend toward travel experiences and social events, favoring personal treatment and wellness over tangible goods. Simultaneously, experiential goods, especially those geared toward high-net-worth individuals, such as yachts, cars, and jets, are garnering strong interest.
Meanwhile, beauty products, particularly fragrances, continue to perform well as consumers gravitate toward “small indulgences.” Eyewear is also experiencing positive momentum, with consumers drawn to widening brand creativity and high-end specialist brands.
Jewelry is holding strong, especially favoured by the high-jewelry segment and by a remarkably positive performance within the US market. Meanwhile, watches, leather goods, and shoes have seen a slowdown as consumers downtrade and are increasingly selective about purchases, though small leather accessories and entry-items are still of interest for Generation Z.
As consumers seek value purchases, the secondhand market is gaining traction, with strong momentum on jewelry and heritage apparel and leather pieces.
Regional breakdown: Bright spots in the Americas, Japan, and Europe
- Americas: The US is showing green shoots with an upward quarterly trajectory, despite fluctuating consumer confidence and foot traffic slowing across key cities. Outside of the US, performance is more polarised. Canada continues to struggle with a lack of Chinese tourists while Mexico and Brazil see positive notes.
- APAC: Japan continues to lead globally on luxury growth due to favorable currency rates and associated surges in touristic spending throughout the first half of 2024. Momentum, however, has recently slowed as pricing realigned. In contrast, Mainland China has experienced a sharp slowdown, worsening throughout the year as domestic spending decreased due to lackluster consumer confidence and Chinese tourist outflows to nearby areas and Europe.
- EMEA: Europe is showing stronger yet normalising growth over quarters, with demand sustained by touristic inflows, particularly in tier-one cities and resort locations in southern Europe. The UK and northern Europe are seeing more limited luxury tourist inflows. The picture varies across the Middle East as regional tensions impact tourist inflows.
- Emerging markets represent new potential avenues of growth—including in Latin America, India, Southeast Asia, and Africa—which are collectively expected to add more than 50 million upper-middle class luxury consumers by 2030.
Looking beyond 2024
The luxury market is expected to face a slightly improving context throughout 2025, though this is highly dependent on the unfolding macroeconomic scenarios in key regions. Looking toward 2030, the market will likely embark on a long-term positive trajectory, with an increasingly addressable consumer base.
