bain and company luxury report 2022
Sales of luxury cars, the biggest portion of the overall market, hit a new record, reaching an estimated 566 billion, 6% more than 2021 at current exchange rates and 3% above 2019. And finally, Bains positive growth projections hinge on Chinese consumers and their continued appetite for luxury brands. International travel disruptions, duty-free opportunities, and digitalization continue to strengthen domestic spending in 2021. This market growth is driven by factors that go beyond aspiration, with consumers becoming more knowledgeable and choosy, and intensified competition for loyalty and advocacy. For information, contact Deloitte Global. About Bain & Company Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future. Some countries will finally see some long awaited recoveries: China, Japan and European countries. Local consumptions impacted by the slow vaccine adoption. Both LVMH and Kering have seen their luxury goods sales more than double. INTERNATIONAL. Older generations will be permanently leaving the luxury market. Lighting and living/bedroom categories benefited the most, as consumers looked for more comfort, functionality, and beauty. South-east Asia and Korea are winning in terms of growth and potential. Cultural relevance and evolving values ask for a new value-creation model in customer engagement. Stay ahead in a rapidly changing world. This is, in part, driven by a more precocious attitude towards luxury, with Gen Z consumers starting to buy luxury items some 3 to 5 years earlier than Millennials (at 15 years-old, versus at 18-20), and Gen Alpha expected to behave in a similar way. 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. Not all sectors can enjoy stable recovery, however. Read the report. What will it bring? 3.0 experiences (such as virtual stores, digital shopping assistants, and ultra-luxury travel and hospitality). Sales growth accelerated to 28%, equivalent to 1.3 times the growth rate for new luxury goods. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. The US luxury market proved very strong in 2022. Later on in 2021 that dip turned into a V-shaped recovery, with the value in 2021 being slightly bigger than before the pandemic. 2022 Diversity, Equity, and Inclusion Report. None of this has stopped brands from investing in modernizing their operations, especially through more robust information technology infrastructure to support the ongoing digitalization of the industry, and through a reconfiguration of their store networks (primarily through renovation and relocation projects). 2023 luxury market now set to be more resilient to recession than during the 2009 global financial crisis. Analysis of financial performance and operations for financial years ended through 31 December 2021 using company annual reports, industry estimates and other sources. Luxury goods sales growth for the year ended March 2022 for Richemont was 50.1%. 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. The Top 5 companies saw their luxury goods sales rebound in FY2021, as operations recovered from the adverse impact of the COVID-19 pandemic on consumer demand, retail, and supply chains. Chinas luxury market is expected to recover between H1 and H2 2023. 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. The spending of Gen Z and the even younger Generation Alpha is set to grow three times faster than other generations through 2030, making up a third of the market. It finds that solid market fundamentals and new tech-enabled profit pools, are set to boost the markets value to 540-580 billion by the end of the present decade, from 353 billion estimated for 2022 a rise of 60% or more. Jewelry sales in 2022 are estimated to have risen to 28 billion, up 23%25% from 2021. Boosted by a strong market performance across quarters, and despite macro-economic indicators worsening globally, as well as specific challenges in China, the personal luxury sector is set to see the value of its sales jump to 353 billion in 2022, marking an advance of 22% at current exchange rates (or 15% at constant exchange rates) versus the previous year, the study projects. The other five key trends identified in the report are: Old continents are still leading, but new markets are surprising. Heels and formal shoes are now back to their 2019 levels. This article is a preview of the Top 5 companies listed in the upcoming Global Powers of Luxury Goods 2022, which will be published in late 2022. The companies making up the Top 5 have been relatively stable, with only LOral Luxe entering the Top 5, replacing Richemont*, Chart 1: Luxury goods sales US$ million: FY2016 & FY2021. 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. 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. That reflected a renewed value proposition in the US and successful reengagement with tourists in Europe. Please select an industry from the dropdown list. Sadove suggests these numbers may not be as stark as they first appear. 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). It maintains some elements of streetwear (such as gender fluidity, a disregard for occasion, inclusiveness, and sports-driven inspiration), but goes beyond its style codes through new and enhanced techniques, materials, and functions. Solid fundamentals are set to boost the markets value to between 540 billion and 580 billion by the end of the present decade, from an estimated 353 billion in 2022a rise of 50% or more. Before Covid, emerging luxury brands had hope to find traction online where the power brands were reluctant to venture, but thats all changed. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. With 2022 already knocking on our doors, its time to step into another year full of new and interesting trends, figures and actions for the Luxury Goods market. In Europe, high-end Asian automakers, particularly Chinese brands, have gained share from local rivals. Demand for high-end furniture and fixtures in commercial spaces was driven by an increasing appetite for refined aesthetics and higher quality. 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. Broader meanings and business models will emerge. Despite the uneven recovery in personal luxury goods, it is projected to post CAGR between 6% to 8% and reach sales of 360 to 380 billion ( $409 to $432 billion) by 2025. That ratio has come down from 3.4 times in 2018. The pandemic was the catalyst for change as luxury goods companies adopted new paradigms of value creation. Despite the slow recovery process, however, the demand for experiences to be allowed back is higher than ever. 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. Meanwhile, China, which remains crucial to the long-term future of the luxury market, was challenged due to Covid lockdowns, and sales are likely to be down vs. 2021. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Major technology growth companies shed 140,000 employees in 2022, followed by a second wave of layoffs in the first weeks of 2023. All luxury categories have now recovered to 2019 levels or better, with hard luxury, leather and apparel leading the resurgence following the pandemic. The US and Europe still command the lions share of the market, but Asia (especially China) accelerated as consumer acceptance increased. Between 2017 and 2021, the market size of second-hand luxury ballooned by 27 percent (first-hand luxury only grew by 12 percent over that same period.) But despite present and continuing economic challenges, the luxury market continued to perform strongly throughout this year to date, with winners for brands across the board, and positive growth for some 95% of brands, todays report concludes. 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. 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. Monobrand stores were boosted by the willingness of customers to return to in-person shopping. Retail continues to dominate, while online channels are seeing a normalization in their growth. data regarding the outbreak of Covid-19 and consequential lockdowns across countries; macroeconomic data (e.g., GDP, consumer confidence index) and latest forecasts; current trading performance from relevant luxury industry players; annual reports, quarterly results, and analyst reports; and. Cision Distribution 888-776-0942 Fondazione Altagamma is led by Matteo Lunelli, who was named chairman in 2020. Ongoing Covid-19 restrictions and economic uncertainty caused the first personal luxury market decline in five years. Driven by the dichotomic impact of pandemic outbreak in 2020, the luxury food market is showing significant difference in growth rates within its components. Bain & Company recently released its 20 th annual Luxury Study, which underlines the resurgence in the global luxury market in 2021 after a contraction in 2020. Source: Deloitte Touche Tohmatsu Limited. 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. The estimated value for the whole market in 2021 is B 1.140. The luxury market's consumer base is broadening with some 400 million consumers in 2022 expected to expand to 500M by 2030. Now, even as the pandemic's impact on air travel diminishes, inflation and lower disposable incomes have emerged as constraints on future growth. Just as they recently did through excellent products and human-centric engagement, they must now deal with new priorities: ESG, creativity chain, tech & data. "Luxury is back to the future" is the title of the latest market study worldwide by Bain - Altagamma. BEIJING, Feb 7 (Reuters) - China's luxury market contracted 10% in 2022 on the year, snapping a five-year streak of high growth, as Beijing's zero-COVID policy and a slowing economy hit. Bain & Company analyzes for Fondazione Altagamma the market and financial performance of more than 280 leading luxury goods companies and brands. Physical stores are distribution centers for online. Within accessories, leather goods grew by 23%25%, far surpassing its pre-Covid levels (up 39%41% compared with 2019). We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Womenswear and menswear grew at about the same pace. Based on a preliminary assessment covering both sales in the luxury goods and experiences market in nine major categories, it reports total revenues will increase between 13% to 15% over the 2020 pandemic year to end at 1.14 trillion ($1.3 trillion). One can argue that the secondhand luxury goods buyer isnt the same as the primary market buyer. Described as the core of the core in the luxury market, personal luxury came roaring back after experiencing a V-shaped recovery. *I have read thePrivacy Policyand agree to its terms. Opinions expressed by Forbes Contributors are their own. The surging recovery Bain speaks about only applies to the power brands. Strong cross category, generation and price growth. The customer centricity honed in recent years is another source of resilience for the industry, as is the multi-touchpoint ecosystem that luxury has developed. 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. Bain & Company expects the industry to recover by 2022 or 2023. Consumers overindulged on products, but the willingness to go back to experiences is at an all-time high we can read in the report. The luxury markets consumer base will expand from some 400 million people in 2022 to 500 million by 2030. Department stores experienced faster growth than in previous years, gaining 20%. These domains are rich with opportunities for luxury brands but investments for future growth are crucial.. 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. 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. All of the Top 5 companies saw their luxury goods sales rebound in FY2021, as the impact of the COVID-19 pandemic on consumer demand, retail and supply chain constraints reduced. Tech-enabled profit pools and strong generational trends to drive 60%+ market growth to 2030. A report by Bain & Company reveals China is set to become world's largest luxury market by 2025. Luxury goods sales growth for the year ended March 2022 for Richemont was 50.1%. 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. Meanwhile, the effect of the airline industry's CO2 mitigation costs has already begun to reshape medium- to long . In 2022, the luxury market generated positive growth for 95% of brands. April 19, 2023. Fashion jewelry showed solid 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. In 2021, the personal luxury market is expected to grow 1 percent compared to 2019 and 29 percent compared to 2020. The pandemic-fueled interest in consuming gourmet food at home continued, boosting select food retailers and fostering demand for culinary education. Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. Yet, they still require an infrastructure catch-up to facilitate the expansion locally. Mainland China should overcome the Americas and Europe to become the biggest luxury market globally (25%27% of global purchases). The global ranking of luxury sales by region changed in 2022, as the Americas regained the top position for personal luxury goods sales. 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. Its not an either-or question but both. However, rising sustainability concerns, coupled with increased operational costs, narrowed the potential customer base and restricted airplane utilization rates.
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