MILAN — Global sales of personal luxury goods are expected to decline for the second consecutive year, as affluent shoppers push back against steep price increases on ordinary products and global uncertainty weakens consumer confidence, according to a new study by Bain & Co. released Thursday.
The semiannual market update for the Altagamma association of Italian luxury producers forecasts a 2% drop in sales of high-end apparel, footwear, and handbags this year, falling from 364 billion euros in 2024 to 358 billion euros ($412 billion). This would mark the first two-year slowdown since the 2008-2009 global financial crisis.
“It is not a disaster scenario, but we see consumers trading down to more accessible brands, not because they lack money, but because they are looking for a more ethical value-price proposition,” said Bain partner Claudia D’Arpizio, co-author of the study.
Post-pandemic sales reached 369 billion euros in 2023, a rebound that Bain analysts now consider a bubble. Despite recent declines, the market remains roughly 25% larger than in 2019, before pandemic lockdowns hit global sales.
Looking ahead, Bain expects a 3% to 5% rebound next year, bringing sales to 365 billion to 375 billion euros, assuming growth in the U.S. market is supported by strong financial markets and recovery in China.
The U.S. market is forecast to remain flat at around 101 billion euros this year, while Europe faces a slight contraction to 108 billion euros. Mainland China and Japan are both expected to slow by up to 8%, to 42 billion euros and 31 billion euros, respectively. Only the Middle East is projected to grow 4% to 6% to 23 billion euros, driven by Dubai’s shopping sector.
Globally, inflated prices and a creativity gap have cost brands 60 to 70 million customers over the past two years, reducing the customer base by 18% to 330 million shoppers who feel far less loyal than before, Bain said.
Footwear and handbags have suffered the most, where price increases were steepest, D’Arpizio said. “These customers already have plenty of bags, including the same models available now.”
Like politics, the luxury sector is experiencing extreme polarization, with ultra-high-net-worth individuals proving the most resilient. Those with personal wealth above 30 million euros number about 400,000, and including family members, total roughly 1.5 million people.
“Ongoing polarization is not helping luxury consumption,” D’Arpizio said. “Other customers feel alienated because brands have focused too much on ultra-wealthy individuals, not only with higher prices but also with customer experiences designed for a few rather than the many.”
Social media is amplifying questions about whether it is ethical to buy at these prices. D’Arpizio added that the strategy of raising prices has been “very dangerous,” creating a misalignment between price and value.
Brands need to decide which customers they want to serve and reestablish themselves as drivers of “self-actualization and social improvement,” qualities that fueled the luxury market for decades, she said.
Paraluman P. Funtanilla
Paraluman P. Funtanilla is Tutubi News Magazine's Marketing Specialist and is a Contributing Editor. She finished her degree in Communication Arts in De La Salle Lipa. She has worked as a Digital Marketer for start-up businesses and small business spaces for the past two years. She has earned certificates from Coursera on Brand Management: Aligning Business Brand and Behavior and Viral Marketing and How to Craft Contagious Content. She also worked with Asia Express Romania TV Show.
- Paraluman P. Funtanilla
- Paraluman P. Funtanilla
- Paraluman P. Funtanilla
- Paraluman P. Funtanilla
