Luxury sector revenue down 2% in 2024 according to Altagamma-Bain & Co. study

We have more details from the latest Altagamma-Bain Worldwide Luxury Market Monitor 2024 that we covered last week and it seems the luxury sector is slowing down in 2024. Revenue for the luxury sector as a whole will drop to €1.478 trillion in 2024, down from €1.5 trillion in 2023, a 2% decline at current exchange rates. Experiential luxury will instead post a 5% revenue rise.

The personal luxury segment will generate a revenue of €363 billion in 2024, driven by beauty products, jewellery and eyewear. The luxury slowdown is being felt chiefly in Asia, hit by the negative results coming from China, while Japan and other countries are on par with last year. There is also an increasingly marked polarisation in consumption, between the upscale luxury segment, generally healthier, and the aspirational one, which is decidedly struggling. 

“The uncertainty prevailing in the global economic and geopolitical scenario has had significant reverberations on our sector and supply chains. Part of this is a normalisation process in the wake of the strong post-pandemic rebound. We’re expecting a modest recovery in 2025, led by experiential luxury (hospitality, fine dining, and wellness), by the more solid markets such as Europe and the US, and the positive performance of jewellery and cosmetics,” said Matteo Lunelli, president of Altagamma.

“It will be essential to work cohesively, in Italy and Europe, to protect our businesses from the risks of growing international protectionism. It will also be important to fully exploit the key success factors of Italy-made luxury: Manufacturing and supply-chain know-how, creativity and technological innovation, sustainability, and the ability to connect with consumers in every region of the world in an authentic way,” added Lunelli.

Altagamma also presented its Consensus survey, which confirmed some of the Bain & Co. study’s forecasts, estimating that the global luxury market’s revenue and EBITDA will grow by 3% in 2025. Increased tourism flows and renewed consumer confidence in China are expected to have a positive impact in H2. The sector is forecast to grow its revenue by 2% in Europe.

The US market is expected to grow by 3.5%, though the prospect of tariffs on European products in the wake of Trump’s new mandate is looming. The Latin American market is expected to grow by 4%. Japan is set to slow down, up by only 2% after soaring in 2024, while China’s growth remains an uncertain prospect, and is estimated at 3%. The Middle Eastern market is instead expected to remain on trend, with an estimated growth of 5%.
 
The ‘luxury shame’ phenomenon in China is expected to be a factor in 2025 too, and the number of the country’s luxury consumers will increase by only 2%, losing out to American ones, whose numbers are expected to rise by 4.5%. Consumer numbers will rise by 3% for Asia-Pacific as a whole, and by 1% in Japan. In Europe, the number of luxury consumers is set to rise by a relatively modest 2%. 
 
Cosmetics is forecast to be the most dynamic luxury segment, with an estimated growth of 6%. Jewellery will continue to improve, driven by demand for investment assets, and its revenue is forecast to rise by 4.5%. Watch sector revenue is expected to increase by 1%. Modest growth is also forecast for leather goods (up 2%) and footwear (up 1%). Apparel is forecast to grow by 3%, with a strong polarisation between thriving quiet luxury labels, and less buoyant other brands.
 
Among sales channels, physical retail is expected to be the best performer, growing by 5%. Online retail is set to grow by 3%. The wholesale channel, both physical and digital, is instead forecast at a complete standstill.
 
The scenario painted by the Altagamma-Bain & Co. study sees the first luxury market slowdown since the Great Recession, excluding the pandemic crisis. A key factor will be the decline in Gen Z luxury consumption. The Gen Z customer base has notably shrunk by some 50 million in the last two years. 
 
The Bain & Co. study has found that consumers are increasingly shifting their spending toward travel, dining and events, while also prioritising personal care and well-being over products. The resale market is also buoyant, notably for jewellery, vintage clothes and leather goods.
 
Luxury stores are being hit by a footfall slump, while outlet stores are performing better, as consumers are shying away from full-price retail. E-tail is expected to normalise, after the post-pandemic swings. 
 
There are growth signals from the USA, but Japan is set to drive the market thanks to favourable exchange rates. A sharp slowdown is expected in mainland China. Europe is set to grow at a stable rate. The picture is more diverse in the Middle East, where regional tensions affect tourism flows. Emerging markets like Latin America, India, South-east Asia, and Africa are expected to add more than 50 million upper-middle-class luxury consumers by 2030.
 
2025 will therefore see a modest improvement in the luxury market worldwide, which is set on a long-term upwards trajectory by 2030, with an increasingly large consumer base.