The global luxury segment has witnessed the weakest performance in 2024 since 2008, as per a report released by Bain & Co., a global management consulting firm. This decline is primarily attributed to rising prices and economic uncertainties, the report added.
Amid the significant downturn, the US $ 386 billion market is likely to witness a stark drop in sales of around 20-22 per cent in China, the report added. This will significantly impact the industry as China was once a major growth driver for the luxury industry. The sales dip in the Chinese markets is majorly due to the economic slowdown and changing consumer preferences.
Major luxury holdings including LVMH and Kering have been gravely impacted by the decreasing sales. Federica Levato, a partner at Bain said that these luxury groups might be offered a sign of relief with the upcoming holiday season. However, global sales are projected to remain flat at constant exchange rates.
A key factor contributing to the decline is the shift by luxury brands toward higher price points. This strategy, coupled with weaker consumer confidence, has led to a decrease in the luxury consumer base by approximately 50 million people over the past two years.
While the outlook for 2024 is challenging, Bain anticipates a potential recovery in 2025, driven by growth in Europe and the Americas. However, China’s recovery is expected to be delayed until the second half of the year.
