Sales of Personal Luxury Goods Show Signs of Slowdown Amid Economic Challenges
Milan — A recent study by Bain & Co. indicates that while global sales of personal luxury goods are experiencing a slowdown, they are not facing a total collapse. The report projects that sales will decrease to approximately 364 billion euros ($419 billion) in 2024, with further drops expected this year ranging from 2% to 5%. This assessment comes at a time when rising U.S. tariffs and geopolitical tensions are contributing to economic unease.
Bain partner Claudia D’Arpizio emphasized the importance of keeping a positive outlook during these tough times, citing multiple global conflicts and rising inequality. Although the luxury market is slowing, she noted it is not in outright collapse.
The study also pointed out that luxury brands have faced challenges from rising prices and a noted decline in creativity, which have distanced them from consumers. Recent findings in Italy revealed concerning labor conditions in factories producing high-end handbags, further dampening consumer enthusiasm.
Sales declines have notably affected strong markets like the U.S. and China. In the U.S., uncertainty caused by tariffs has led to diminished consumer confidence, while China has seen six consecutive quarters of downturn.
Conversely, regions like the Middle East, Latin America, and Southeast Asia are experiencing growth, while Europe remains mostly static.
The disparity among luxury brands is widening. For instance, the Prada Group reported a remarkable 13% rise in revenue for the first quarter, reaching 1.34 billion euros. In contrast, Gucci suffered a 24% drop in revenue, totaling 1.6 billion euros in the same timeframe.
To revitalize Gucci and its other brands, Kering recently appointed Luca De Meo, a former automotive CEO known for turning around Renault, as part of a strategy to innovate and reduce costs. His appointment has been met with excitement, as evidenced by a 12% increase in Kering’s stock.
Brands are adapting their strategies to address potential U.S. tariffs by shipping directly from production facilities rather than warehouses and decreasing inventory in stores. D’Arpizio believes these measures are a smart response to the current market dynamics.
Looking ahead, it’s clear that many of the challenges facing the luxury sector are beyond the control of individual companies. D’Arpizio pointed out that while clarity regarding tariffs could improve, broader issues like political instability are likely to persist.
Despite these hurdles, Matteo Lunelli, president of Altagamma, highlighted that the luxury sector has seen a significant increase of 28% from 2019 to 2024, putting it above pre-pandemic levels. While sensitive to global events, luxury spending has a history of bouncing back quickly, aided by emerging markets and strong consumer demand.
Historical patterns show that luxury sales can rapidly recover from downturns. For instance, following the financial crisis of 2008-2009, the market rebounded with a 14% increase in 2010, propelled by growth in China. Similarly, after a decline during the pandemic, luxury sales surged again, breaking previous records.
