The Strategist

Bain & Co: Global luxury sales will jump in the coming years

06/21/2019 - 12:00

The global market for luxury clothing, shoes, watches and accessories will be growing in the coming years, Bain & Co and the Italian association of luxury goods manufacturers Fondazione Altagamma’s report said. In 2019, it will increase by 4–6% to €271–276 billion, and will have reached €320–365 billion by 2025. Thus, the market for luxury goods in six years could double compared with 2011.

The fastest growing categories will be shoes, bags and jewelry, said Bain & Co. Sustained growth is also expected in the skin care and makeup segments, which partially compensates for the moderate sales of perfumes. Clothing sales are expected to stagnate.

The paper highlights a number of megatrends that will shape further luxury consumption in the world. Chinese generation Z (born in the Internet era) will enter the market. These people will become the most prominent customers who make impulse purchases, and their mood will have a significant impact on the market. Generations Y (the so-called millennials) and Z will account for over half - 55% - of all global spending on luxury goods by 2025, analysts at Bain & Co indicated in a report on the results of 2018.

Digital technologies will be actively developed. By 2025, online sales will have a quarter of the market versus 10% in 2018, Bain & Co. wrote earlier.

In general, the growth of the market can primarily be explained by an increase in demand from Chinese consumers. According to the forecast of Bain & Co, in 2019 the growth in sales of luxury goods in mainland China will reach 18–20%. By 2025, share of Chinese buyers will exceed 45% of the global luxury goods market, with half of the purchases made in mainland China. Last year, the figure was 33%.

Sales of luxury in North and South America will grow by 2-4%. The real discovery could be Japan, whose market “remains exclusive and attractive for luxury brands”, with a projected growth of 2–4%, Bain & Co. writes. Travel expenses are expected to increase on the eve of the Summer Olympics in Tokyo in 2020, again at the expense of Chinese consumers.