Editor’s Note
The luxury market continues to defy broader economic headwinds, driven by its most affluent clientele. As this report highlights, the resilience and spending power of top-tier consumers are now central to the sector’s growth trajectory and bullish forecasts.
On June 23, Bain & Company, in collaboration with the Italian luxury goods industry association Altagamma, released the “2023 Spring Luxury Study” (hereinafter referred to as the “Market Study”). Following the record-breaking sales in the personal luxury goods market in 2022, the growth momentum continued into the first quarter of 2023. The Market Study holds an optimistic view of the development in 2023 and has raised its annual sales forecast for the global personal luxury goods market for the year. Additionally, the Market Study specifically points out an important trend in the personal luxury goods market: the wealthiest customers (top customers) remain enthusiastic about this category and are a key driver of industry growth.
From a regional perspective, the Market Study indicates that the strong performance in multiple regions of the personal luxury goods market is driven by the wealthiest customers. The overall growth rate in the US market has slowed, showing average performance, but the spending power of the wealthiest US customers remains robust; Europe’s strong performance benefits from top-tier consumers; the strong growth in the Southeast Asian market is also closely related to the strong demand from local consumers and tourists for jewelry and watch categories.
Dana Gives, a contributor to the lifestyle magazine Robb Report, analyzed the polarization in luxury brand development, pointing out that less affluent consumers, who previously occasionally purchased high-end luxury goods, are now affected by the less optimistic overall economic environment and inflation, which has brought disruptive impacts to many industries.
However, on the other side, affluent consumers have not been affected by economic cycle changes.
Luxury e-commerce platforms and department stores that aggregate multiple luxury brands have observed the same trend. On the luxury e-commerce platform Farfetch, the top 1% of customers accounted for 27% of the total transaction volume in 2022; another niche luxury e-commerce platform, Mytheresa, also mentioned that the top 3% of customers contributed 35% of sales. In the third fiscal quarter of 2023 (January 1 to March 31, 2023), the number of its wealthiest customers grew by 28%, and the average spending of such customers increased by 6.7%. Marc Metrick, CEO of the American luxury department store Saks Fifth Avenue, stated that within their customer base,
Federica Levato, a partner at Bain & Company, believes that the personal luxury goods industry is entering the era of the “true self.”
This implies that “brands capable of meeting the needs of the wealthiest customers are those that perform better compared to other brands.”
Daniel Langer, a contributor to JINGDAILY, explains that luxury consumers are now making purchasing decisions based on the degree of alignment between a brand’s values and their own personal values.
