**Luxury Industry Shifts Focus from Top Spenders to Wider Consumer Base**
The global personal luxury goods market is demonstrating signs of recovery in the second quarter of 2023, according to a recent report from Bain & Company. The consultancy's updated outlook indicates that demand in the United States has exceeded expectations, even amid ongoing geopolitical tensions in the Middle East.
Bain's revised forecast anticipates a 2% to 4% increase in personal luxury sales for the year, a slight adjustment from the earlier prediction of a 3% to 5% rise made in November 2022, prior to the escalation of conflict involving the US and Israel. The personal luxury market, valued at €358 billion (approximately $406 billion) in 2025, has faced challenges over the past two years, contracting by 2% at current exchange rates in 2025. However, it showed a modest increase of 1% when adjusted for constant currencies.
The report highlights a notable trend within the luxury sector: experiences are increasingly outpacing the sales of tangible goods. Francesca Levato, a partner at Bain, noted that despite macroeconomic uncertainty and socio-political turmoil, consumer interest in luxury remains robust. “We see growing uncertainty and turmoil at the macroeconomic and socio-political levels, but the market is there,” Levato stated in an interview with Reuters.
Geographically, the luxury market's growth is being driven primarily by the United States, where spending is led by domestic brands and younger consumers. This growth is offsetting a slowdown in both the Middle East and Europe. In China, a gradual recovery is underway, particularly in the ready-to-wear segment, which is outpacing sales of leather goods.
Levato emphasized the importance of the American market's performance, saying, “America is growing more than expected and China is recovering faster than expected.” However, Europe has been affected by reduced tourist flows, although there are signs of stabilization beginning in May.
One of the significant shifts identified in the report is the industry's changing focus. Levato pointed out that the luxury sector has lost approximately 70 million consumers since 2022, primarily due to brands raising prices and concentrating their efforts on high-spending clients. She advocates for a broader approach, suggesting that the industry should aim to expand its consumer base rather than solely catering to the top 1%. “The industry should refuel the growth of the consumer base rather than focus only on the top 1%,” she stated.
Additionally, the report highlights the growing influence of artificial intelligence (AI) in the luxury shopping experience. Approximately half of luxury consumers now utilize AI tools to assist in their purchasing decisions, using these technologies for product discovery and comparison. The rise of the second-hand market is also noteworthy, with half of luxury shoppers consulting pre-owned options before making new purchases.
As the luxury industry navigates these changing dynamics, the emphasis on inclusivity and broader consumer engagement may play a crucial role in its recovery and future growth. Brands are increasingly recognizing the need to adapt to the evolving preferences of a more diverse clientele, which could reshape the landscape of luxury consumption in the years to come.