In data: Luxury market to grow to $269bn by 2028 despite headwinds
29-4-2024
IN DATA: LUXURY MARKET TO GROW TO $269BN BY 2028 DESPITE HEADWINDS
Though the global luxury market is experiencing a
slowdown following the post-pandemic surge in demand, it is poised to regain
momentum in 2025 as inflation rates begin to stabilise and aspirational
shoppers re-engage, with the market forecast to grow by 27.8% between 2024 and
2028 to reach $268.6bn.
According
to GlobalData’s latest report GlobalData’s Global Luxury Apparel Market to 2028,
while capturing growth in 2024 will remain challenging due to low consumer
confidence, luxury will still outperform the total apparel market.
Industry experts anticipate a stabilisation
in inflation rates to re-engage shoppers and drive growth.
Global luxury fashion players like Louis
Vuitton Moet Hennessy (LVMH) experienced a surge in demand after the pandemic,
with the conglomerate’s Q1 FY23 sales jumping 16.8% to €21.0bn ($22.5bn) as
eager shoppers unleashed their pent-up spending.
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GlobalData’s apparel analyst Louise
Deglise-Favre noted at the time that this was due to strong demand from locals
and international tourists, especially from China as the government lifted
mandatory quarantines for travellers in December 2022.
She explained: “Europe’s impressive
performance is also testament to the wealth of local luxury shoppers that
continues to protect them from economic challenges, allowing them to keep
spending on luxury goods, despite the region suffering from cripplingly high
inflation rates and looming threats of recession.”
However, this momentum waned by the end of
2023 as the luxury market grappled with inflationary pressures, leading to a
downturn in spending that has continued through 2024.
As per GlobalData’s apparel analyst Alice
Price, the latest figures from LVMH point towards a “bellwether within the
luxury sector.”
Price believes this is a result of
“aspirational shoppers continuing to reign in spend, as ongoing economic
challenges hit their savings and discretionary incomes.” LVMH reported a 1.6%
decline in group revenues, reaching €20.7bn in Q1 FY2024 ending on 31 March
2024.
Global luxury market to rebound in
2025
GlobalData’s report reveals that the luxury
sector will outperform the total apparel market as demand picks up pace again
in 2025.
The report’s authors anticipate that this
will be achievable as inflation rates begin to stabilise, reigniting interest
from “aspirational shoppers.” The luxury market is therefore projected to grow
by 27.8% between 2024 and 2028 to reach $268.6bn.
The
report highlights that the luxury market will account for 10.9% of total
apparel spend. Moreover, the global luxury market is expected to grow at a CAGR
of 5.9% between 2023-2028.
What’s
driving growth in the global luxury apparel market?
The report’s authors believe that while
macroeconomic difficulties in Western Europe and North America will impact
luxury demand in the short term, countries in APAC and Eastern Europe will
continue to experience burgeoning economies.
“Emerging markets will also continue to see
growth in their middle class and urbanised populations out to 2028, driving
more luxury spend, as designer items are often seen as status symbols, which
newly wealthy consumers are eager to display.”
Another trend emerging is the role played by
Gen Z shoppers who are seen as “increasingly aspirational” towards luxury
brands through social media and influencer culture.
This demographic is said to be more
committed to following fashion trends and is seen as less willing to cut back
on their apparel spending during tough times. The report emphasises that luxury
brands are adapting their product offerings and market to appeal to Gen Z and
their desire for “exclusivity and social validation” which will continue to
drive growth in the luxury apparel market.
By Just Style
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