Luxury Market Growing Amid Recession Fear, Energy Crisis, and War

Global inflation and rising fuel prices are indicating an upcoming recession, and the Russia-Ukraine war is threatening the global supply chain. Despite such grave concerns Luxury markets are showing growth. This was identified through the study conducted by Bain & Company consultancy. According to the study global luxury market grew to $198 billion in 2021, rebounding from its worst year in 2020. This shows the resiliency of the world’s wealthiest people in buying luxury goods.

High-end apparel, accessories and footwear saw double-digit growth in the first quarter of 2022, even though economic struggle due to the Russia-Ukraine war. Even the most pessimistic outlook, which includes global inflationary pressure, forecasts growth in the sales of the high-end personal goods sector to grow by 5% to about $207.9 billion. Moreover, if the global economic situation improves the study also points out that growth could be as large as 15%.

The largest growth in luxury market so far this year was seen in the United States and Europe. On the other hand, in China sales reduced due to China’s rigid no covid policy which put restrictions on key cities.

Large brands are increasing control over their distribution channels. The retail channel has grown to about nearly half of the entire market to 49% and is ready to overtake the wholesale channel. This remarkable growth in the luxury market could be attributed to the growth of online luxury stores. Websites that are dedicated to a single brand gained the most growth in 2021.

The second-hand luxury market has also seen growth, in 2021 its sales were $34.7 billion. In luxury apparel, the comfort theme was desirable as well as big-occasion dressing. In accessories, logos are making a comeback.

The study suggested four growth tends to shape the luxury market in 2025. First, China is going to dominate the luxury market. Second, Chinese consumers will be the dominant customers of luxury goods. Third, online is going to be the primary sales channel for luxury goods. Fourth, Generation Y and Z should become more dominant.