The luxury market has had a good run so far. The luxury goods sector has witnessed healthy growth, better than many other retail sectors, especially since the coronavirus pandemic and its aftermath being the cost of living crisis.
Though the Covid pandemic was also tough on the sector as it recorded negative growth for the first time in many years during that period, the sector remained resilient. It was able to pull through the crisis quite well and made a record as one of the first sectors to survive the crisis.
Experts from the Promo-Codes found that the number of luxury goods purchased with promo codes significantly increased last year by 31%, unlike what one would have expected.
Despite facing a global pandemic, war, climate change, and energy crisis coupled with inflation all at the same time, the luxury goods sector is still set to grow by approximately 21% globally.
A Look At Luxury Markets Around The World
Of all world nations, the United States has always had a strong luxury market that remains the same to date.
On the other hand, Europe witnessed a major decline during the COVID-19 pandemic as a record-level low was recorded. Fortunately, the European luxury market has risen compared to the 2019 levels.
Surprisingly, many other countries are entering the luxury market and performing significantly well.
Some new luxury markets worthy of note are Southeast Asia and South Korea. The market in these parts of the worth is topping the luxury sector today in terms of growth rate and potential.
The Indian luxury market has also performed remarkably well in terms of growth and is expected to be almost four times bigger than it is now by 2030.
What Does 2023 Hold For The Luxury Goods Sector?
The global luxury industry has always managed to survive whatever crisis it faces. However, 2023 might be ready to give the sector the biggest challenge it has ever encountered.
From the rising fear of a global recession to constant digital disruptions, increasing demand for sustainability, to escalating geopolitical risks, the sector is expected to face a major challenge this year.
As the fear of an impending recession increases, the target audiences of the luxury sector are starting to make big decisions to cut back on their spending. A millionaire survey by CNBC revealed that about 80% of millionaires in the United States have made plans to reduce spending on luxury goods.
Milton Pedraza, the CEO of Luxury Institute, explained that the majority of the customers who deliver 30% of the luxury items sales are just as vulnerable to economic downturns as they have limited resources and are witnessing a decline in their stock portfolios.
Luxury Redefined
Moving forward, it is expected that this year’s challenges will most impact accessible luxury brands, fashion trends, and fast fashion. Lower-end luxury brands created to tend to the middle class are already facing these challenges as their sales records have continued to witness a decline.
In contrast, higher-end luxury brands have maintained their stand in the market, as economic distress does not impact true luxury clients.
True luxury brands like Chanel, Louis Vuitton, and Gucci have continued to make sales while lower-end brands are trying desperately to catch up and strategize.