Here are the key insights and takeaways from the Internet Retailing: Global Luxury Market In 2024 Report.
Market Overview
- The global luxury goods market reached $354.81 billion in 2023, up from $312.63 billion in 2022. Luxury fashion remains the largest segment, accounting for around a third of total spend.
- Growth has been driven by a resurgence in Europe of high-end spenders returning to travel. Asia leads in revenue generation at $135.2 billion.
- The average spend per luxury consumer globally was $46.19 in 2023, up from $41.07 in 2022. The U.S. generates the most revenue per shopper at $169.
Regional Breakdown
- Asia accounts for the largest share of luxury revenues at $136 billion, followed by Europe at $110.5 billion and North America at $85.65 billion.
- Europe saw the biggest growth, switching from a 5.6% contraction in 2022 to 24.6% growth in 2023. Asia and North America markets remained relatively static.
- The Middle East and North Africa (MENA) region also saw significant 23% growth in luxury to reach $11 billion in 2023.
Consumer Demographics
- Millennials aged 27-42 are now the largest segment of luxury store shoppers at 25.1%, followed by Gen Z at 21.1%. Higher income shoppers account for 28.9%.
- Luxury shoppers increasingly hail from emergent markets like Egypt (41.8%), China (40.8%) and India (31%). Traditional markets like the U.S., Canada, Australia and UK have lower percentages.
- Around a third of shoppers across income levels expect to maintain luxury spending next year. 28.3% of higher income shoppers plan to spend more.
Channels and Devices
- Physical retail still dominates luxury, accounting for 86% of global sales in 2023, hardly changed from 89% in 2019. Online has a small 13.9% share.
- For the luxury shoppers that do buy online, mobile is the preferred device at 61% globally and 76% in Asia. Desktop leads slightly in Europe and North America.
- Luxury brands have embraced mobile, social media and even the metaverse to engage younger, digitally-savvy consumers. Social commerce and livestreaming are growing.
Sustainability
- Luxury is becoming increasingly linked to sustainability, driven by eco-conscious younger shoppers. 46% look for sustainable luxury clothing and 28% buy second-hand luxury.
- Sustainable luxury purchases are highest in China (40.1%), India (31.1%), Egypt (19%) and UAE (14.4%). Traditional markets see lower uptake.
- Over a quarter (28.3%) of global consumers buy second-hand clothing overall, with 10.2% buying second-hand luxury goods specifically. Millennials and Gen Z lead this trend.
Insights
- Revenge spending refers to the incremental increase in consumer spending that occurs after an unprecedented adverse economic event.
- It is characterized by consumers spending more compared to normal levels as a way to make up for lost time or missed opportunities during the adverse event.
- Examples include increased spending after the end of COVID-19 lockdowns and restrictions in 2021-2022. Consumers splurged on things like travel, dining out, luxury goods, etc. that they had to forego during the pandemic.
- Revenge spending can contribute to stronger economic growth as the greater than normal consumer spending drives economic activity.However, it can also lead to higher inflation if the increased demand enabled by the revenge spending outpaces supply, putting upward pressure on prices.
Revenge spending refers to the surge in consumer spending, especially on discretionary and luxury items, that can occur after a negative economic shock ends, as people splurge to make up for lost consumption. While it boosts growth, it can also fuel inflation if supply can’t keep up with the heightened demand.
