Taut home purse strings keep luxury goods flat
Return of tourists could boost global sales in 2024, says a Bain & Co report
Paris — Global sales of luxury goods are unlikely to grow materially in the fourth quarter, with tourist flows to Europe essential to spending there as local shoppers tighten their purse strings, says consultancy Bain & Co.
“It will really be linked to tourist flows,” said Bain partner Federica Levato of spending on high-end goods in Europe, noting that local shoppers have reined back spending after three years of strong, postpandemic growth.
Although there were some initial cancellations of trips to Europe from the Americans in the wake of the Israel-Hamas war, including a few for the holiday season, the situation seems “normal” now, according to Levato.
In its twice-yearly report, Bain said global sales of personal goods — spanning clothing, accessories and beauty products — are likely to be flattish in the fourth quarter, year on year, after a 3% decline at current exchange rates in the third quarter.
For 2024, Bain’s “probable scenario” forecasts a rise of 1%-4% at constant exchange rates, while a more optimistic range goes up to 7%, with a return of tourist flows likely to outpace demand from locals.
Personal luxury goods salesin 2023 are set to grow 8% at constant exchange rates to €362bn, as spending in the US and Europe normalises after a surge over the past three years.
Chinese tourists, who are fuelling growth in Asia, could fully return to Europe by the end of next year, according to Levato, who said they were already spending 40% of 2019 levels in Europe.
Levato noted shoppers are favouring high-end jewellery, seen as investment pieces, as well as fragrance and makeup, with the leading brands doing best.
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