In 2024, the luxury goods sector faced a challenging year as macroeconomic difficulties impacted some of the industry’s most prominent companies.
The luxury market struggled in 2024, with many high-end brands experiencing a downturn. Kering, the parent company of well-known labels such as Gucci, faced the most significant challenges, with its stock price plummeting by more than 40%. This downturn reflects broader macroeconomic pressures that have affected the industry worldwide.
Highlighting this trend, Claudia D’Arpizio, head of Bain’s global luxury and fashion sector, reported a sizable drop in the consumer base for luxury goods. Approximately 50 million consumers either exited or were pushed out of the luxury market within the last two years, suggesting a shift in consumer sentiment and spending power.
Other luxury giants like LVMH, owner of Louis Vuitton and Christian Dior, and Burberry also saw a decline in stock prices. While Hermès and Richemont managed to outperform the STOXX Europe 600 index, they were among the few exceptions. Most other luxury brands like Prada and Moncler similarly experienced financial slips, though they weren’t highlighted in an industry report.
Some of the prominent struggles were linked to brand-specific issues, such as Burberry’s overpriced goods and Gucci’s overextension in the market. However, broader economic factors were mainly responsible for the downturn. The global economy’s instability led to reduced spending from luxury shoppers, particularly in regions like China and the United States. An economic slowdown in China, with declining real estate sales and rising unemployment, significantly impacted consumer behavior. Meanwhile, inflation in the United States strained middle-class buyers, who previously fueled a boom in luxury purchases post-pandemic. In Europe, political uncertainties further discouraged high-ticket spending.
Looking ahead, there is some optimism for 2025. Analysts from HSBC foresee the third quarter as a potential rebound period for the sector. Moreover, predictions from EMARKETER indicate a rise in personal luxury retail sales, estimated to grow by 4.1% next year, signaling hope for a gradual recovery in the luxury market.
While 2024 proved to be a challenging year for the luxury industry, with many brands facing significant setbacks, there are indications of a potential rebound in 2025. Companies within the sector are cautiously optimistic, hoping for stabilization in global markets to revitalize consumer spending.
Source: Businessinsider
