Luxury Sector Faces First decline in Decades, Forcing Model Redefinition
PARIS – The luxury goods market is experiencing โฃa significant shift, โขmarked by its firstโ sustained decline in decades, prompting industry leaders to reassess long-held strategies. After benefiting from uninterrupted growth for โขthirty years – a fivefold increase in โmarket size – theโค sector is now grappling with a contraction, with a 1% dip recorded between 2023 and 2024 and a projected 2-5% โdropโค this โyear. This downturn, unlike previous crises like the 2008โ subprimeโ crisis or the 2020 COVID-19 pandemic, is endogenous, stemming from internal market dynamics.
A keyโ indicator of this change is a loss of 50 million โcustomers between 2022 and 2024. This decline coincides withโค rising prices andโค decreasing sales volumes, leading some consumers to reconsider luxury purchases amidst โgrowing geopolitical andโ macroeconomic instability. Bothโ China and the United States, traditionally the sector’s primary growth drivers, are currently โคfacing economic โฃheadwinds.โ Moreover, the industry is finding limited opportunities for expansion into new geographic markets, effectively exhausting readily availableโข “Eldorados.”
While โขnot a complete collapse, thisโ slowdown necessitates a fundamental re-evaluation ofโฃ theโ luxury economic model.Experts emphasize theโ need to move beyond traditional approaches and embrace โ”new inspirations.” A critical focusโค must be placed โขon reactivating customer acquisition, notably targeting infrequent โluxuryโค buyers and cultivating interest among younger generations.
Industry observers agree that innovationโฃ in offerings and services is paramount, but caution against dilutingโ brandโ exclusivity. “The equation will not โbe easy to solve,” one source noted, โ”but market players have a lot of assets to reinvent the model.” The challengeโ lies in โadapting toโ a new reality where sustained, effortless growthโ is no longer guaranteed, and proactive reinvention is essential for future success.