Luxury consumers are cautiously resuming purchases of apparel, handbags and cosmetics despite continued geopolitical uncertainty, fuelling a likely return to modest growth in the sector this year, the Bain & Company consultancy said Thursday (June 25).
After two years of contraction, global sales of personal luxury goods are forecast to grow 2% to 4% in 2026, reaching €365bil to €373bil (approximately RM1.704trillion to RM1.742trillion), up from €358bil (RM1.671trillion) last year, Bain said in a semi-annual study.
The recovery is expected to be led by the Americas, where some US luxury brands posted first-quarter growth of as much as 15%.
Read more: Can luxury fashion reclaim its allure without sacrificing exclusivity?
"People are still alive and want to live their better lives,” said co-author Claudia D’Arpizio, a partner at Bain, considered the leading consultancy for luxury goods.
"So there is this mega trend of looking for good quality of life, of improving their lives and finding the meaning and living the experiences that is stronger than the fear of the future.”
Following a consumer rebellion over steep price hikes, prices have stabilised with more entry-level offerings, and consumers are returning to the luxury arena, D’Arpizio said.
She called it "a healthier situation vis-a-vis two years ago”, but added that brands will continue to have to fight to regain "customer love that has been a little bit broken in the previous years”.
The base-case scenario assumes Middle East conflicts stabilise, local spending helps to offset uneven tourist flows and demand in China gradually improves.
Bain’s downside scenario calls for flat growth, while easing geopolitical tensions and accelerated growth in China could lift growth to as much as 6%.
Read more: As space travel expands, luxury fashion is bravely finding a place on board
US shoppers were spending on everyday casualwear, jewellery and beauty products, with young consumers under 35 years old fuelling sales.
China is forecast to return to growth, helped by online sales of ready-to-wear, while Europe is lagging due largely to a dip in tourism caused by geopolitical tensions. Even Dubai has seen locals return to stores.
"People want to live a normal life, that’s a stronger feeling,” D’Arpizio said. – AP
