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Home Market Research Business

Bain & Co luxury report shows personal goods shrank last year

by TheAdviserMagazine
4 months ago
in Business
Reading Time: 3 mins read
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Bain & Co luxury report shows personal goods shrank last year
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Luxury brands have retreated back to their safe space of exclusivity, having explored new avenues to win customers during COVID. The only problem is, to win and retain the next generation of shoppers they must marry their need to remain elusive with a consumer who wants to share everything online.

These companies have no time to waste. According to a spring update on the sector from Bain & Co, the industry is losing speed relatively quickly.

The study released Thursday shows the sector’s worth was €1.5 trillion ($1.7 trillion) in 2024, though for Q1 of 2025 estimates are shrinkage of 3% compared to last year.

Even last year, personal luxury goods was one of the categories which marked the most notable slowdown, knocking from €369 billion in 2023 down to €364 billion in 2024. That marked its first contraction in 15 years—with the notable exception of the pandemic.

And the gap between winners and losers in the luxury sector is also growing, added the author’s writers Claudia D’Arpizio and Federica Levato.

The gap between the top 75th percentile and the bottom 25th percentile performers increased by 1.5 times in Q1 2025 compared to a year earlier, with market leaders continuing to charge ahead while the bottom 20% to 30% of the sector continued to report a reduction in growth.

Part of the problem is consumers are wrangling with what Bain & Co describes as the “value equation”—basically, are they getting enough—be it experience, social and cultural kudos, or workmanship—out of the purchase for the elevated price they are paying?

For a “long period” luxury brands were trying to enlarge their customer base to be more inclusive, D’Arpizio tells Fortune. This was really reinforced in some categories with “entry items like streetwear, sneakers, and even beauty—all the categories that could have been more relevant for young people, but also with people with less discretionary spending.”

That strategy “overcorrected” she added, with brands overly relying on iconic design or experiences, reducing their pace of innovation and hence, leading consumers to question if their spend is really worth it.

“So last year we had a big loss of customers—around 50 million less customers buying luxury product—in particular in the younger generation, and a big drop on customer advocacy,” D’Arpizio continued. “What is happening now that the brands are trying to fix that, and trying to reignite this relationship with these customers without losing their exclusivity.”

Exclusivity in the online age

Shifting back to exclusivity is a more difficult ask when younger consumers are known as the social media generation for their propensity to post online.

Gone are the days of galas with no cameras, of designer handbag back rooms with no filming allowed: It’s all available on a For You Page within moments of ending.

“Luxury has always been about showing off,” D’Arpizio, who is Bain & Co’s lead for the global fashion, luxury goods vertical, continued. “The previous generation was showing off wealth and showing off accomplishments in life, now it’s more showing off of your of your personality or your ability to choose your aesthetics, your quality of life. 

“There is a big need, in particular in Gen Z, for sharing. This sharing means expressing their personality … but also a desire of conformity. These are two forces that are contradictory but in reality are a big driver for luxury consumption because luxury brands can provide this conformity, but then inside the luxury brand, mixing and matching, choosing your own style, developing your own style, creates your self-expression.”

She continued: “Social media has provided a huge impulse to luxury consumption because the potential of sharing with a larger audience has created both more customers but also in augmentation of their communication strategies and so they have a broader reach. 

“So yes, they want to be exclusive, but they know the power of social media.”



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Tags: BainGoodsLuxuryPersonalReportshowsshrankyear
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