2024 Sees Luxury Take A Rain Check Amid Economic Uncertainty

By Janet Ekstract NEW YORK – Luxury is not yet a thing of the past but in 2024, it’s taking somewhat of a rain check amid the impact of inflation and political uncertainty during the upcoming presidential election, according to a new report from Bain & Company – out earlier this week. According to Bain’s forecast of flat global luxury sales for 2024, one factor reducing luxury sales are price hikes on luxury items as brands switch their focus to the highest upscale clients. Bain also listed economic uncertainty in China as a major factor in the latest trend of “luxury shaming.” Meanwhile, Bain partner Claudia D’Arpizio said that a “creativity crisis” is also responsible because many major fashion houses are transitioning creative directors, refocusing on uber-wealthy clients while defocusing on a wealthy middle class and Gen-Z youth who boosted sales before the pandemic. As D’Arpizio said: “There is a lack of clarity for many of these brands. They are making attempts to regain focus. It is five, six brands under turn-around, big one. This is not helping the overall excitement.” She added that the industry is “supply-driven” and that it’s crucial to get brands “really in tune with customer needs.” D’Arpizio said “tweaks” are crucial on strategy and price points, highlighting the fact that “you can’t grow without the middle class and younger generations.” Another primary factor is lack of innovation in luxury products with huge price hikes on items that remain the same year-in and year-out, which D’Arpizio said leaves clients “upset and puzzled.” Gucci, Moschino and Valentino are some of the fashion brands that have debuted new collections while Chanel is in the process of redefining its brand. One factor that often isn’t considered is that luxury purchases are driven by cultural norms and expectations. There are far more Asians and Middle Easterners snapping up luxury items compared to consumers in the U.S. and the EU, who prefer to shop for top quality at affordable or bargain prices. While sales of personal luxury goods grew by 4% in 2023 from 2022, the current global climate has a majority of people rethinking their priorities when it comes to luxury spending.