Global sales of luxury goods will likely not grow significantly in the fourth quarter, with tourist flows to Europe key to spending there as local shoppers tighten their purse strings, consultancy Bain & company said.
“It will really be linked to tourist flows,” said Bain partner Federica Levato of spending on high end goods in Europe, noting that local shoppers had reined back spending after three years of strong, post-pandemic growth.
Although there were some initial cancellations of trips to Europe from the Americans in the wake of the Israel-Hamas war, including a few for the holiday season, the situation currently seems “normal”, according to Levato.
In its twice-yearly report, Bain said global sales of personal goods – spanning clothing, accessories and beauty products – were likely to be flattish in the fourth quarter, year-on-year, after a 3% decline at current exchange rates in the third quarter.
For 2024, Bain’s “probable scenario” forecasts a rise of between 1% and 4% at constant exchange rates, while a more optimistic range goes up to 7%, with a return of tourist flows likely outpacing demand from locals.
Personal luxury goods sales this year are set to grow by 8% at constant exchange rates to 362 billion euros ($387 billion), as spending in the United States and Europe returns to more normalised levels after a surge over the past three years.
The Chinese, who are fuelling growth in Asia, could fully return to Europe by the end of next year, according to Levato, who said they were already spending 40% of 2019 levels in Europe.
Levato noted shoppers were favouring high-end jewellery, seen as investment pieces, as well as fragrance and makeup, with the leading brands doing best.