World Market for Luxury Goods

September 2022

The pandemic, cost-of-living crisis and inflation hikes continue to have an unprecedented impact on affluent populations, their wealth, and their spending habits on luxury goods. The top wealth segments stand out more now than ever before and remain the key consumers and drivers of luxury goods. This report provides a top-line overview of market performance and prospects across luxury goods and outlines key trends within the global luxury goods business landscape.

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This report comes in PPT.

Key Findings

Supply chain and routes to market

Luxury brands are rethinking production models and routes to market. Supply chain disruptions caused by the COVID-19 crisis, as well as ensuing excess inventories and shortages, have led fashion players to rethink their supply chains and manufacturing locations. Inflationary pressure on raw materials, increasing shipping costs and lack of warehousing have been driving costs up. This has increasingly led market players to consider a shorter supply chain through reshoring and nearshoring to gain control and agility.

Green initiatives and social responsibility

Greater attention is being paid to evolving consumer values and attitudes, as these will dictate demand for purpose-driven, environmentally-friendly, health-focused products and services in the luxury space. While pre-pandemic the focus was concentrated more on environmental problems, the social momentum is now accelerating fast with key players and consumers alike defining sustainability as supporting local communities.

Value creation and experience

Inflationary pressures are eating into consumers’ discretionary and luxury spending, yet the desire for experiences remains unabated. Luxury brands are adopting a “less is more” approach, removing filters, highlighting quality and craftmanship, storytelling and ensuring that brand experiences are inclusive, opening up new opportunities to forge long-lasting connections.

Digital living

Digital operations are being improved to meet consumers in the digital and physical space. As home isolation has accelerated the already increasing use of digital devices among consumers across markets and generations, brands are shifting to digital marketing and e-commerce, implementing digital components to the in-store shopping experience, and beginning to meet emerging consumers in the “metaverse” and all other digital platforms where they spend much of their time.

Physical and emotional wellbeing

The rising importance of taking a holistic approach to health is fuelling demand for wellness propositions from every angle. Many luxury companies are already benefiting from the more health-centred consumer as the luxury of being in possession of good health becomes a focal point across every consumer group in the post-pandemic world. All aspects of health, wellness, sustainability, and DE&I are now focus points in this area

State of the luxury goods industry
Global luxury goods continues to bounce back from the brink and exceed all expectations
Recovery accross category performance remains mixed
Per capita spending in Switzerland remains high thanks to its affluent adult population
War in Ukraine heightens inflation risks and challenges recovery across luxury goods
Could inflation growth undermine consumer spending power on luxury goods?
Could luxury become less accessible due to the rising cost of living in key luxury markets?
UHNWI, HNWI and affluent consumers key drivers of luxury, especially in uncertain times
Income inequality hampered further by cost of living crisis
Value for money remains a priority for consumers as they balance frugality and indulgence
Luxury hospitality and fashion remain major growth areas thanks to pent-up demand
Luxury bags and leather goods maintain position as top-performing alternative asset class
China and the US continue to stand out as the world’s two leading luxury goods markets
China to boast the second largest wealthy and affluent population
China’s recovery drives luxury goods sales but concern about new variants poses threats
China’s lockdown measures cap inflation, but risks remain
The US to remain the world’s most important wealth market
The US to surpass its pre-pandemic sales levels by the end of 2022 thanks to local wealth…
…but the tight US labour market and rising energy prices add to the inflation surge
G lobal travel on the rebound but full recovery derailed due to economic uncertainty
Inflation surge puts pressure on consumers’ ability to spend on experiential luxury
Tourist spending on luxury remains low on pre-pandemic levels
The absence of the Chinese tourist still hugely apparent across luxury retail and hospitality
The digital transformation continues to accelerate post-pandemic
Key forces shaping the consumer landscape beyond the pandemic
Global top 10 continue to control over half of the luxury goods industry
“Co-opetition” new name of the game as players look to navigate challenging times together
Further M&A activity since the COVID-19 outbreak leads to further market concentration
Examining five trends shaping luxury goods
Pandemic exposes the limits and weaknesses of luxury’s globalised supply chains
Key risks for the global supply chains weighing on luxury goods in 2022
China’s zero-COVID policy could add further headwinds to supply chain issues in 2022
The great “Relocation Revolution” forces luxury brands to pivot supply chain operations
Working from home shifts to working from Four Seasons, St Regis and Hyatt
The digital transformation continues to accelerate post-pandemic
Period of rapid change has put pressure on the luxury industry to expedite innovation efforts
AI and IoT to exert the greatest disruptive power in the next five years
What does The Metaverse Movement mean for luxury business?
Could fashion’s rising presence in the metaverse help bridge the gap between rich and poor?
Balenciaga drops more virtual products through Fortnite’s first luxury partnership
Gucci presents its brand to digital-savvy young consumers in a virtual space on Roblox
Rising interest in a holistic approach to health fuels demand for luxury wellness propositions
Cutting edge luxury wellness clinics and medical tourism on the rise
Cutting edge luxury wellness clinics and medical tourism on the rise
The paradigm shift towards health, self-expression and feeling good about oneself
Girlfriend Collective thrives in the busy athleisure market thanks to its body-positive motto
Wake-up call for luxury highlighting the plight of social and environmental responsibility
The paradox of inclusivity in an industry that prides itself on exclusivity
Growing pressure from luxury consumers and regulators to put “purpose before business”
New consumption patterns via resale and rental explored as luxury beyond ownership rises
Disconnect between sustainable goals and efforts to achieve them puts loyalty in jeopardy
Many luxury brands continue to fail in their diversity efforts
Luxury brands under ever-increasing pressure and scrutiny to improve their ESG practices
COCOON’s rental service for luxury handbags is emblematic of changing consumer demands
Global snapshot of premium and luxury cars
Global snapshot of luxury leather goods
Global snapshot of luxury eyewear
Global snapshot of designer apparel and footwear
Global snapshot of luxury jewellery
Global snapshot of luxury timepieces
Global snapshot of super premium beauty and personal care
Global snapshot of luxury writing instruments and stationery
Global snapshot of luxury wearable electronics
Global snapshot of luxury hotels
Global snapshot of luxury foodservice
Global snapshot of fine wines
Global snapshot of luxury spirits
Regional snapshot: Asia Pacific
Regional snapshot: North America
Regional snapshot: Latin America
Regional snapshot: Western Europe
Regional snapshot: Middle East and Africa
Regional snapshot: Eastern Europe
Regional snapshot: Australasia

Luxury Goods

This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.

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