Research shows that the market for personal luxury goods will shrink for the first time since the 2008 financial crash.

According to Bain & Company’s annual luxury report, the personal luxury goods market looks poised to experience its first slowdown since the global financial crisis this year, as economic uncertainty and a pronounced slowdown in China weigh on consumers. At the expense of

This is the first slowdown in demand for personal luxury goods – including clothes, bags, jewelry and cosmetics – in 15 years, excluding the period of the Covid-19 lockdown, according to Wednesday’s findings.

Higher costs and declining customer loyalty saw shoppers shun premium brands in 2024, reducing company profits and potentially 2 in the sector over the full-year period, the report said. The percentage can be estimated.

It noted that overall luxury spending is forecast to remain flat year-on-year at around 1.5 trillion euros ($1.59 billion) in 2024, even as segments including autos, travel and fine wine recorded modest growth. is

Global economic uncertainty and inflationary pressures have emerged as common threads in luxury labels’ earnings reports this year. LVMH, Burberry and owner of Gucci dry All postings lose recurring revenue.

But declining demand from the key Chinese market has proven particularly concerning for the sector, as the economy struggles to recover from the Covid-19-era slowdown.

Even the owner of Cartier RichmondThe company, which was the biggest contributor to the broader sector slump, last week reported a 1 percent drop in sales in the first half of its fiscal year, due to weaker demand from China.

“Mainland China has experienced a sharp slowdown, which worsened throughout the year as household spending fell due to declining consumer confidence,” noted Bain & Company.

Continued weakness in China’s market could further weigh on the luxury sector in 2025, according to the report, which nevertheless called that a less likely outcome and instead pointed to a gradual recovery in the second half of next year. “

Luxury demand in Europe and the US has shown signs of gradual improvement quarter-on-quarter this year, with Japan leading the way due to favorable currency exchange rates. As such, the report predicts that the sector will grow slightly next year, barring any major economic slowdown.

The report also pointed to a bright spot for the sector, with luxury cars and hospitality, fine wines and fine dining all recording records this year.

Luxury travel emerged as a particular growth sector, with consumers increasingly shifting their spending towards experiences, social events and wellness.

Smaller personal items, such as sunglasses and beauty products, also saw an increase, as shoppers opted for “small pleasures” over big purchases, the report said.

Even so, he noted that luxury brands will need to do more to attract and retain their increasingly agile consumer base, particularly those born between 1997 and 2012. In the younger Gen-Z segment of doers.

“In the last two years, 50 million luxury consumers have either opted out of or been forced out of the luxury goods market. This is a signal to brands that it is time to rethink their value propositions. Fix it,” said Claudia D’Arpizio. Bain & Co. and lead author of the study.

“To win back consumers, especially younger ones, brands will need to lead with creativity and expand conversation topics. At the same time, they must put their elite consumers front and center, They should surprise and delight while rediscovering one-on-one human interactions.” he added.