Adapting to a New Era: European Luxury Market's 2024 Forecast

In this edition of our newsletter, we delve into the anticipated trajectory of European luxury brands for the year 2024. Amidst a backdrop of macroeconomic uncertainties, geopolitical tensions, and shifting consumer behaviors, the luxury market is bracing for a phase of recalibration. We bring insights from leading financial analysts and industry experts, including Barclays, HSBC, Altagamma, Bain & Co., and voices from within the luxury sector itself. Their forecasts not only shed light on the challenges ahead but also highlight strategies for resilience and growth in a rapidly evolving landscape.

Overall Outlook for 2024:

Analysts, brand leaders, and industry figures are conservative in their outlook for 2024, expecting a tough short term but better times ahead, though no specific timeline is given.

Barclays' View:

Barclays maintains a cautious view, predicting that the normalization of the luxury market will fully materialize in 2024. They warn of potential negative growth for some brands due to a slowdown in consumption and tough comparisons with the first half of 2023.

HSBC's Forecast:

HSBC titles its 2024 outlook as “Goodbye Stellar Growth” and suggests that normalization in the sector could extend into 2025. They forecast an 8% average growth for 2024 and 2025, compared to higher growth rates in previous years (35% in 2021, 15% in 2022, and 11% in 2023).

Altagamma and Bain & Co. Report:

Anticipate softening in personal luxury goods performance in 2024 with low-to-mid-single-digit growth over 2023. They highlight fragile consumer confidence and macroeconomic tensions in China, along with sparse recovery signs in the U.S.

Bernstein on Chinese International Tourist Spend:

Cites Global Blue data showing Chinese international tourist spend is slowly returning to 2019 levels, but questions remain whether this spending is on luxury goods or on experiences and hotels.

Jefferies' Insight:

Notes limited impact of Chinese economic stimulus measures on consumption and a trend of consumers taking more time to consider purchases, focusing on value. They also foresee limited growth in spend among Chinese travelers in 2024.

Analysts' General Consensus:

Analysts believe it will be a lackluster year for big brands, with organic growth projections between 4% and 8%. Growth is expected to be weighted towards the second half of 2024, mainly from Asian markets, while demand in the U.S. and Europe is expected to be flat.

It's evident that the sector is navigating a period of significant transformation. While the forecasts suggest a departure from the stellar growth rates of the past few years, there remains a sense of cautious optimism.

The emphasis is now on strategic adaptation – whether it's through embracing new price points, focusing on underrepresented markets, or enhancing the customer experience.

The consensus among analysts and industry leaders points towards a normalized growth pattern, emphasizing the need for brands to demonstrate resilience, relevance, and innovation