Fears of an incoming recession and skyrocketing inflation are impacting consumer spending. Still, those with deep pockets are splurging on luxury products like there is no tomorrow, Bain’s latest research indicates.
Sales of luxury products in the U.S. and Europe are expected to rise by at least 5% as shoppers continue to buy jewelry, designer shoes, and high-end watches.
“Consumption doesn’t seem to be affected so far,” Bain partner Claudia D’Arpizio said.
According to Bain’s projections, global luxury goods sales will range between $320 billion and $347 billion this year, partly driven by the end of pandemic lockdowns.
Bain had previously estimated luxury sales to reach a maximum of $310 billion. However, the consulting firm decided to revise its projections due to the ongoing strong momentum in sales even in today’s challenging market conditions, D’Arpizio told Reuters.
The overall performance of the luxury market would have been even stronger if there was no ongoing conflict between Russia and Ukraine, which triggered a mass exodus of luxury brands from Russia, a travel ban on Russian tourists, and the elimination of Russia from the SWIFT network.
Russian consumers previously accounted for $7.3 billion worth of luxury product sales in the country and abroad, representing 2% to 3% of the global market.
Lockdowns in China have also had a negative impact, but luxury brands have largely succeeded in offsetting their losses by focussing more on the U.S. and European markets. Looking ahead, luxury sales in China are expected to recover in the second half of 2022.