Year 2023 opens up many possibilities for global luxury brands, flushed with the sector’s success in the previous year. As per Mediaboom Global, 2022 yielded more than $312 billion and annual growth predicted at 5 per cent. Whilst luxury brands continue to look strong they also seem unfazed with the current economic slowdown being faced by many economies around the world.

However, economists and analysts are questioning if this parade will hold itself through 2023. After two years in lockdown, a substantial number of consumers who hadn’t spent money under lockdown came out to the world to travel, socialize and network like it was 2019 and spent as much to dress for it. That was 2022.

The new year may be a bit different as the initial enthusiasm has cooled off with prospects of recession across the US, the world’s largest luxury goods market, China, the second largest luxury goods market grappling with a pandemic situation all over again and the EU fighting energy crisis and a very high inflation. Experts say, the enthusiasm of 2022 may cool off in 2023 given the uncertain economic times ahead which may be in direct contrast to a Statista report that predicts a luxury goods market valued at $350 billion by 2030 with a 4 per cent GAGR. According to the report, the top five luxury brands in 2023 will be Gucci, Dior, Chanel, Louis Vuitton and Hermès.

Report suggest resilience to recession

As per management consulting firm Bain & Co., performance of the luxury segment in the final quarter of this year will largely depend on the progressive lifting of Covid-19 pandemic restrictions in China, as well as the evolution of European and American luxury consumer confidence in the face of rising inflation and cost of living pressures. While this report was prepared in October 2022, the current scenario does not exactly mirror the statement.

However, the company’s report concludes that 95 per cent luxury brands will achieve positive sales growth this year, regardless. A Bain spokesperson said the luxury market now appears better equipped to cope with economic turbulence with its consumer base both larger and more concentrated. Customer-centricity and a multi-touchpoint ecosystem as factors will contribute towards resilience amid disruptions. It is clear that confidence factor is riding high in this sector which has prompted high levels of investments in future growth.

Therefore, the luxury goods sector may not see the 2022 levels of profits in 2023 but will be driven by continued growth. As per Claudio D Arpizio, lead author of the Bain’s Global Luxury Goods and Fashion Report, the nouvelle vague or new wave of the luxury goods market will demand evolution amid disruption, adaptation amid uncertainty, and an expansion of creativity in all of the basics – all while new trends and concepts develop. It seems the luxury goods market is going to be more resilient in 2023 than it was after the financial crisis of 2009.

Entry of developing markets

Even as the US continued to hold pole position in luxury purchases, Europe’s post-pandemic bounce back was also noteworthy, particularly France and Germany and the return of North American as well as Middle Eastern tourists. The promise factor though comes from South Korea, South East Asia and India. The big question for the luxury goods market in 2023 is about China’s recovery from the ongoing Covid crisis which doesn’t seem to subside. Hopefuls are predicting that the second largest purchaser of luxury goods could bounce back by mid-2023.

India is being seen as the rising star as predictions indicate great growth potential driven by the changing attitudes towards lifestyle in general and luxury in particular by the younger generations. The Indian market for luxury goods is expected to expand by 3.5 times by 2030.