Tourism and experiences have been key to driving luxury growth in 2024

13-12-24

The luxury market is undergoing a profound transformation, with new trends defining the near future of the industry. Throughout 2024, major luxury groups have experienced a significant slowdown in their growth rates, as a consequence of a generalized global crisis and a change in consumption patterns. Faced with an uncertain economic context, consumers are reorienting their purchasing decisions, focusing on experiential luxury and more affordable products within sectors such as jewelry and cosmetics. This phenomenon reflects a shift towards the intangible: experiences, travel and personal wellness, while conspicuous consumption of luxury goods has shown signs of decline.

Claudia D'Arpizio, partner at Bain & Company, points out that “the shift between product and experience is increasingly noticeable”. According to her analysis, spending on experiences is growing much faster than spending on traditional luxury goods. Travel experiences, social events and personalized services are gaining prominence in the industry, reflecting a new trend in which emotions and the desire for personal well-being play an essential role in purchasing decisions.

Although global luxury sales have shown a slight decline of 2% in 2024 from the previous year, some sectors within the market have experienced notable growth. Sales of luxury hotels, high-end cruises and elite dining have increased by 5%, while spending on products that offer a tangible experience, such as artwork, luxury cars and yachts, has fallen by 3%. This shift is due, in part, to a contraction in the entry-level luxury segment, while absolute luxury products continue to be in high demand by the most affluent clients.

Among the categories that have benefited most from the shift towards experiential luxury are cosmetics and jewelry. Beauty in particular has seen a 3% to 5% boom by 2024, driven by growing demand for innovative and personalized products, especially in the West. In the Asian market, cosmetics remains under pressure, but niche fragrances and more affordable local brands are gaining ground, especially among the younger generation.

Jewelry, on the other hand, remains the most resilient sector within luxury. According to the Bain & Company report, fine jewelry continues to grow at a steady pace, thanks to a combination of craftsmanship, technique and a focus on well-structured collections that appeal to a broad and diverse audience. This sector has managed to maintain its relevance in the global market and is considered a safe investment by consumers.

One of the most important drivers of luxury growth continues to be tourism. According to Pier Francesco, chief operating officer of Global Blue, the luxury market is only experiencing growth thanks to international tourism, especially in Europe and Japan. Travel retail has become a key channel for luxury brands, with a notable increase in duty-free purchases. In fact, the sale of luxury products at airports and tourist destinations continues to be one of the most dynamic areas of the market.

U.S. tourists have been central to this growth, with a 10% increase in their luxury spending in 2024, while Chinese tourists are also slowly regaining market share, especially in European destinations such as Italy and Spain, which are seeing a significant increase in spending by luxury travelers. Japan, meanwhile, has stood out as one of the most favored destinations, with luxury purchases increasing by 12% to 13%.

Looking ahead to 2025, projections continue to point to strong growth in the cosmetics and jewelry categories, with an estimated increase in sales of 6% and 4.5%, respectively. Luxury brands are increasingly focused on delivering unique and personalized experiences to their customers, both through their physical stores and through travel experiences.

In this new landscape, experience has become the heart of luxury. According to Stefania Lazzaroni, CEO of Altagamma, brands must adapt to this new reality and understand that consumers expect to be surprised and welcomed in an environment that goes beyond simply buying products. Offering exclusive and memorable experiences will be the main differentiator for brands looking to thrive in an increasingly competitive luxury market.