Luxury Fashion Market - Global Outlook & Forecast 2023-2028
The global luxury fashion market is expected to grow at a CAGR of 6.14% from 2022-2028.
MARKET TRENDS & OPPORTUNITIES
Leveraging Augmented Reality
Augmented Reality (AR) helps an individual experience the virtual elements in the real physical world. Virtual reality and the metaverse are emerging technologies that have gained significant attention recently. It is one of the latest trends in technology and is increasingly gaining momentum in various industries. The rising smartphone penetration and faster download speed with the launch of the 5G network are allowing various businesses to leverage AR technology and provide better shopping experiences to customers. Various businesses in the luxury fashion market use AR to influence customers' purchasing behavior and help them make more informed decisions. The purchase of fashion goods depends heavily on the product's trial; hence, customers prefer to try the products before making final purchases.
Growing Inclination Towards Sustainable Products
Customers are increasingly becoming environmentally conscious and are seeking more sustainable lifestyle choices. There is also growing pressure from the public and the industry on luxury brand owners to decrease the environment while maintaining the luxury quotient. This has prompted several luxury fashion brands to adopt sustainable and eco-friendly raw materials for manufacturing luxury apparel, footwear, and other fashion goods. Further, luxury fashion retailers are also taking initiatives to make sustainability more visible in the luxury fashion market. Online retailers such as Net a Porter, Selfridges, Matches Fashion, and others have brought sustainability to their websites to highlight its importance and the growing demand in the market.
Growing High Net Worth Individuals
Luxury fashion goods are priced higher due to their premium quality, durability, and unique brand values. Hence, lower income group people are less likely to buy these products—people with high net worth purchase most luxury fashion goods. Developing countries are witnessing significant growth in the number of High-Net-Worth Individuals (HNWI), leading to the increasing demand for luxury fashion products.
Availability of Second-Hand Luxury Products
Luxury fashion goods are costly, and consumers are unwilling to give up on the products even if they no longer use them. As a result, the re-selling of such products is gaining momentum, thereby leading to the increase in growth of the second-hand market for luxury fashion goods. Re-sale and re-commerce (selling of used or already owned products through online or offline channels) are the words that are increasingly becoming popular in the luxury fashion market. Second-hand luxury fashion goods, the used stock of luxury goods, are increasingly gaining momentum due to their availability at lower prices. The growth in the sale of used supply of luxury fashion goods is significantly hampering the sales of fresh stock of luxury fashion brands. Hence, such factors pose challenges to the fresh sales of the luxury fashion vendors in the market.
INSIGHTS BY PRODUCTS
The global luxury fashion market by product type can be segmented as apparel, leather goods, watches, footwear, jewelry, etc. In 2022, the apparel segment dominated the luxury fashion market, holding a share of over 30%. There is a high demand for luxury apparel such as t-shirts, tops & shirts, shorts, and others. Also, the rising awareness among the population concerning various luxury apparel brands available in the market is leading to individuals' increasing acceptance of the product. However, the leather goods and watches segment is expected to grow highly. The lower cost of accessories as compared to apparel and footwear is expected to drive its market during the forecast period.
Segmentation by Product Type
- Leather Goods
INSIGHTS BY END-USERS
The women end-users segment accounted for the highest share of the global luxury fashion market in 2022. The growth is attributable to the increasing women's labor force and rising number of independent women. Moreover, the inclination of women towards stylish & fashionable products has always been higher, which is contributing to the higher growth of the women segment in the global market. Furthermore, the demand for women's luxury fashion products is expected to be high in countries with higher women participation in the labor force and high employment rates due to their higher income levels.
Segmentation by End-User
INSIGHTS BY GENERATION
The global luxury fashion market by generation can be segmented as Gen X, millennials & Gen Z, and baby boomers & silent gen. In 2022, Gen X accounted for the highest market share due to their higher income and higher spending power. This generation is highly exposed to and aware of traditional and digital distribution channels. As a result, this generation prefers to shop for luxury fashion products online and offline.
Segmentation by Generation
- Gen X
- Millennials & Gen Z
- Baby Boomer & Silent Gen
INSIGHTS BY DISTRIBUTION CHANNEL
The retail distribution channel in luxury fashion is a finely tuned system that ensures exclusive and high-end products reach discerning consumers most efficiently and luxuriously. At its core, luxury fashion distribution relies on a selective and strategic network of upscale boutiques, flagship stores, and department stores in prime locations worldwide. However, in 2022, the wholesale channel dominated the global luxury fashion market and is expected to grow at the highest CAGR during the forecast period. The wholesale distribution channel is critical in connecting luxury brands with discerning retailers and affluent consumers worldwide. Renowned luxury brands meticulously curate and showcase their collections in opulent showrooms in fashion capitals. Here, eager buyers from high-end retail stores and prestigious boutiques converge to preview the latest designs and place wholesale orders for the upcoming season.
Segmentation by Distribution Channel
INSIGHTS BY SALES CHANNEL
The online sales channel held the most significant global luxury fashion market share in 2022 and is expected to grow at the highest CAGR of over 7% during the forecast period. The proliferation of e-commerce and rising awareness of the benefits of online purchases, such as heavy discounts, occasional offers, availability of several coupon codes, and rising demand for convenience, are driving the growth of the online segment. Furthermore, mono-brand stores are also a prominent part of the sales channel. The key factor contributing to the high demand for luxury fashion products from these stores is the personalized experience that customers enjoy while shopping. These stores help luxury brands to understand the requirements and buying behavior of the customers personally.
Segmentation by Sales Channel
- Mono Brand Stores
- Specialty Stores
- Departmental Stores
- Off-Price Stores
APAC accounted for the highest share of the global luxury fashion market and over 31% in revenue in 2022. Factors such as increasing regional investments, rapidly growing disposable income, and increasing awareness about luxury brands drive the region's demand for luxury fashion products. Countries such as China and Japan emerged as the leaders across the region, accounting for most of the share. APAC was led by China, Japan, India, and South Korea, which are significant markets for raw materials. Moreover, the continuous rising disposable income of the middle-class population supports the region's luxury fashion market. Likewise, the increased access to international luxury brands will likely push product consumption. Therefore, several brands are expanding their footprint in the APAC market to serve the large customer base.
Segmentation by Geography
- South Korea
- Australia and New Zealand
- Rest of APAC
- North America
- Latin America
- Rest of Latin America
- Rest of Europe
- Middle East & Africa
- Saudi Arabia
- South Africa
- Rest of MEA
The global luxury fashion market has many prominent players and several small players. LVMH, Kering, Burberry, Armani Group, and Prada Group are among the key players in the market. Other global luxury fashion market players include Swatch Group, Moncler, MCM, and others—the rising competition pressures vendors to continuously innovate with a unique value proposition to survive in the industry. The companies must invest significant money in research and development to introduce new technologies, enhance their offering, and expand their product portfolio. Although established players dominate the industry, there are tremendous growth opportunities for new entrants strategizing to tap the market by entering niche segments.
Recent Developments in the Luxury Fashion Market:
- Armani: The organization expanded its business and focused on opening new green outlets due to consumers accessing various products. For instance, in 2021, the company opened seven new green retail outlets in Italy.
- Loui Vuitton: The LVMH Group is focused on expanding its production capacities to ensure sustainable growth. With this, the company is expected to expand its product portfolio and brand value in the luxury fashion market.
- Burberry: The company strategy is to maximize the potential of all product categories, ensure they thrive, and achieve optimal performance. They aim to bring every category to its fullest potential by utilizing innovative approaches and resources to drive growth and success.
Key Company Profiles
- Giorgio Armani
- Capri Holdings Limited
- Dolce & Gabbana
- Estée Lauder Companies
- HUGO BOSS
- PRADA Group
Other Prominent Vendors
- CESARE ATTOLINI
- F J Benjamin
- Max Mara
- Mitsui & CO., Ltd.
- Roberto Cavalli
- OSCAR DE LA RENTA
- Swatch Group
- sungjoo group
- Salvatore Ferragamo
KEY QUESTIONS ANSWERED:
1. How big is the luxury fashion market?
2. What is the growth rate of the global luxury fashion market?
3. Which region dominates the global luxury fashion market share?
4. What are the significant trends in the luxury fashion market?
5. Who are the key players in the global EdTech market?