The 2009 Bain & Company Luxury Goods Worldwide Market Study indicates a downturn in the luxury market for the first time, with a 2% decline in 2008 and an 8% drop forecasted for 2009. This contraction was due to lower consumer confidence, aging consumer bases in consolidated markets, and credit shortages in emerging markets. Luxury goods experienced deflation with aggressive markdowns and a shift towards entry price items. Online shopping grew, fueled by younger consumers and “luxury shame”.
Asia Pacific, led by China, showed strong growth, contrasting with the continued softness in mature markets like Japan and the Americas. Hard luxury items faced postponements and destocking, while apparel shifted towards premium and fast-fashion brands. Cosmetics were impacted by “masstige” competition, but accessories remained resilient.
Consumer behavior shifted towards frugality, inconspicuous consumption, and value-seeking, with a focus on evergreen and quality items over extravagant spending. Long-term trends include consumer conscience, polarization of consumption, and luxury shame, while others like technology dependence and luxury market enlargement are emerging trends.
The study forecasts timid growth in 2010, with a more robust recovery expected in 2011-2012, aligning with global GDP trend.