Luxury sector navigates challenges and opportunities in 2024 - report

The luxury goods industry is facing a year of transition in 2024, as it grapples with macroeconomic uncertainty and shifting consumer behaviours, according to an annual report by Webranking, one of Italy's largest media agencies. Despite these challenges, the sector is projected to achieve a compound annual growth rate of 8 percent between 2024 and 2028, driven by technological innovation and enhanced online shopping experiences.

China, a key market for luxury brands, is experiencing a slowdown. Major groups like Kering and LVMH reported declines of 19 percent and 10 percent respectively in Asia during Q1 2024. Chinese consumers are becoming more discerning, often opting for single high-end purchases that retain value. This trend is forcing brands to reassess their strategies and reduce dependence on the Chinese market.

In contrast, the Middle East is emerging as a promising region for luxury growth. Saudi Arabia and the United Arab Emirates are forecast to see compound annual growth rates of 3.1 percent and 2.51 percent respectively from 2024 to 2028. Brands like Dolce & Gabbana and Damiani are expanding their presence in the region, capitalising on the growing affluence and tourism in these markets.

The Indian luxury market is also gaining traction, with 50 percent of consumers preferring domestic purchases. Brands are focusing on cultural traditions and major holidays like Diwali to attract younger, affluent consumers seeking exclusivity.

Digital engagement remains crucial across all markets. In China, 46 percent of consumers are influenced by social media in their purchasing decisions. Brands are investing in innovative digital campaigns and personalised shopping experiences to capture market share.

Measuring brand prominence

Louis Vuitton has emerged as the strongest brand in Webranking's W Fashion Index, a tool developed by the Webranking Observatory to track the prominence and strength of major luxury brands. It uses a quantitative-qualitative analysis based on 8 variables, grouped into three metric types: consideration, action, and engagement. The index covers 22 luxury brands, generating a quarterly updated ranking based on global data.

Louis Vuitton's strength outperformed peers such as Prada, Balenciaga, Off White, Chanel, Dior and Bottega Veneta, in brand searches, website traffic, and visit duration. Meanwhile, Miu Miu has shown remarkable growth, particularly in the apparel category.

As the luxury sector navigates this complex landscape, brands that successfully adapt to regional preferences, embrace digital innovation, and maintain exclusivity are best positioned to thrive in the evolving market.