A new report by Barclays sheds light on several significant changes occurring within the global luxury market. The report, which analyzes data from various sources, including consumer surveys and market trends, indicates the luxury market is expected to experience moderate growth in coming years compared to previous periods.

Growth slowdown in China

The report notes luxury goods sales in China, a major market for luxury brands, have slowed in recent months. This is due to weak economic outlook and a shift in consumer preferences. Barclays predicts a 1% decline in luxury spending by Chinese consumers in 2025. In contrast, India's luxury market is expected to experience significant growth in the coming years. Barclays forecasts an annual expansion of 15 to 25 per cent in India's luxury market over the next seven years, driven by a growing middle class and increasing disposable incomes. However, the report cautions that India will remain a relatively small player in the global luxury market for the foreseeable future.

With China slowing, the US is expected to be the primary driver of luxury market growth in 2025. Barclays predicts a 6 per cent increase in luxury spending by US consumers, due to higher consumer confidence and a potential economic boost from President-elect Trump's policies. Since the US elections, consumer confidence seems to have improved on the back of a better wealth effect," said Carole Madjo, co-author of the Barclays report. The report notes that Americans already account for approximately 25 per cent of global luxury goods revenue. The report highlights the success of British luxury brands like Me+Em and Kurt Geiger in the US market. Me+Em recently opened its fourth US store in Dallas and plans further expansion, while Kurt Geiger has seen North America become its largest and fastest-growing market. Barclays notes that LVMH Moët Hennessy Louis Vuitton is experiencing a rebound in the US market, with its Fashion & Leather Goods division showing quarter-over-quarter improvement. This could signal a broader return to growth for the luxury sector in the US

Table: Luxury market projected growth

The report also states consumers are increasingly concerned about the sustainability of luxury products. The report highlights that brands that can demonstrate their commitment to sustainability are likely to be rewarded by consumers.

The report highlights several case studies of luxury brands that have successfully adapted to changing market conditions. For example, one brand has partnered with local artisans in India to create unique products that appeal to the country's growing middle class. Another brand has launched a line of sustainable products made from recycled materials.

Overall, the findings suggest a significant shift in the global luxury landscape, with the US taking centre stage as China's growth slows. Luxury brands need to be more agile and responsive to changing consumer preferences in order to succeed, particularly in light of the economic and geopolitical uncertainties highlighted in the report. The report also highlights the growing importance of sustainability in the luxury market and the potential impact of political developments, such as President-elect Trump's policies, on the sector.