High ends

The global luxury market demonstrated strong growth in 2023, with an increase of c.8% over 2022, however, market performance began to soften towards the final quarter, and has slowed in the first quarter of this year.

Underperformance of some markets such as China has led to a slowdown in luxury spending, which has resulted in polarisation in the performance of brands.

We look at the performance of key players in the market and how this differs geographically:

Struggling brands
China’s challenging economy and slow recovery from the pandemic has caused a decline in luxury spending, which is impacting some key luxury players. Kering, owner of Gucci, Balenciaga, Bottega Veneta, YSL, Creed, and Alexander McQueen, reported a 17% decrease in net profit last year and expect sales to be down 10% in the first quarter of 2024. This is a result of an expected 20% decline in year-on-year sales at Gucci, largely driven by a slowdown in the Asian market.

Gucci’s attempt to reshape its aesthetics to target a younger audience through trend-driven product lines has also caused issues for the brand’s image. With middle-class ‘aspirational shoppers’ pulling back on luxury spending in response to inflation, Gucci’s focus on short-term trends to capture this market is now starting to show cracks. The new creative director has attempted a rebrand towards a more authentic ‘quiet luxury’ aesthetic, however this only accounts for a small proportion of items and sales impacts are yet to be realised.

Burberry has also felt the impact of decreased Chinese luxury market demand and reduced aspirational shopper spending last year. European sales performance was stronger, reported to be a result of spend from affluent Chinese consumers shifting overseas since China’s lifting of travel restrictions in 2023. In response, the brand is repositioning itself to attract more affluent, high-end luxury customers through increasing its price point and quality of products, refurbishing stores, and spending on marketing.

Thriving brands
The highest-end luxury brands have remained more resilient to global market challenges. LVMH, owner of Moet, Hennessy, Louis Vuitton, Christian Dior and Tiffany & Co, reported higher than expected sales for 2023, driven by strong growth in Europe, the US and Japan, which made up for decreased demand in China.

Hermes celebrated record annual sales and net profit last year, with a 21% increase in year-on-year sales, driven by the Americas (up 22%) and Europe (up 19%), followed by Asia Pacific (up 15%), a result of its strong brand and product exclusivity maintaining high appeal.

Richemont, owner of Cartier, Van Cleef & Arpels, and more, reported highest ever quarterly sales at the end of 2023, driven by a sales surge in China, with jewellery driving performance (sales up 12% vs watches at 3%). The brand has faith in the Chinese market recovering, albeit at a slow pace and therefore anticipates a challenging beginning to 2024 for the luxury market. 

Performance of these high-end luxury brands demonstrates that strong brand momentum, created through classic designs, scarcity of products and high price points, have epitomised the exclusivity of these labels, creating consistent demand from the most affluent customers. These brands have therefore become more resilient to global economic challenges and remain strong in an increasingly competitive market.


Despite the underperformance of some markets, the luxury market is projected to continue to grow 5% this year, albeit at a lower rate than the previous two years. There is optimism for the Chinese market to recover slowly, with Europe and America remaining strong markets, however, other markets are showing promising potential for luxury growth, particularly the Middle East.

While highest-end luxury brands will continue to thrive, brands targeting more ‘aspirational’ customers will likely continue to struggle in the face of economic challenges. Greater importance must be placed on brand continuity, storytelling, and creation of timeless products to remain relevant and attract spend from more affluent customers.

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Emily Brown