New Delhi: The world’s wealthiest shoppers are not splurging money this year, says a study by the Italian luxury goods association Fondazione Altagamma and global consulting firm Bain & Co. published on Thursday.

Terror threats in Europe, uncertainty over the outcome of the US presidential election and turbulent exchanges rates have made shoppers cautious, suggsts the study.

The global luxury market will collectively grow 4% to an estimated €1.08 trillion in 2016, the study calculated.

“…selected currency movements are affecting consumption in 2016. Brexit, the US presidential election and European terrorism all impacted consumer confidence and touristic flows," the study said.

Shoppers are likely to spend about €249 billion on personal luxury goods like fashion accessories, jewellery, watches and beauty products, 1% less than 2015 (at current rates, stable at constant exchange rates), according to Bain’s calculations.

But luxury shoppers are likely to spend more on buying top-end cars. Sales of luxury cars are estimated to grow about 8% to around €438 billion this year, the study added. Sales of luxury private jets are set for a 5% dip, while sales of luxury yatches and fine arts markets are likely to stay flat in 2016.

“There is also evidence that luxury consumers are redirecting their spending toward new and more personal high-end experiences, such as luxury travel, food and wine, and even fine art. Meanwhile, the personal luxury goods industry managed to hold steady amid global geopolitical uncertainty. Despite China’s re-emergence after three years of stagnation, the US decline prevailed as the stronger force, dragging down worldwide performance," Bain said in a statement.

Chinese shoppers are estimated to contribute about 30% to the luxury market in 2016, down 1% from 2015. Over the longer-term, however, Chinese luxury spending is expected to trend upwards, backed by a growing middle class with more disposable income to spend on luxury purchases.

According to the study, luxury spending among tourists contracted across Europe, where local spending rebounded. Depreciation of the pound drove buying of luxury goods in the UK, but Germany and France suffered due to terror threats.

Luxury brands in the US continue to struggle due to a decline in tourism as a result of a strong dollar and weak local spending. Asian markets like Hong Kong and Macau continue to decline, the study added.

“The luxury market has reached a maturation point. Brands can no longer rely on low-hanging fruit. Instead, they really need to implement differentiating strategies to succeed going forward," Claudia D’Arpizio, a Bain partner in Milan and lead author of the study, said in a statement.

The personal luxury goods market, said D’Arpizio will reach €280-285 billion by 2020 while the road ahead will be bumpy.

“Luxury brands need to adjust their expectations and their strategies as we enter an era in which growth is no longer a given. We’re now on a level playing field. Brands that adapt their business and take an omni-channel, customer-centric approach will rise to the top. Those that lag behind are sure to lose market share."

According to the study, digital will continue to be a democratizing force even in the global luxury market. “An influx of new market entrants is concerning to incumbents, who are worried about losing market share," Federica Levato, a Bain partner based in Milan and co-author of the study, said in a statement. “But, we anticipate big opportunities for the brands that are willing to think and act more like their up-and-coming counterparts."