The luxury goods sector is set to move past the coronavirus crisis this year, fuelled by domestic spending in the United States and China, particularly on high end shoes, leather goods and jewellery, consultancy Bain revealed.
Business in the United States, which this year overtook Europe as the largest market, was boosted by early vaccination campaigns and a quick rebound in local consumption.
Bain estimates that global sales of personal luxury goods will reach 283 billion euros ($327 billion) this year, bouncing back from the crisis with a 4% increase, at constant exchange rates, compared to 2019, before the pandemic hit.
Demand in China, the growth engine of the luxury industry, remained strong through October despite lockdowns in some areas, as the Chinese — unable to travel abroad — made purchases in their home market.
In Europe, business has yet to return to pre-COVID levels, and may take until 2024 to do so, despite a pick up in tourist activity over the summer, added Bain, whose forecasts are closely watched by the luxury industry.
The largest players in the industry, like LVMH, Hermes and Kering have already recovered strongly from the health crisis, pushing well above 2019 levels of business as lockdowns ease and socialising resumes.
Due to the pandemic, overall sales for the sector fell by 23% in 2020, their largest-ever drop and first decline since 2009. Shoppers under 40 would account for more than 60% of luxury purchases this year and more than 70% by 2025.
Although sales linked to international travel have not returned, brands brought on new business by focusing on catering to consumers domestically, not only in top luxury hubs but also in second and third-tier cities. A quarter of global sales this year were made with new consumers, according to Bain estimates.