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Luxury Sales Won’t Recover for Two Years – Bain
Nov 19, 2020 8:00 AM
By Rapaport News
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RAPAPORT... Sales of personal luxury goods will fall 23% this year and are unlikely to recover for at least two years, Bain & Company predicted.
Total sales for the category will drop to EUR 217 billion ($257.47 billion) in 2020, as the coronavirus pandemic shut stores around the world, Bain forecast Wednesday in its global luxury report. This marks the first decrease since 2009 and the steepest annual decline Bain has recorded, according to the consultancy company, which released the study in collaboration with Italian luxury-brand committee Altagamma.
The uncertainty surrounding the virus will continue to affect sales of luxury goods through the end of the year, and will be influenced by whether stores are locked down again as cases rise. Luxury will not fully recover until the end of 2022 or the first half of 2023, Bain projected.
“Uncertainty will hover over the industry for some months to come,” Bain noted. “Following on the second quarter, which was the worst the sector has ever experienced, there were signs of recovery in the third quarter. The most likely outcome is a 10% year-over-year drop in the fourth quarter, which is heavily dependent on the future evolution of Covid-19, and the additional restrictions that national governments could put in place.”
Jewelry was one of the strongest performers in the personal-luxury category, as wealthy Chinese consumers continued to purchase. The sector was also buoyed by a rise in online sales. However, sales are still expected to fall 15% to EUR 18 billion ($21.29 billion) for the year.
E-commerce purchases of personal luxury “skyrocketed” in 2020, with the pace of growth for the year equivalent to that of five years, Bain said. Online sales will nearly double to EUR 49 billion ($57.94 billion), Bain predicted, and are expected to constitute one-third of the total market share by 2025.
The recovery in the Americas has been faster than expected thanks to government help, despite the lockdowns and political uncertainty, Bain noted. Luxury purchases in the region will likely fall 27% to EUR 62 billion ($73.32 billion), according to Bain. Mainland China was the only region expected to see a rise during the year, growing an estimated 45% to EUR 44 billion ($52.03 billion), as local consumption increased. Chinese consumers will make up close to 50% of global luxury purchasers by 2025, Bain maintained.
Image: A woman wearing diamond rings. (Shutterstock)
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Tags:
Altagamma, bain, Bain & Company, global luxury report, Luxury sales, Rapaport News
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