Global Personal Luxury Goods Market On Track For Recovery. Two possible scenarios for the luxury industry rebound in 2021.
Following a turbulent year, the luxury market has started its path towards recovery. The luxury industry returned to growth in the first quarter of 2021, growing by 0-1% versus 2019, which is viewed by the industry as the last comparable year.
China continues to drive the recovery while the United States unexpectedly rebounded. The acceleration of this key region is one of several new trends of note, along with the importance of a human touch alongside digital interactions and the increasing presence of high-end brands in the secondhand luxury market.
The outlook for 2021 still remains uncertain.
The market is expected to reach between €250-€295 billion, depending on which one of two scenarios outlined in Bain & Co’s report plays out over the course of the year.
These are the key findings from Bain & Company, the world’s leading advisor to the global luxury goods industry, in the “Bain & Company Luxury Study 2021 Spring Update” released in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers’ industry foundation.
“It’s clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study.
@Cartier Double C de Cartier bag
A strong start to the year driven by China and the US.
Comparing versus the first quarter of 2019, the market for personal luxury goods grew by 0-1% at current exchange
rates (2-3% at constant exchange rates) in the first quarter of 2021.
While China is driving the recovery thanks to continuous repatriation and acceleration of domestic spending on
luxury, the US market has been the unexpected bright spot. Renewed consumer confidence coupled with stimulus
and a rapid vaccine rollout has meant that luxury consumption returned at surprisingly fast pace. Europe still lags
behind, hampered by a slower vaccination campaign and the lack of international tourism.
Two possible scenarios for the market rebound in 2021
Despite signs of green shoots in the high-end market, a high degree of uncertainty remains. There are two possible trajectories for the recovery in 2021:
Scenario 1 (probability 30%): Recovery path to continue throughout 2021, winning back 2019 market level as early as this year. In this outcome, the market could reach €280-295 billion this year.
Scenario 2 (probability 70%): Despite the strong momentum of the first quarter, full year growth is stifled by slower domestic luxury purchases and limited intra-regional tourism. In this case, the full recovery to 2019 levels would be expected only in 2022 and the market would reach €250-265 billion this year.
“Brands have been forced to rip up the playbook and innovate rapidly in light of the crisis,” said Bain & Company partner and report co-author Federica Levato. “As life hopefully begins to return to normal, customers are expecting a tech-enabled human relationship with brands. Winners will need to stay closely in touch with the key trends shaping the new normal lifestyle – all while remaining differentiated and creating a narrative that is true to their own culture.”
@Emporio Armani My EA Bag 2021
