Luxury industry eyes rebound from pandemic by end-2021Europost
Luxury brands worldwide bet on fast rebound from the Covid-19 slowdown as customer demand picks up due to huge stimulus packages and fast vaccination roll-out fuels optimism over economic recovery, AP reported, quoting a study by Bain & Co. consultancy. The rapid rebounding US economy together with China - already on an established growth trajectory - could push the global market for personal luxury goods back to or even beyond pre-pandemic sales levels as early as this year, Bain partner Claudia D’Arpizio said.
“We expect a very positive cycle that is just starting in the United States, where luxury brands can really take advantage,” D’Arpizio said, citing the stimulus and positive stock market reaction. “This together with the fact that probably consumers are already back to normal in terms of traveling, is pushing the recovery of luxury goods.”In its most optimistic outlook, Bain forecasts a full recovery and even growth to as much as 295 billion euros as soon as this year. A more cautions scenario puts recovery to 2019 levels off until 2022.
Sales of luxury apparel, jewelry, leather goods and beauty products plunged to 217 billion euros in the pandemic year of 2020, from 281 billion euros in 2019, shedding six years of growth. Europe still lags behind, with tourism flows from abroad suppressed by a slow vaccine campaign that is behind that of the US. Other bright spots include the Middle East, in particular Dubai, which attracted high net worth individuals during the pandemic. “They did vaccinations very quickly and many wealthy people during the winter moved to working remotely from Dubai,” D’Arpizio said. The pandemic is proving to be an accelerator in trends that were already happening, including more e-commerce, an emphasis on greater inclusivity, a push toward sustainability and embrace of the second-hand market, she noted. E-commerce grew to 23% percent of sales in 2020 from 12% in 2019, a bit more than a decade into the phenomenon. It is expected to reach 30% by 2025.