Bain study on the global luxury goods market
Munich/Zurich (ots) – * Global personal luxury goods market surpasses pre-Corona levels in 2021 at
288 billion euros
* In the first quarter of 2022, the industry records a significant increase in sales
* High-end business increases particularly strongly in Europe and the USA, while China suffers from tough Corona measures
* Tech trends are becoming increasingly important for high-end brands
After the biggest slump in its history in 2020, the luxury goods industry has quickly found its way back onto the road to success. By 2021, the global market for personal luxury goods, which includes high-end clothing, footwear, leather goods and jewelry, was already back above pre-Corona levels at around 288 billion euros. And Russia’s war against Ukraine and the resulting high rate of inflation together with the economic slowdown have so far had little impact on fine brands. Adjusted for currency effects, industry sales in the first quarter of 2022 rose by 13 to 15 percent compared with the same quarter of the previous year. This is the conclusion reached by international management consultants Bain & Company together with the Italian luxury goods association Fondazione Altagamma in the current spring update of their “Luxury Goods Worldwide Market Study”.
The industry is also expected to grow in the coming years. For example, a market volume of up to 380 billion euros is expected by 2025, depending on economic developments. “The luxury goods industry is once again demonstrating high resilience when it comes to crises,” emphasizes Bain partner and industry expert Marie-Therese Marek. “Despite the current economic and geopolitical challenges, the positive market development is likely to continue.” By the end of 2022, a baseline scenario expects a year-on-year increase of 5 to 10 percent, resulting in total sales of up to 320 billion euros, she said. If the current strong momentum continues, up to 330 billion euros is possible in an optimistic scenario.
Rapid recovery in Europe
Demand for high-quality goods had already risen massively in the 2021 Christmas season. The European market in particular, which had recently been rather weak, recovered very quickly from the Corona-related setback. The reason for this in many places was the will of Europeans to quickly return to normality. Shopping in stores is just as much in demand again among them as traveling on their own continent. The luxury market in Europe is therefore likely to return to pre-Corona levels as early as the end of 2022.
Russia’s war of aggression against Ukraine has so far had a more local impact on demand for luxury brands. In Russia, whose share of the global personal luxury goods market is 2 to 3 percent, sanctions, ruble devaluation and travel restrictions have so far mainly been to the detriment of middle-class consumption. In contrast, the rich and very rich people in the country are trying to secure their wealth with targeted luxury goods purchases. However, EU-imposed restrictions on Russian banks’ access to international payments make it difficult for Russian travelers to spend more abroad. And this is likely to remain the case in the medium term.
New impetus from diversity and inclusion
In turn, the luxury market in the USA is growing stronger than ever. There, high-end suppliers are increasingly managing to fully exploit the potential of all buyer segments. It is not only the market share of the younger generation that is growing. At the same time, luxury consumption is shifting more and more to smaller cities, and interest is growing among new high-income groups. Diversity is also becoming an increasingly important issue in the U.S. business. “The top brands are increasingly incorporating different ethnicities, age groups and customer needs,” Marek says. “In this way, they are once again expanding their customer base.”
South Korea has picked up speed in terms of upscale brands. The country is becoming increasingly important for the luxury business in Asia and its market share is growing, thanks in particular to a strong brand-loving middle class. In China, demand has recently been strong, especially during the local New Year holiday and until March 2022, but the drastic Corona restrictions that have been in place since the spring have initially caused sales to slump. However, this does not dampen the desire for luxury in the People’s Republic, so that business in China could recover towards the end of 2022 or early 2023.
Growing influence of virtual worlds
Tech trends such as the metaverse, social media and gaming are creating new sales opportunities for luxury brands outside traditional channels. “Selling digital products in the virtual world will become increasingly important for brands in the future,” explains Bain partner Miltiadis Athanassiou, who leads the Consumer Goods and Retail practice group in Europe, the Middle East and Africa (EMEA). In fact, digital assets and the metaverse could account for 5 to 10 percent of revenue in the luxury goods market by the end of 2030. “Companies should therefore start creatively shaping the virtual world today,” Athanassiou said.
At the same time, high-end suppliers must increasingly meet the ongoing need of customers for greater sustainability. But the industry still lacks clear environmental and social standards. “The crises of recent months have forced luxury suppliers to reorient themselves to some extent,” states Bain partner Athanassiou. “The successful market players have succeeded in doing so. They have quickly adapted to both geopolitical and cultural changes.” And he adds:
“Industry champions are seizing the opportunities of the virtual world, living true sustainability and accommodating the preferences of younger generations.”
Bain & Company
Bain & Company is a leading international management consulting firm that helps executives in decision-making positions around the world shape the future. With our 65 offices in 40 countries, we are in close proximity to our client companies. We work with them to outpace the competition and set new standards in their industries. Partnerships from our ecosystem of digital innovators complement our expertise and ensure we deliver better, faster and more sustainable results for our clientele. Over the next decade, we will invest more than $1 billion in pro bono projects globally. We support organizations that are addressing today’s educational, environmental and economic development challenges, and are committed to equality in every sense of the word. We have been awarded a gold medal by EcoVadis, the leading platform for environmental, social and ethical performance ratings for global supply chains. This puts us in the top 2 percent of companies surveyed. Since our founding in 1973, we have measured our success by the success of our client companies and are proud to have the highest referral rate in the consulting industry.
Learn more at: www.bain.de, www.bain-company.ch
Follow us on: LinkedIn, Facebook, Instagram
Bain & Company
Tel: +49 89 5123 1524
OTS-ORIGINAL TEXT PRESS RELEASE UNDER EXCLUSIVE CONTENT RESPONSIBILITY OF THE SENDER. www.ots.at
© Copyright APA-OTS Originaltext-Service GmbH and the respective sender
The post Precious brands make gains despite pandemic, Ukraine war and inflation appeared first on TOP News Austria – News from Austria and around the world.