Luxury Goods: Quarterly Statement Q1 2021

April 2021

Whilst pent up savings and demand, as well as improved consumer confidence, will help to support recovery, the luxury industry still faces huge challenges, not least as consumers are saving rather than spending and many major economies are still subject to significant lockdown measurers. Vaccines, effective containment measures and reliable national healthcare will all be needed to improve the economic outlook in luxury, but pre-COVID-19 revenues are not expected to be fully recovered until 2022

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Key findings

Luxury goods still faces huge challenges despite economic recovery

Many economies were still subject to significant social distancing and economic activity restrictions in Q1 2021. Whilst there is a general consensus across the industry that pent up savings and demand, as well as improved consumer confidence, will help to support recovery, the luxury industry still faces huge challenges, not least that more consumers are saving rather than spending. Vaccines, effective containment measures and reliable national healthcare will all be needed to improve the economic outlook in luxury.

Key luxury markets in Europe struggle with successive COVID-19 waves and slower than expected vaccination programmes

Several key markets in Europe continue to implement tighter COVID-19 rules to curb the resurgence of the virus. These, along with a much slower than anticipated EU vaccination roll-out programme, are restraining recovery across key luxury goods markets. With bans on non-essential travel in place across several markets, foreign demand (a key growth driver in markets such as Italy, France and the UK) remains heavily disrupted and adding to the challenges ahead.

Asia Pacific continues to drive sales thanks to the reshoring of demand in China

Asia Pacific continues driving sales and remains the most important region overall for luxury goods, making up almost half of all spending. Much of this spending has been driven by China’s middle, wealthy and affluent classes. That said, China’s wealthy and affluent population as a whole is set to contract, with no rebound to pre-COVID-19 levels until 2024.

Elasticities in luxury travel and cars exposed the most over the forecast period

Forecast growth rates to 2025 as part of this Q1 2021 quarterly update show that high-end references, such as luxury travel and experiential luxury, as well as luxury cars, are exposed the most. Their non-essential nature and higher than average income elasticities are the main drivers behind this macroeconomic-led update.

 

Introduction

Scope: Luxury goods quarterly updates
Key findings

Q1 Luxury Goods Update

Demand for luxury goods based on income elasticities
Quarterly forecast for luxury goods: baseline vs quarterly update
Luxury sales impacted by further damage to consumer confidence
Consumers saving not spending as uncertainty continues
China’s economic activity and consumer spending shows full recovery
Why Singles’ Day should matter to every luxury goods company
Asia Pacific will continue to lead sales, with China at the helm
Sales in key luxury shopping destinations rise as Chinese tourists return
China first major economy to show signs of full recovery in luxury goods
Growth trajectory in China’s repatriated spending expected to continue
Domestic “revenge shopping” continues to helps offset China’s losses
All eyes look East as repatriated spending and a return to travel sets in
Top 10 luxury players continue to dominate the competitive landscape
Top 10 luxury companies clear determinants of 2021 outlook
Encouraging sales momentum from Kering thanks to Chinese “glocals”
Luxury cars manufacturers remain optimistic for a better 2021
LVMH latest results signpost Asia-led recovery trend
Spain and Italy among the largest key luxury market downgrades in Q1
All key markets in Western Europe subject to further contractions
Key takeaways for Q1 2021 in luxury goods

Q1 Macroeconomic Update

Global baseline outlook: Downside risks to the recovery have declined
Uncertainty remains high, but with a more optimistic tilt
Real GDP annual growth forecasts and revisions from last quarter, AE (%, percentage points)
Real GDP annual growth forecasts and revisions from last quarter, EMDE (%, percentage points)

Global Outlook

COVID-19 scenarios summary

About our Industry Forecast Model

About Luxury Goods quarterly forecast updates
Timeline: Luxury Goods quarterly updates and reporting timeline
Euromonitor International and COVID-19: Forecasts and analysis
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