In this half-year (H1-2021) update briefing, we investigate the latest developments in the global luxury goods industry, with a focus on the macro-economic and demographic changes and what these mean for our view of a likely outlook in the short to medium term. Whilst the luxury goods industry is not immune to the effects of the COVID-19 pandemic our research for H1-2021 shows that the industry overall is bucking the slowing global macroeconomic trend, albeit with some categories being impacted.
The global pandemic remains a significant constraint on luxury goods for the remainder of 2021 and into 2022. Ongoing lockdowns and social distancing measures are still in place in some key markets. However, more targeted lockdowns and greater consumer adaptation have reduced the impact of recent lockdowns on industry sales.
The global economic outlook has improved somewhat since the start of 2021. Global real GDP growth in 2021 is now expected to be the fastest in more than 40 years. This will go some way to help to improve consumer confidence. Nevertheless sales are still suffering from being at the mercy of a disparate mess. Some 20 months on, frustration levels continue to rise especially in high growth potential regions such as Asia Pacific.
As we move into the second of 2021, we expect all regions to record much healthier growth in the top three wealth segments. While the contraction during the COVID-19 outbreak was greatest in the ultra-wealthy segment overall, this segment will record the most significant rebound in growth in 2021.
Dark clouds continue to hang over the fate of luxury travel and hospitality. Despite a sharp up-tick in sales, the experiential luxury category is beset by factors such as government health, travel and transport policies.
Luxury cars continue to navigate a period of change, as consumer attitudes towards car ownership and mobility shift into a new era. However, H1 2021 saw some hugely positive growth stories, driven by the segment’s premium positioning and electrification in an effort to meet sustainability goals and initiatives.
Personal luxury goods are bouncing back strongly with over half of the revenues lost to the pandemic expected to be recovered by the end of 2021, This has been driven by pent-up demand but also due to the segment’s value-creation propositions. This is a trend that we are also seeing in luxury drinks as aspirational consumption boosts sales.
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