The Impact of Coronavirus on Personal Accessories

July 2020

Personal accessories revenues are expected to post some of the sharpest declines among all fmcg industries. The industry is concurrently facing pressure from three main factors: consumers’ diminished disposable income, retail closures (and sluggish footfall within the context of social distancing among those already up and running) and record low travel flows limiting demand across most categories, especially at the high end of the price spectrum.

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Key findings

Economic prospects are gloomy

As of July 2020, Euromonitor forecasts indicate global output set to contract by around 4.6% by the end of the year, though with a recovery of around 5.3% growth in 2021 and 4.5% in 2022. This would leave global economic activity levels in 2020 around 4.5% below the pre-COVID-19 forecast.

Strong revenue decline across all categories

Along with luxury goods, personal accessories ranks among the hardest hit fmcg industries by COVID-19. Categories such as bags and luggage, jewellery, watches and writing instruments are expected to close 2020 with double-digit declines given the non-essential nature of most of these goods.

Pockets of growth

With a growing number of governments either recommending or making their use compulsory in public spaces, face masks are becoming ubiquitous and an accidental fashion trend. A growing number of operators are jumping on the bandwagon, launching a growing number of these cashing in on the trend.

Shift to digital

The standstill of retail operations across all personal accessories specialist retailers has boosted penetration of e-commerce across markets and categories. While this shift could not offset the drop experienced across physical retailers, it offers clues to the kind of successful strategies to deploy moving forward.

Impact of travel

Global shutdown has brought travel to a standstill, and with it, international retail expenditure. Markets such as Hong Kong or Singapore, overdependent on wealthy Chinese shoppers, are struggling to keep up with domestic demand only. On the other hand, retail in China is benefiting from increased domestic demand as locals shop from home.

Recovery shape

The rapidly deteriorating economic outlook and lower than expected footfall across retailers that reopened has vanished hopes for a rapid and “V-shaped” recovery to follow the pandemic. Pre-COVID-19 revenues are not expected to have recovered before 2024.

Introduction

Scope
Key findings
Personal accessories and COVID-19

Economic Outlook

Global economy will contract sharply in 2020
The COVID-19 pandemic impacts both supply and demand
In our baseline view, the pandemic peaks in June 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecast real GDP growth in 2020 under different scenarios
Fiscal stimulus a challenge with restrictions on expenditure
What could alleviate the economic effects of the pandemic?
What could exacerbate the economic impact of the pandemic?

Industry Impact

COVID-19 impact at a glance
Store closures and changed consumer behaviour weigh heavily on sales
Drop in travel and tourism hits bags and luggage hardest
Postponed celebrations dampen jewellery sales
Digital device use during quarantines will weaken outlook for watches
Useful during quarantines, writing instruments fares best
Routes to disruption
Macro environment mirrors past crises, but recovery will be unique
Depressed demand and supply chain disruptions prompt discounting
Closures of key channels impede sales, but e-commerce gets a boost…
…that is expected to be the most permanent change moving forward
Overall market dynamics

Geographic Impact

Double-digit declines in retail value terms worldwide
North America set to lose almost a quarter of revenue in 2020
Western Europe to suffer from constrained local and foreign demand
HNWIs ignite demand across key markets in Asia Pacific
Top shopping destinations suffer from drop in travel

Corporate Response

Main challenges for personal accessories players
How retailers are responding to COVID-19 pandemic
LVMH : Utilises its resources and facilities to help combat COVID-19
Michael Kors: Gets creative online to engage loyal Chinese consumers
Luggage start-ups pivot offerings and services amid travel restrictions
Pandora: Launches a service to assist in choosing the right gift online
Swatch: Makes a further push to its direct online business
Crayola: Offers at-home activities for children during stay-at-home order
KOKUYO launches IoT stationery, helping children discover the joy of learning

Conclusion

Short-, medium- and long-term effects for personal accessories
Outlook for personal accessories

About Our Analytical Capabilities

About Euromonitor’s Macro Model
About Via Pricing from Euromonitor International
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