World Market for Luxury Goods

March 2021

Luxury goods was among the industries hardest hit by the Coronavirus (COVID-19) pandemic with sales damaged by temporary store closures, travel bans and weakened consumer spending. In addition, the pandemic also accelerated a channel shift to e-commerce as well as an emphasis on sustainability and wellness. This report provides a top-line overview of market performance and prospects, including the impact of COVID-19, and outlines key trends within the global luxury goods business landscape.

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Key Findings

Major disruption in luxury goods and services

The COVID-19 pandemic is having an unprecedented impact on the luxury goods industry with global sales set to slump across all major markets. Sales in the world’s two most important luxury markets, namely China and the US, are expected to decline by 5% and 18% respectively, in 2020, and existing economic and political problems as well as income and wealth losses of affluent individuals in key markets are adding to the challenging mix.

Asia Pacific continues to drive sales but risks remain

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.

Digital innovation accelerates and sparks corporate partnerships

E-commerce and digital innovation will undoubtedly grow and expand as consumers continue to enjoy the convenience of online shopping, and the shift to learning, working, eating, shopping, playing and socialising moves further to the home and online. Both physical and digital retailers will need to go above and beyond to create new bonds and build loyalty with customers who will be looking to be entertained, rewarded and valued.

Sustainable initiatives on the rise

Luxury businesses are facing increasing pressure from consumers, governments, investors and NGOs to have a more positive impact on people and the planet. Sustainable initiatives and ESG will be key for all luxury players over the next five years, with the bulk of the investment going into projects related to waste, recycling, inclusivity, social and community projects and sustainable product development.

Innovation is at the heart of the recovery for the luxury industry

New ways of thinking and doing will be key to building resilience and one thing that should not be paused despite the economic crisis, is innovation. At a time when consumers are worried about the state of the planet as well as social issues, luxury businesses are urged to leverage investment in research and development to create new innovations that will resonate with consumers post-COVID-19.

Introduction

Scope
Key findings

Global Outlook

Luxury goods ranked fourth in global consumer goods
COVID-19 poses huge threat to global luxury market
Squeezed middle class income weakens discretionary spending
Luxury goods among hardest hit across all fmcg markets
Switzerland reclaims its number one position in per capita spending
Asia Pacific leads in sales with China at the helm
Wealth declines least in China with modest income gains…
… but China’s wealthy still face downturn despite upbeat economy
North America’s luxury spending contracts by nearly a fifth
North America: ultra-HNWIs adversely affected by the pandemic
US ultra-wealthy population and luxury market hit hardest overall
Western Europe in the eye of the COVID-19 storm
France to see the biggest contraction in Western European wealth
At least one in 10 wealthy French to leave the ranks in 2020

Global outlook

Brighter outlook for 2021 led by Asia Pacific
China will be the first major economy to show signs of full recovery

Leading Companies and Brands

Competitive environment remains highly concentrated
Luxury car manufacturers continue to dominate sales
Luxury powerhouses pivot to digital channels amid pandemic
Luxury giants face strong headwinds despite optimistic results

Key Trends Shaping Luxury Goods

COVID-19 a catalyst for change across the luxury landscape
Examining five trends shaping the luxury goods industry
Questions raised over future of long-term shopping behaviour
COVID-19 a catalyst for change in our shopping behaviour
Physical and digital worlds collide to create a phygital luxury space
Burberry ahead of the curve in digital innovation
Purpose-driven luxury and ESG gains momentum
Trust, transparency and inclusivity at the core of consumer loyalty
People before profit challenges the status quo across luxury
All eyes look to the East as repatriated spending sets in
Key fashion hotspots void of USD12 billion Chinese spending
Could China’s repatriated spending offer hope of a silver lining?
Domestic “revenge shopping” helps to offset China’s losses
Redefining value and affordability without becoming ubiquitous
Buying less but buying better could favour luxury brands
Design, tech, luxe and value at Mollie’s new “budget luxe” creation
Luxury wellness reaches new heights in the wake of coronavirus
All-encompassing solutions in luxury wellness
ARTAH transforms the meaning of at-home health and wellness

Category Snapshots

Category snapshot: premium and luxury cars
Category snapshot: designer apparel and footwear
Category snapshot: fine wines/champagne
Category snapshot: luxury spirits
Category snapshot: luxury eyewear
Category snapshot: luxury jewellery
Category snapshot: luxury leather goods
Category snapshot: luxury portable consumer electronics
Category snapshot: luxury timepieces
Category snapshot: luxury writing instruments and stationery
Category snapshot: super premium beauty and personal care
Category snapshot: luxury hotels
Category snapshot: luxury foodservice

Regional Industry Snapshots

Regional industry snapshot: Asia Pacific
Regional industry snapshot: Australasia
Regional industry snapshot: Eastern Europe
Regional industry snapshot: Latin America
Regional industry snapshot: Middle East and Africa
Regional industry snapshot: North America
Regional industry snapshot: Western Europe

Appendix

Definitions
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