World Market for Luxury Goods

February 2022

Despite ongoing travel restrictions, inflation, and supply chain concerns, the global Luxury Goods industry continues to register a strong recovery of value sales. Now, to meet pent-up demand and maintain competitiveness post-pandemic, iconic brands are increasingly employing digital sales and marketing tools, launching new product collections, rethinking retail footprints, and prioritizing ESG while experimenting with more environmentally-conscious business models, such as resale.

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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.

Scope
Examining the trends shaping Luxury Goods
COVID-19 continues to impact the recovery of Luxury Goods
Diverging preference for Experiential and Personal Luxury across regions
Premium and Luxury Cars helps to drive industry’s early recovery
All developed markets recover but Asia Pacific/China continues to lead
Iconic luxury brands will continue to adapt and grow across key markets
Accelerated by COVID-19, focus will continue to shift to e-commerce
Retailers challenged to keep abreast as brands expand their D2C offering
Major players dominate industry, especially in developed markets
Luxury car manufacturers lead, followed by multibrand conglomerates
Chinese luxury spirits follow Tesla as fastest-growing companies
Luxury brands continue to adapt to the zeitgeist of our post-COVID-19 world…
…while also meeting consumer demands in search for other attributes
M&A activity will continue to create ripples across corporate landscape
Luxury brands employ similar strategies to adapt to industry trends
Luxury brands pivot to a digital-first approach, but stores remain vital
The metaverse is emerging as the next frontier of digital competition
Gucci presents its brand to digital-savvy young consumers in a virtual space on Roblox
Balenciaga drops physical hoodies and virtual game skins in partnership with Fortnite
Companies expand their product portfolios to leverage equity and awareness
Brands build on own expertise whilst also moving into new territories
As outdoor wear becomes everyday wear, The North Face and Gucci join forces again
New products and campaigns from Tiffany & Co. to tap into new and diverse consumer group
For health and wellness-seeking consumers, brands launch both fitness attire and equipment
As international travel remains low, so too does tourists’ luxury spending
All eyes look East as anticipation of revenge travel sets in
As Chinese travellers stay closer to home, brands go all-in on local Lunar New Year events
Remote work promotes shift to suburbs and seasonal destinations
Iconic London luxury retailer Harrods bets on British suburbia for stand-alone beauty stores
Watches of Switzerland and Equinox set up for a summer in the Hamptons
Awareness of social and environmental issues rises amid COVID-19
The luxury resale market gains interest from consumers and brands alike
Online luxury resale platforms expand their brick-and-mortar presence
Twig launches the first circular “Bank of Things” to quickly turn physical assets into cash
Evolving consumer behaviour will continue to shape the industry
Global snapshot of Premium and Luxury Cars
Global snapshot of Luxury Leather Goods
Global snapshot of Luxury Eyewear
Global snapshot of Designer Apparel and Footwear (Ready-to-Wear)
Global snapshot of Luxury Writing Instruments and Stationery
Global snapshot of Luxury Jewellery
Global snapshot of Luxury Timepieces
Global snapshot of Luxury Portable Consumer Electronics
Global snapshot of Super Premium Beauty and Personal Care
Global snapshot of Luxury Hotels
Global snapshot of Luxury Foodservice
Global snapshot of Fine Wines
Global snapshot of Luxury Spirits
Regional snapshot: Asia Pacific
Regional snapshot: North America
Regional snapshot: Latin America
Regional snapshot: Western Europe
Regional snapshot: Middle East and Africa
Regional snapshot: Eastern Europe
Regional snapshot: Australasia
Definitions

Luxury Goods

This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.

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