Luxury Goods Market Set for Rebound

RAPAPORT… The personal luxury-goods industry will bounce back in 2021 amid increased spending from the US and China on shoes, leather items and jewelry, according to Bain & Company.

Global sales of personal luxury goods will grow 29% year on year to EUR 283 billion ($324.01 billion), the consultancy company said in its Fall 2021 Luxury Report, released last week in conjunction with Altagamma, an Italian industry group for luxury-goods manufacturers. Sales will rise 1% versus 2019 levels at current exchange rates and 4% at constant exchange rates.

The jewelry category will grow 24% year on year and 7% relative to 2019, as branded luxury takes off in traditional non-core markets, the desire for unisex jewelry rises, and e-commerce sales grow, Bain noted.

“Driving this growth is remarkable momentum in China, where the market size has doubled since 2019, as well as solid growth in the US, where a new map of luxury is fast emerging, with increased importance of secondary cities and suburban areas,” the company explained.

The Americas is now the largest global market for luxury, representing 31% of the total, or EUR 89 billion ($101.9 billion), while China makes up 21%, or EUR 60 billion ($68.69 billion). Meanwhile, Europe, Japan and the rest of Asia have recovered only partially this year and have yet to reach pre-Covid-19 levels, as travel remains lower than before the pandemic.

Bain expects the personal luxury-goods market to grow to between EUR 360 billion and EUR 380 billion ($412.17 billion and $435.06 billion) by 2025, it said. The outlook comes despite some uncertainty over the next holiday season, including a possible softening in China due to falling consumer confidence and potential further lockdowns, and the winding down of US public-relief programs.

“It’s interesting to think about where the industry might be in 20 years from now,” said Federica Levato, a partner at Bain and co-author of the report. “It’s likely that the crisis will mark a turning point for luxury as we knew it — luxury brands will continue to redefine themselves, expanding their mission beyond creativity and excellence, becoming enablers of social and cultural change.”

Image: A woman wearing luxury jewelry. (Shutterstock)