Sales of personal luxury goods will fall 23% this year, the first decrease since 2009, and are unlikely to recover for at least two years, Bain & Company predicted.
Total sales for the category will drop to EUR 217 billion ($257.47 billion) in 2020 as the coronavirus pandemic shut stores around the world, Bain forecast Wednesday [November 18] in its global luxury report. That represents the steepest annual decline Bain has recorded, according to the consultancy company, which released the study in collaboration with Italian luxury-brand committee Altagamma.
The uncertainty surrounding the virus will continue to affect sales of luxury goods through the end of the year, and will be influenced by whether stores are locked down again as cases rise. Luxury will not fully recover until the end of 2022 or the first half of 2023, Bain projected.
“Uncertainty will hover over the industry for some months to come,” Bain noted. “Following on the second quarter, which was the worst the sector has ever experienced, there were signs of recovery in the third quarter. The most likely outcome is a 10% year-over-year drop in the fourth quarter, which is heavily dependent on the future evolution of Covid-19, and the additional restrictions that national governments could put in place.”
Jewelry was one of the strongest performers in the personal-luxury category, as wealthy Chinese consumers continued to purchase. The sector was also buoyed by a rise in online sales. However, sales are still expected to fall 15% to EUR 18 billion ($21.29 billion) for the year.
E-commerce purchases of personal luxury “skyrocketed” in 2020, with the pace of growth for the year equivalent to that of five years, Bain said. Online sales will nearly double to EUR 49 billion ($57.94 billion), Bain predicted, and are expected to constitute one-third of the total market share by 2025.
Photo © Chaumet High Jewelry Perspectives 2020.