Sales of luxury on track to pre-pandemic levels

Sales of global luxury could return to pre-pandemic levels according to a report by Bain & Company.

The path to recovery showed positive signals when the industry returned to growth in the first quarter of 2021. Compared to 2019 (2020 is not a comparable year) growth of 0.1 percent was driven largely by sales in China and a recovering U.S. economy.

Bain said the the outlook for 2021 still remains uncertain, with global sales estimated to reach between 250-295 billion euros, depending on how the rest of the year plays out.

The findings from the advisory group were published in a report this week called “Bain & Company Luxury Study 2021 Spring Update,” released in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers’ industry foundation.

“It’s clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study.

A strong start to the year driven by China and the US

Comparing versus the first quarter of 2019, the market for personal luxury goods grew by 0-1 percent at current exchange rates (2-3 percent at constant exchange rates) in the first quarter of 2021.

“While China is driving the recovery thanks to continuous repatriation and acceleration of domestic spending on luxury, the US market has been the unexpected bright spot. Renewed consumer confidence coupled with stimulus and a rapid vaccine rollout has meant that luxury consumption returned at surprisingly fast pace. Europe still lags behind, hampered by a slower vaccination campaign and the lack of international tourism,” Bain said in a press release.

Bain cites two possible scenarios for a luxury rebound in 2021

The first possibility suggests a recovery throughout 2021 with sales reaching 2019 levels. With a 30 percent probability outcome, Bain says the market could reach 280-295 billion euros this year.

Another and more likely scenario, with a probability of 70 percent, is a slower than expected growth this year due to the lack of international tourism and slower domestic luxury purchases. In this case, the full recovery to 2019 levels would be expected only in 2022 and the market would reach 250-265 billion euros this year.

Article source Bain.com.