It will be necessary to wait until 2023 for profitability in the luxury market to return to its 2019 level, estimate IG economists. If the health crisis has diverted some regulars from luxury products, 60 million others should join the ranks by 2023.
The Covid-19 epidemic, a considerable brake on the luxury market
In the luxury market, the Covid-19 epidemic has resulted in a significant drop in sales. In 2020, the global luxury goods market fell by almost 25% to stabilize at 217 billion euros. You have to go back to 2009 to find such a low sales year, we learn from an IG study.
All luxury categories (leather goods, fashion, jewelry, perfumes and cosmetics) saw a drop in sales in all the main markets. Europe was the market most affected by the crisis, with a decline of 29%, followed by North America (-22%). The Asian market is faring better, with a drop of only 5%. Luxury clothing sales were particularly affected with a drop of more than 30%, as consumers switched to less upscale brands. And if there is one sub-sector that suffered considerably in 2020, it is undoubtedly watchmaking, with sales in this sector happening almost exclusively in physical stores.
Luxury sector: a full recovery is expected by 2025
According to this study, on the luxury market, it will be necessary to wait until 2022 or 2023 to regain profitability similar to that of 2019. Secondly, a full return to normal is expected by 2025. At this date, the The luxury market is expected to have more than 450 million consumers around the world, or as many as in 2019 and 60 million more compared to 2021. It is also estimated that by this time, nearly half of luxury sales in the world will be made by Chinese consumers.
To some extent, sales should be boosted by e-commerce. Long reluctant to launch into online sales, claiming that the luxury experience is characterized by rarity, refinement and exception, during the year 2020 companies in the sector have gradually ventured into this ground. After 33 billion euros in 2019, online sales climbed to 49 billion euros in 2020. And according to forecasts by IG economists, by 2025 this sales channel could even become the majority.