Sales of luxury goods could rebound from the effects of the coronavirus as early as this year, thanks to shoppers in the U.S. and China, according to a new report from the consultancy Bain & Company.
“Bain now sees a 30 percent probability that sales of high-end handbags, clothes and jewellery will return to or exceed their 2019 level of 280 billion euros ($340 billion) this year, depending on how quickly vaccines are rolled out and tourism picks up,” Reuters reported on Monday (May 17).
However, the more likely outcome is a full rebound next year, which is still a quicker turnaround than Bain’s prediction from November 2020, when the firm said that luxury goods would need to wait until 2023 to return to their pre-COVID state. The sector saw its sales drop by 23 percent last year, its biggest decline in history and the first in more than a decade, thanks to pandemic-related store closures and a nearly complete halt to worldwide tourism.
“But the crisis does not seem to have had a lasting impact on consumers’ appetite and spending power for high-end wares,” Reuters noted, with soaring sales in China and stimulus payments in the U.S. helping to fuel a recovery in the first quarter of 2021.
“The U.S. market has been the unexpected bright spot,” Bain said. On the other hand, Europe is still struggling, thanks to tourism restrictions and a slower pace of vaccinations.
The report noted that this recovery doesn’t apply to every luxury brand. Labels like Hermes and Kering have already surpassed their 2019 levels, while some smaller labels like Ferragamo have yet to catch up. COVID-19 has forced brands that would not have otherwise sold their goods online to embrace eCommerce, “which is set to become the leading channel for luxury purchases in the next few years,” per the report.
That’s in keeping with larger retail trends. As PYMNTS reported earlier this month, global eCommerce soared to $26.7 trillion in 2019 and accounted for nearly 20 percent of all retail sales last year.
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