This Year sales of luxury goods worldwide are set to fall by 23% to 217 billion euros ($258 billion), this will be their largest ever drop and first since 2009. This is all due to the fallout from the coronavirus pandemic, consultancy Bain said on Wednesday. Regardless of strong sales recovery in China, the expected decline is at the lower end of a 20% to 35% range which Bain’s closely followed industry forecast had predicted in May.
This comes after a bigger than expected rebound happened during the summer, when lockdown measures were elevated or eased across the world and stores selling high-end handbags, clothes, jewelry and watches were reopened. However the comeback. The only silver lining is China, where sales have burst since it began to emerge from the health crisis in the spring. Sales in mainland China are seen increasing by 45% at current exchange rates to 44 billion euros this year.
Federica Levato, a partner at Bain, said, “We have a two-speed world, with Europe and the U.S. strongly hit by the second wave and by social and political uncertainty, while China is relentlessly accelerating day after day.”
In the fourth quarter sales we are expected to see a drop by 10%, even though the decline could be bigger depending on how much the new shutdowns hit the critical Christmas season. By 2021 revenues for Louis Vuitton owner LVMH, Hermes and Prada should recover. But Bain has a different point of view and thinks it will take until the end of 2022 or even 2023 to return to 2019 levels.
Bain said, the coronavirus crisis has accelerated three trends, with purchases online almost doubling from 12% in 2019 to 23% in 2020, and e-commerce set to become the leading channel for luxury purchases by 2025.