Insatiable Chinese buyers, along with an astounding rebound of the US market and the online sales performance: such are the three factors that have been driving the recovery of luxury in the first quarter of 2021. The outlook is positive. Prudent, though
To begin with, let us focus on the most bizarre trend of the moment. Talking about luxury, accessories for pets are enjoying a remarkable boost in terms of demand and sales. Although it is not something completely new, it is rather surprising anyway, considering the current situation. Other than being crazy for pets, let us move on to human things. Based on a recent analysis, carried out by Bain & Company, let us try to figure out something more about the days of revenge luxury: the way it is and the way it is going to be (hopefully lasting for a long time).
Revenge luxury
Bain & Company, in collaboration with Altagamma Foundation, have published a report: “The Healing of (post) Covid Luxury”. Looking at such survey, we find out that in the first quarter of 2021 luxury (at variable rates) did not increase more than 1%. Conversely, it went up by 2 to 3% at fixed rates of exchange. Who and what has been driving such initial resurgence?
China, online, the USA and more
From January to March 2021, the luxury business enjoyed a light boost as sales went slightly better compared to standards prior to the pandemic outbreak. Three factors have driven such performance. Number one: the comeback of shopping in China, which went faster. Number two: the enhancement of the online channel. Number three: a swifter recovery of the US market. Not to mention one more element, the fourth one: vaccine campaigns have kicked off and have become widespread. China is the main propeller for shopping and, as reported by Bain, “is becoming, more and more, a fully-established ecosystem, nourished and supported by tailored strategies on a local scale”. All product categories are being affected by the current growth: from hard luxury (highly valued jewellery, exotic leather accessories and more) to entry level articles. For the records, and it is quite curious, Bain considers accessories for pets as a new expanding category.
Flexibility and innovation
“Buyers – pointed out in a statement Claudia D’Arpizio, Senior Partner of Bain & Company and chief writer of the report – still want to purchase high-end goods and items. Along with the luxury brands’ ability to adapt themselves and make innovation, such trend is driving the growth and recovery of the market”. Accessories, such as bags and shoes, turn out to be the winners among product categories. On top of that, footwear models are “the super champions”. Their leadership, commented Federica Levato (partner of Bain & Company), while talking to WWD, is leading to a few unusual and never seen before situations, which are nearly paradoxical, to some extent. For example, she said, “a single sneaker model may even be stronger than the brand itself”.
Positive and prudent outlook
The outlook for 2021 is still prudent, anyway. Looking at the most probable scenario, 2019 standards will be fully recovered in 2022, while at the end of 2021 revenues from sales are going to reach 250 to 265 billion euros. In other words, they will be decreasing by 5 to 10%, compared to 2019. In 2019, in the luxury goods worldwide market, overall sales amounted to 280 billion euros; subsequently, in 2020, they went down by 23% in terms of value.
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