In the 19th edition of the Bain & Company Luxury Study, released on Wednesday in Milan in collaboration with Fondazione Altagamma, the Italian luxury goods manufacturers' industry foundation, this global management consulting firm said the COVID-19 outbreak caused an unprecedented fall in luxury market size to EUR217 billion, down 23 percent from 2019 and back to 2014 level, however accelerating potential for change and transformation.
“The turmoil of COVID-19 has been the catalyst for change for the luxury industry, which is on a path to recovery by 2022-2023. Consumer demand for action with purpose and social impact is growing and luxury brands are expected to demonstrate real and sustained commitment to diversity, inclusion and sustainability,” the study said.
Uncertainty will hover over the industry for some months to come, Bain noted. Following on the second quarter, which was the worst the sector has ever experienced, there were signs of recovery in the third quarter. The most likely outcome is a -10 percent year-over-year drop in the fourth quarter, which is heavily dependent on the future evolution of Covid-19 and the additional restrictions that national governments could put in place.
Scenarios for 2021 are varied and Bain forecasts growth that ranges from +10/12 percent to +17/19 percent depending on macroeconomic conditions, the evolution of Covid-19 and the speed of return to travel globally as well as the resilience and confidence of local customers.
Bain expects the recovery to gather pace over the next three years, with the market returning to 2019 levels by the end of 2022/early 2023.
Online is set to become the leading channel for luxury purchases by 2025, fuelling the omnichannel transformation.
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