Global luxury market to return to pre-pandemic levels by 2022: Report

29 Jun '21

2 min read

Pic: Shutterstock

The global luxury market is estimated to return to pre-pandemic levels by 2022, as per a recent report. The push comes from US consumers, who started luxury purchases more quickly than expected, thanks to the strong government support, and from Chinese consumers, who confirm the trend towards the repatriation of purchases that began during COVID-19.

While Europeans are cautious about domestic spending and will be more pessimistic about foreign spending for the next 12 months, US and Chinese consumers stand out for their optimism, placing themselves as potential growth drivers of the personal luxury market in the near future, according to the True-Luxury Global Consumer Insight Report by Boston Consulting Group and the Altagamma Foundation. BCG surveyed over 12,000 luxury consumers for the survey.

Virtualisation of luxury can bring great opportunities of additional revenue streams for luxury brands through innovative digital engagement tools like gaming and livestreaming.

Millennials and Gen Z are the other growth drivers and will account for 60 per cent of total consumers by 2025, the report stated.

Among the major trends in consolidation are the increasing virtualisation of luxury (new digital tools for engaging the consumer), the polarisation of values between Western and Eastern styles, an omnichannel-centred distribution system and a growing attention towards the values of brands, in terms of environmental sustainability and inclusiveness.

In 2020, only the two highest luxury spender cluster grew. While the ‘aspirational’ segment (which was 90 per cent in terms of population and 62 per cent in terms of value, pre-COVID) suffered the most (-20 per cent in population and 55 per cent market share), the true-luxury category market share increased from 30 per cent to 40 per cent.

The report said that the desire for luxury will increase in the post-COVID world. It also found polarisation in brand values between western and eastern styles. European and US consumers expressed the intention to shift to a more sober style, while Chinese respondents substantially confirmed the intention to continue in the same direction as before the emergency.

Sustainability issues are increasingly being considered by consumers in their purchasing decisions, with more than 6 out of 10 respondents highlighting their influence over decision making. Additionally, compared to last year, a personalised touch remains key for consumers, confirming the need for brands to create a more 1-1 relationship with the customer across all touchpoints.

Fibre2Fashion News Desk (KD)

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