MILAN , — Personal luxury markets for high-end accessories and leather goods have reverted to pre-pandemic levels, as U.S. consumers outspent Chinese shoppers in pursuit of the latest fashion trends. According to a Bain consultancy study, Thursday’s release was a surprise.
Global consumer spending on personal luxury products, including latest sneaker trends and design collaborations, is expected to rise by 29% to 283 billion euros ($325billion) this year. This is a return to 2019 levels, and a significant turnaround from the global pandemic lockdowns in 2020 that shut down stores and stopped international travel. Bain stated that the holiday season will be a key factor in the recovery.
“We are quite positive, even though the growth rate in China, in particular, has been slowing since mid-August. They are still very strong,” Claudia D’Arpizio (Bain partner) said. “There’s been a sharp V-shaped recovery in personal goods.”
Bain stated that the global luxury market, which includes high-end dining, fine art, and furniture, is still behind 2019 levels.
As consumers have moved to higher-quality furnishings and have spent more time at home, they have also been less likely to travel. Travel restrictions have made it difficult for luxury hotels, fine dining, and cruises to recover fully.
Global luxury is projected to total 1.1 trillion euros ($1.26 Trillion) in 2019, which is roughly 10% less than 2019 levels. Luxury cruises are the hardest hit sector, with spending falling by 80% from pre-pandemic levels. This will continue to decline even through 2020. D’Arpizio stated that there are still “glimmers for hope” in strong bookings for 2022.
International tourism is still restricted. Consumers have begun to buy their latest fashion trends at home instead of buying duty-free merchandise abroad.
The U.S. has temporarily overtaken the Chinese as the largest spenders. This year, they accounted for one-third, while Chinese shoppers accounted for 23%. This trend is expected to reverse by 2025 with almost half of all spending coming from Chinese consumers. That compares to just over 20% for Americans and 18% for Europeans.
Bain predicts that tourism will rebound by mid-2019 to the end of next year, but D’Arpizio stated she believes the pandemic will have created new habits with luxury shoppers spending more at home than abroad.
“We expect tourists will return. She said that they don’t expect them be as relevant as they were before.
The pandemic has also accelerated the shift towards online shopping. It has reinforced the dominance of larger brands on the market, as well as encouraged the use of digital campaigns and collaborations to grab attention.
“The gap is growing due to the pandemic. There are now clear winners and losers. D’Arpizio stated that bigger bands have more muscle.
They have also used connections in larger conglomerates such as the Gucci-Balenciaga alliance between two French brands owned by Kering.