In-depth: Luxury Goods 2020

Statista Consumer Market Outlook

In-depth: Luxury Goods 2020 The global luxury goods market is expected to increase from US$285.1 billion in 2020 to US$388 billion in 2025. However, revenues in 2020 are expected to dip sharply compared to 2019 due to the Covid-19 pandemic. Asia is expected to witness the highest spending riding on the back of Mainland China’s resurgence, followed by Europe, North America, South America, Middle East, and Africa. Online sales of luxury goods are expected to cannibalize the brick-and-mortar share.

Even though luxury online sales are gaining market share worldwide, the importance of the physical store continues to increase. Interestingly, digital born luxury companies are now opening physical stores to increase traffic to their eCommerce stores, enhance brand legitimacy, provide the touch-and-feel, and improve local community engagement.

What's included?

  • Global market size
  • Segment analysis
  • Market trends
  • Drivers
  • Technological impact
  • Country analysis
  • Consumer analysis
  • Competitive landscape: Burberry, Coty, Estee Lauder, Hermes, Kering, L’Oreal, LVMH, Swatch Group

Burberry Coty Estee Lauder Hermes Kering L’Oreal LVMH Swatch Group

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The global luxury goods market is expected to increase from US$285.1 billion in 2020 to US$388 billion in 2025, at a CAGR of 6.4%. The Covid-19 pandemic is expected to result in cutbacks on discretionary spending in 2020, amid falling GDPs and employment levels. Additionally, the potential slowdown in international travel is expected to further disrupt the market, at least until an effective vaccine is available at scale. Growth is expected to resume in 2021 supported by Mainland China’s recovery, pent-up demand by millennials and Generation Z and the ongoing maturity of the digital channel. Asia, including Australia and Oceania, is expected to witness the highest spending riding on the back of Mainland China’s resurgence, followed by Europe, North America, South America, and Africa.

Even though online sales of luxury goods are expected to cannibalize the brick-and-mortar share over the next few years, the importance of the physical store continues to increase. Companies are following different strategies to augment their retail experience in the days of eCommerce. Interestingly, digital born luxury companies are now opening physical stores to increase traffic to their eCommerce stores, enhance brand legitimacy, provide the touch-and-feel lacking in an online store, and improve local community engagement. An overall Luxury 4.0 model is emerging which is characterized not only by the growth of the online sales channel but by the digitalization of a consumer’s entire luxury shopping journey.

The luxury industry has been associated with excessive consumerism and a general lack of respect for the environment. However, with the growing influence of Millennials and Generation Z who deeply consider the social impact of their luxury purchase, the industry is gradually moving towards ethical and sustainable products and experiences. Casualization of apparel, the growing demand for experiential luxury, rentals and the rising share of online sales and accessories are the other important market trends.

Spending by millennials from Mainland China, both at home and overseas, is one of the main drivers of the global luxury market. Mainland China currently has around 400 million millennials, five times more than the U.S., and they are expected to make up around 65% of the region’s consumption growth through 2020. International tourism is another driver with a 2017 Deloitte study showing global tourists to account for almost 47% of luxury goods purchases. The recent rise of luxury menswear has resulted in brands such as Prada, Gucci and Dolce & Gabbana, which traditionally have not been known for their menswear lines, to open stores focused only on men.

Brands are now adopting digital technologies to not only mimic the in-store shopping experience on their eCommerce platforms but to also enhance the physical store experience. Artificial intelligence (AI) is currently the most sought-after technology, as it enhances customer experience and helps brands reach a wider audience. Immersive technologies such as virtual and augmented reality (VR/AR) are also experiencing increasing use due to their ability to enhance the overall shopping experience and create high quality content for digital marketing. 3D printing is used mainly in luxury fashion as it enables the creation of shapes without molds, thus resulting in elements with extreme intricacy.

The U.S., Mainland China, and Japan are projected to be the three biggest markets for luxury goods in 2020 with a market size of US$65bn, US$38.1bn and US$27.4bn respectively. The dominance of these markets can be gauged from the fact that they are projected to account for almost 46% of the global luxury goods sales in 2020. Even though the U.S. retains the leading position for luxury goods globally, factors such as economic and political uncertainty, cutbacks on discretionary spending and low sales to international tourists mainly due to the Covid-19 pandemic, are affecting market growth.

Clothing accessories and glasses/sunglasses are the most preferred luxury categories by respondents from both the U.S. and the UK, whereas Germans preferred perfumes. Chanel is the most preferred cosmetics brand, whereas Rolex leads the chart for luxury watches and Gucci is preferred for luxury fashion and accessories. The majority of the luxury purchases are associated with gifts for someone. However, while making the purchase decisions, quality remains as the prime factor. Germans prefer online shopping channels for luxury goods, whereas Americans and Britons prefer department stores or physical store.

France leads in the number of leading luxury goods companies globally. Specifically, most of the prominent French luxury goods companies are located in Paris. We have a closer look at some of those prominent French companies: LVMH, L'Oréal, Kering and Hermès along with other global leaders including Burberry, Swatch, Estée Lauder and Coty. Most of the luxury goods companies followed inorganic growth path by acquiring competitor companies to increase their business presence. A few of them opted for licensing and distribution arrangements to support their bottom line.

  • Language: English
  • Released: August 2020
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