Luxury Goods Quarterly Statement Q3 2020

August 2020

Early July 2020, Euromonitor published revised forecasts for luxury goods for 2020-2024 that considered the implications of the novel Coronavirus. Overall, Coronavirus (COVID-19) is expected to severely suppress global demand for luxury goods in 2020, but the pandemic’s effects are expected to be markedly different across different categories and channels. A strong rebound is expected in 2021, but pre-COVID-19 revenues are not expected to be fully recovered until 2022.

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Key findings

COVID-19 continues to disrupt luxury goods sales worldwide

Despite national lockdowns having been gradually lifted in most countries, the COVID-19 pandemic continues to disrupt the global economy and fears of a second wave remain worldwide. The forecasts for 2020 have been marginally revised upwards over the previous quarter, however dark clouds remain on the horizon for the short term.

Digital becomes the dominant means of industry participation for luxury goods

Pre-pandemic, the luxury industry was already going through a period of disruption on the back of digital development. Significant global investment has accelerated this trend and is now reaching areas where advanced technology was not previously available. COVID-19 sets the tone for future development as digital becomes the dominant means of luxury goods industry participation.

Redefining core values among eco- conscious luxury consumers

Ethical and sustainable practices among luxury players will still remain top of mind, but will evolve into a greater push towards conscious luxury, driven by digitally-savvy consumers pushing for accountability, inclusivity and brand purpose beyond profits.

All wellness-related micro trends accelerating

The COVID-19 pandemic is accelerating all wellness-related micro trends, with the basic principles of health and keeping diseases at bay as a core priority. With mental and emotional wellbeing front of mind, brands are pivoting towards prioritising mental wellbeing and mood enhancement through new, digital applications.

COVID-19 sends shockwaves across all income and wealth groups

Traditionally high-income households have been somewhat sheltered by shocks in the financial markets as they have more of a financial cushion, but as the world enters the worst economic recession since the great depression, the outlook remains uncertain in all income groups for the short term with many individuals leaving the ranks of the wealthy.

Scope
Euromonitor International and COVID-19: Forecasts and analysis
Luxury goods quarterly update methodology
Demand for luxury goods is fairly elastic
Luxury goods COVID-19 data and reporting timeline
Key findings
Key drivers shaping luxury goods during Q3
Store closures and protectionism drive more luxury consumption online
Renewed values drive purpose-led innovation in luxury goods
Travel lockdown, protectionism and quarantine measures hit travel hard
Demand for “escape” grows even as consumers stay close to home
Luxury consumers pivot toward enhancing physical and mental health
High-income consumers driven to curb discretionary spending
Global economy will contract sharply in 2020
In our baseline view, the pandemic peaks in summer 2020
Three scenarios examine the impact of a more severe outbreak
Our view in short
Forecast real GDP growth in 2020 under different scenarios
Global luxury market to contract by almost USD150 billion
Luxury goods industry remains heavily disrupted due to COVID-19
Outlook for luxury goods moderately less gloomy in Q3 update
Pandemic represents an unprecedented shock to all category demand
Luxury cars and personal luxury remain highly exposed to COVID-19
Double-edged sword for luxury as international shopping grinds to a halt
Experiential luxury not set to reach pre-pandemic levels in medium term
Asia Pacific remains heavily exposed to COVID-19 pandemic
Latin America falls foul of digital divide and omnichannel advances
North America faces further challenges owing to economic uncertainty
Divergence remains a key theme across Western Europe
The US to post the largest absolute sales decline in 2020
US wealthy population hit hardest due to COVID-19
Global luxury consumption at further risk as two million leave ranks of the wealthy
Conclusion
Outlook for global luxury sales Q3 baselines and forecast scenarios
About Euromonitor International’s Industry Forecast Model

Luxury Goods

This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.

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