14.05.2020 13:00
(Act. 14.05.2020 13:00)
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Exclusive watches, jewelry and expensive branded clothes hardly find buyers in the times of Corona. The pandemic plunged the manufacturers of luxury goods worldwide into a deep crisis, the consulting firm Bain & Company wrote on Thursday. The market will recover only slowly.
In the first quarter, global sales of luxury goods fell by a quarter, the Bain experts are predicting together with the Italian luxury goods association Altagamma. Depending on how long the lockdown measures are maintained, a decline of between 20 and 35 percent is expected in 2020.
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The industry had a good start to the year, with success in China, Europe and the United States. But then the rapid spread of the corona virus caused the brakes to slow down in all core markets, explains Bain manager Marie-Therese Marek. Because of the worldwide border closures, tourists had broken off as an important source of income.
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According to Bain, manufacturers of expensive watches were hit particularly hard by the crisis, since their products are mainly sold in specialist shops. The same thing happened to the producers of luxury clothing and jewelry. If you go out, there is hardly any reason to buy an evening dress and the matching necklace.
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The slump in the Swiss watchmaking industry was already evident in the export data for March published by the Swiss Customs Administration (EZV) about a month ago. Compared to the previous year, watch exports sank by over a fifth, in the first quarter the decrease was 7.5 percent.
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The categories cosmetics and accessories were more crisis-resistant than watches and clothes, Bain continues. Since these articles are more frequently purchased online and the skin is maintained even in times of crisis, the drop in sales is less.
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Online sales of luxury goods should continue to grow. After growing strongly in 2019, the online business with the closings of brand shops and department stores has become more important. According to the Bain estimates, around 30 percent of industry sales will be generated in online trading by 2025.
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According to the study, the luxury goods market cannot be expected to recover too quickly. Uncertainty about the actual effects of the corona crisis and concerns about a second wave of infection significantly dampened consumers’ desire to buy.
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“At the earliest in 2022, sales should reach the pre-crisis level again,” believes Bain luxury goods expert Oliver Merkel. In 2019, the industry had turned over around 281 billion euros worldwide. At that time, the luxury goods market had grown by 4 percent.
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In the long term, a lot depends on the desire to buy in China. According to Bain, around half of all luxury goods purchases should be made by Chinese by 2025. Mainland China will then record about 28 percent of global luxury sales. Today it’s 11 percent.
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By 2025, the luxury goods market is expected to continue on the same path as in the past, with annual growth rates of 6 percent. Until then, Bain expects the industry to generate annual sales of between 320 and 330 billion euros.
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