Despite the deconfinement, summer will be the most affected, alert Bain & Co and the Italian luxury foundation Altagamma
Updated 42 minutes ago—
The recovery of luxury boutiques – here, Monday, Place Vendome in Paris – will be very gradual, according to Bain & Co.
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The figures are in line with those announced by the conglomerates of watch brands – Swatch or LVMH for example – at the end of March, largely paralyzed from one point to the other by the pandemic.
The only problem is that the 20% to 35% drop in sales on the world luxury market anticipated by the consulting firm Bain & Co and with the Altagamma foundation, which brings together Italian luxury manufacturers, now concern the whole of the 2020. And the return to the previous situation should take at best two years.
50% decline this summer
Combining economic forecasts, the perspectives of financial analysts and interviews with a hundred experts, this survey shows that gradual deconfinement should not mark the end of the tunnel. The pandemic has halted tourism activity, the main driver of the sector, and led to the closing of shops all over the world. As a result, the second quarter – roughly, the summer period – will be “the worst hit of the year” with activity 50% to 60% lower than in summer 2019.
The strongest resistance is displayed by accessories, beauty and jewelry
“If all sectors are in decline, the strongest resistance is displayed by accessories (note: leather goods), beauty products and jewelry,” said Claudia d´Arpizio and Federica Levato, the two responsible for the report. However, the latter observe that watchmaking should suffer the most. The comments on the sidelines of the presentation of the results of the Richemont conglomerate on Friday will help refine this forecast.
Back to normal in 2022
Over the year as a whole, the decline will depend – in addition to the possibility of a new contagion wave – on the recovery of tourism and the rebound in sales in Europe and the United States. China, which is embarking on a slow rebound, should keep its role of engine.
The recovery will be very gradual. Bain & Co does not see sales of luxury products return to their level of last year – 281 billion euros – before 2022 or 2023. This year, activity should rather be between 180 and 220 billion euros . In the longer term, experts anticipate a market reaching 320 billion euros in 2025, an average growth reaching the equivalent of only 2 to 3% per year since 2019. The importance of China will emerge increased from this crisis, According to the report: the country, from which the pandemic that brought the sector to its knees, will alone account for almost half of the sales of luxury products at the midpoint of the decade, against a third in 2019.
Posted today at 8:05 p.m.-
