Luxury goods sales just went from dip to rip.
After plunging due to the global health crisis, the personal luxury goods market returned to pre-pandemic growth in 2021, with sales estimated to top 283 billion euros ($325 billion) by year-end, according to a new report by Bain & Company. That would represent a slight increase from then-record sales of 281 billion euros ($318 billion) in 2019.
Bain analysts note that these figures include only high-end merchandise, from leather handbags to jewelry to fragrances. Luxury “experiences,” such as travel and dining, still lag 2019 levels due to the ongoing pandemic.
Young Consumers In The U.S. And China Powering Growth
The V-shaped recovery was largely powered by the U.S. and China, with U.S. consumers outspending their Chinese counterparts by 1.5 times, the report says.
That’s despite the fact that the luxury market in China has nearly doubled since 2019. Consumers there are so hungry for luxury brands that Louis Vuitton is reportedly considering opening its first duty-free store in China, on the island-province of Hainan, which has rapidly become a luxury shopping destination for Chinese tourists unable to travel overseas due to pandemic restrictions.
Louis Vuitton, or LV, is the largest brand in the giant stable of luxury goods companies owned by LVMH Moët Hennessy Louis Vuitton. The Paris-based conglomerate reported record revenue of 44.2 billion euros ($51 billion) in the nine months ended September 30, an 11% increase from the same period in 2019.
Looking at demographics, the biggest contributors to the global sales recovery in 2021 were millennials and Gen Z, the oldest of whom are 40, according to Bain. These two cohorts are expected to make up 70% of all spending on luxury items by 2025.
Betting On Future Luxury Growth
Bain’s report helps underscore the reason why I was interested in providing an easy way for investors to gain access to the luxury goods market. As I’ve said before, there was initially some pushback to the idea, especially during the pandemic.
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Originally Posted on November 18, 2021 – Luxury Goods Sales Have Recovered To Pre-Pandemic Growth: Report
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