Leave a Comment / February 3, 2022
Despite a pandemic, Brexit, and serious issues with imports, exports and staff shortages on a global scale, the luxury goods market have rebounded very nicely indeed.
It looks like the luxury market will return to the pre-pandemic 2019 levels much faster than originally predicted.
As an international entrepreneur and luxury diamonds business owner, this has been a great development in 2021 and instils confidence in us all as we navigate our way through 2022.
Bain and Company estimated growth of 13 to 15 percent during the year of 2020; this is when the luxury sector was hit hardest by the lockdowns and resulted in store closures, an international travel ban and serious economic uncertainty.
The report showed a shift toward goods rather than a pre-pandemic balance between goods and luxury experiences.
Experiences undoubtedly fell off because people either couldn’t invest or enjoy them or because confidence in booking those experiences declined due to uncertainty.
Although 2020 was a year, most want to forget and possibly have because it feels like we lost a year of our lives.
The luxury travel market made a strong recovery, as did the fine dining and hospitality industries, which is remarkable considering how badly they had been hit. Luxury cruises have inevitably taken much longer to recover.
Luxury personal goods have seen the greatest rebound, with figures up by 29%. Fine wines, luxury homeware and luxury cars increased beyond their 2019 levels and 2020, but the latter isn’t unexpected.
It seems everyone was enjoying fine wines at home whilst wearing their luxury comfy casuals and escaping on the open roads during the lockdowns. Who can blame them!
It’s satisfying to report that the luxury diamond industry has also rebounded incredibly well and looks set to remain strong throughout 2022.
What’s driving the luxury market rebound?
China and the US markets have been big drivers of the rebound with increased online sales worldwide. The Chinese market has reportedly doubled in size since 2019, and the US luxury market has seen new areas open up across the country.
The Middle East has seen strong growth, but across Asia, Japan, and Europe has seen a weaker rebound.
Knight Franks annual wealth report shares how good a year it has been for passion investments such as fine wines, watches, handbags, art, cars and whisky.
It seems there’s nothing like a global crisis to make people want to invest more, especially in the luxury brands market.
With more time spent at home and more time on their hands to get involved in the investment market, many people, especially younger ones, took advantage of the situation to make some shrewd portfolio moves.
The other advantages have been for those businesses able to bring their luxury offerings online.
This has been seen with the auction houses worldwide increasing their digital presence and, as a result, reaping the rewards.
The fine wine market has seen a remarkable recovery during the pandemic. This is partly because many couldn’t go out to their usual establishments of choice to enjoy a bottle, so they started to buy-in.
According to the head of UK sales at Sotheby’s auction house, 2021 saw their London sales increase dramatically due to their live-streamed auctions online, meaning they could reach an international audience easier than ever before.
The Bain report notes that Millenials and Gen Z will make up 70% of the market by 2025 and predicts growth in online luxury sales of around 27% due to the increase of 50% from 2020 to 2021.
The same can be said for the secondhand luxury market, which saw a growth of 65% over the last four years.
Luxury brands would be wise to continue focusing on this demographic with their online marketing campaigns to ensure the growth outperforms the predictions.
There are still many challenges ahead for every type of industry, not just the luxury market.
The world is not out of the woods just yet with the Omicron variant, soaring energy prices and supply chain issues. But there are many positive signs that the luxury market will continue its rebound and remain strong in 2022.