Analysts agree: the luxury segment will recover quickly from the Covid-19 shock

Analysts agree: the luxury segment will recover quickly from the Covid-19 shock

All were impacted by the Covid-19 shock, and the luxury segment also paid some consequences. But analysts agree: every crisis offers opportunities. And so, partly because of the sector’s appeal, partially because of its ability to reorganize, the luxury industry is destined to recover. Companies of that segment should, already in 2021, show signs of growth.

The Covid-19 shock

Covid-19 could cost the luxury segment 9% of revenue in 2020. But the sector should show immediate signs of it being recovering. According to Finaria, total turnover in 2021 should already show a +12.9%, reaching 332 billion USD. The recovery wont end there though, because business could even go up to 366 billion USD by 2023: +28% in three years. Finaria believes that there are the margins to reach 388 billion USD of turnover by 2025.

The transition

The pandemic forces people to modify their behavior, and thus how they consume. For this reason, Bank of America aims the spotlight on potential digital activities. The quota attributed to the online channel in 2019, according to a report by Thematic Investing Europe: the next 10 years, is of 12% of the total turnover. “Yet, we expect the percentage to reach 18% in 2020 – stated the analysts according to MFF -, as a consequence of the new behavior brought on by the pandemic. We also expect the increased online orders to further accelerate in the future and reach 30% of the total by 2025”. IN absolute terms, it means that luxury goods sold digitally will go from a current value of 34 billion to 95 billion USD by 2025.

Picture from Imagoeconomica

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