The onset of the pandemic caused the luxury market to retreat around the world. Companies in the area shrank 40% in 2020, going from sales of €966 billion in 2019 to €581 billion. Personal luxury dropped 22% and experience, the most affected by restrictions, practically halved. In 2021, however, the market started to recover and the Boston Consulting Group (BCG) projects growth between 41% to 50%, compared to 2020.
In Brazil, however, the movement must be opposite. Although the consumer stopped buying abroad at an initial moment and moved the local brands, now the stores must slow down sales.
“There is a perspective in the world of luxury consumption repatriation: people stop shopping outside their countries,” says Flavia Gemignani, director of BCG. “Brazil is the only one, of the ten countries we surveyed, that has the opposite trend.”
In 2020 and part of 2021, sales in luxury malls increased in the country. “It was associated with consumption that, before, was done outside Brazil.”
According to the report, the recovery of the luxury segment in the world may not be enough for it to return to levels before the pandemic in 2021. Even with growth, the market should remain between 10% to 15% below the result of 2019.
The recovery should only take place in 2022, with growth of 5% compared to 2019, which would represent more than €1 trillion in sales. BCG also projects that the luxury market could earn €1.22 trillion in 2025, if the pace of growth is maintained from 2021 onwards.
One of the engines of recovery are millennials and Generation Z. It is the population that most believes in the economy’s recovery: 53% say it will be quick, against 20% of other generations. Younger age groups accounted for 39% of luxury consumption in 2019. In 2025, it will be at least 60%.
BCG also credits the growth to what it calls the rebound effect: the desire to consume what was suppressed during the pandemic. For the consultancy, China and the United States will lead the resumption.
For the study, BCG consulted 12,000 consumers from the 10 main luxury markets in the world, including Brazil, with an average expense of around €33 thousand.
The information is from the newspaper The State of São Paulo.