Global Luxury Feeling the Chills of the Coronavirus
For the better part of the last decade, China has been the El Dorado for the global luxury industry, driving its growth to reach a market size of €281 billion in 2019. Mainland China alone contributed €30 billion to global luxury revenues while globetrotting Chinese consumers spent close to €100 billion in premium high-quality products, accounting for almost 90% of the global luxury market growth. The industry’s consistent growth and China’s ever-increasing appetite for luxury goods and services bolstered both short and medium-term forecasts, with pundits predicting the industry to reach a market valuation of almost €350 billion by 2025 despite clear signs of a slowdown in the Chinese economy.
While neither the looming fears of Chinese economic downturn nor that of a global recession managed to dampen the industry outlook, the recent outbreak of the novel coronavirus (Covid-19) has thrown the spanner in the works, potentially leaving all predictions off the mark. With Chinese cities, large and small, going into lockdown and outbound tourism dropping to an all-time low, the luxury industry may be facing a crisis of unparalleled proportions. Major luxury groups from Kering to LVMH shuttered their stores across China and reported a significant drop in sales globally. The luxury industry is bracing itself for arguably its toughest year since the financial crisis of 2008-09.
The full report from SIA Partners can be read here
Posted on 2020/04/23