Business News

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