Demand for luxury products drastically reduced because of Covid-19, countries lockdown and global economic slowdown. In 2019 China accounted for 90% of worldwide growth in luxury goods and for 35% of personal luxury goods purchase worldwide. After pandemic reached Italy and France luxury companies faced additional operational problems because of supply shortage and countries lockdown.
Luxury companies offered their factories to make protective clothing, masks, hand sanitizers. Luxury market has changed completely in 3 months. Also preferences of customers’ changed as well as their purchase power. During crisis times people prefer to save money than to spend on ridiculously expensive bags or premium cosmetics. Worldwide demand for luxury items during lockdown extremely low .
Luxury market will depend from duration of corona virus pandemic and governments’ approach to stop virus spread. During 2020 fall in demand for luxury items expected by 30%. But after corona virus pandemic expect that brands will reduce prices and provide more meaning behind the products. In China majority of luxury shops re-opened and customers willing to buy more than before the virus.
European luxury market faced the biggest decline in this century. Tourism ban and total countries lockdown hit badly on luxury sales because no one buys expensive dress just to wear it at home.
Impact of global crisis 2008-09 and 2002-03 SARS outbreak did not have such a strong affect on global luxury market. Because Chinese buyers did not contribute 30% of sales worldwide during those period. Now everything has changed and Chinese buyers create global luxury trends.
The corona virus “fear factor” is much bigger than expected, because countries did not prepare for outbreak. On screenshot available visual scenarios for luxury market. In the best scenario fall will be 15-18%, in realistic scenario expected 22-25% fall, in the worst scenario expected 30-35% fall.
The fastest luxury demand growth expected in China, Hong Kong, Taiwan, South Korea, Japan, Singapore. But European, American and South American markets could take longer to recover. Fear of corona virus will stimulate digital luxury shopping.
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