MILAN -- Luxury brands are already cashing in on promises of a 21st-century version of the "Roaring '20s" in the United States, where hefty stimulus packages and an advanced vaccination campaign are accelerating a recovery in high-end sales, according to a study released Monday by the Bain & Co. consultancy.
The U.S.' rapidly rebounding economy along with that of China -- already on an established growth trajectory -- could push the global market for personal luxury goods back to or even beyond pre-pandemic sales levels as early as this year, Bain partner Claudia D'Arpizio said.
"We expect a very positive cycle that is just starting in the United States, where luxury brands can really take advantage," D'Arpizio said, citing the stimulus money and the positive stock market reaction.
"This, together with the fact that probably consumers are already back to normal in terms of traveling, is pushing the recovery of luxury goods," D'Arpizio said.
In its most optimistic outlook, Bain forecasts a full recovery and even growth to as much as $358 billion in sales as soon as this year. A more cautions scenario puts off until 2022 the recovery to 2019 levels.
Sales of luxury apparel, jewelry, leather goods and beauty products plunged to $264 billion in 2020, from $341 billion in 2019, shedding six years of growth.
Europe remains the laggard, with tourism flows from abroad still suppressed by a vaccination campaign that is behind that of the U.S.
Bright spots include the Middle East, in particular Dubai in the United Arab Emirates, which has attracted individuals of high net worth during the pandemic. "They did vaccinations very quickly, and many wealthy people during the winter moved to working remotely from Dubai," D'Arpizio said.
The pandemic is proving to be an accelerator of trends that were already happening, including more e-commerce, an emphasis on greater inclusivity, a push toward sustainability and an embrace of the secondhand market, she noted.
E-commerce grew to 23% percent of sales in 2020 from 12% in 2019, a bit more than a decade into the phenomenon. It is expected to reach 30% by 2025.
The result is likely to be a rethinking of retail footprints, with some reductions, but also an emphasis on customer experience to support the online presence, both in terms of social media and retailing, D'Arpizio said.
The secondhand market helps brands emphasize the longevity and value of their products, she said, qualities that are especially attractive for younger consumers who are starting to power the market. Collectible sneakers, vintage bags by brands such as Prada or Hermes, and even secondhand watches are developing a cachet all their own.
"There is a brand-equity element," D'Arpizio said. "This is a space where some brands were skeptical and scared, but now they are trying to understand the consumer dynamic and partner with players or develop secondhand platforms themselves."
