The luxury goods market will register a compound annual growth rate of between 6 and 8% from 2021 to 2025, according to forecasts by Bain & Company.
With the exception of 2020, the global market for this segment has shown continued average growth.
Demand in the personal luxury goods market, especially in the absolute luxury segment, tends to have fairly low price sensitivity.
According to Ermenegildo Zegna, the demand is more driven by the quality of the products and the extent to which the brand is recognizable and exclusive.
Brand equity and intrinsic value is a key factor and products designed, distributed and branded by a luxury company are typically highly distinctive, clearly related to their brand and unlikely to be confused with products designed and distributed by lower-tier brands or companies.
The global market for personal luxury goods had a total estimated value in 2021 of approximately €283 billion and has been growing steadily for about two decades with a compound annual growth rate of 6% between 1996 and 2019.
In 2020, the luxury goods market experienced a drop in demand as a result of the Covid-19 pandemic and changing customer preferences and habits, which has led customers to postpone or reduce the purchase of luxury personal items.
In 2021, the personal luxury goods market experienced a V-shaped rally fueled by, among other things, consumers’ shift from experiences to products.
From the first quarter of 2021, according to Ermenegildo Zegna, the world market for luxury personal items began to experience a recovery driven mainly by the positive evolution of the pandemic and the deployment of vaccines and immunization campaigns against Covid-19, which it allowed governments to ease restrictions and led to a partial resumption of shopping and travel, a partial return to pre-pandemic lifestyles, levels of consumer confidence, and recovering consumer trends, especially in China.
The company expects that the trends experienced in 2021 will continue to be the main drivers of growth in the coming years.
As of the third quarter of 2020, the personal luxury goods market shows signs of improvement compared to previous quarters of the same year, with sales for 2021 expected to be slightly higher than 2019 at current exchange rates (+1%), or showing an increase of 4% at constant exchange rates.