Life after Covid-19: The future of luxury retail

Coronavirus achieved what the Second World War failed to do: the closure (albeit temporary) of Harrods of London, the largest luxury store in the world. As a symbol of the pandemic’s impact on the luxury market, it was a powerful one.

Geographically, the crisis hit the sector hard: it started in China, a country whose citizens accounted for 90% of industry growth in 2019, and quickly spread to Italy where many luxury brands are headquartered or have key suppliers.

In 2019, the global market for personal luxury goods was worth about $310 billion, compared to $128 billion in 2000. Now, analysts predict the sector to contract by about 35% in 2020. Immediate headwinds include:

  • Falling GDP and employment – inhibiting consumer spending power
  • Volatile financial markets – undermining consumer confidence
  • Travel restrictions – reducing the number of tourists who are a key driver of luxury spending

However, beyond the current turmoil, the broader outlook for the luxury sector remains positive, with three key trends defining the future

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