Consulting company Boston Consulting Group (BCG) presented a progress report on the state of the world market of luxury goods and luxury goods. Experts say that the pandemic coronavirus COVID-19 led to the present crisis in the market, which fueled development in the global economy and high demand from Chinese consumers. In the new conditions, experts expect a larger number of online sales channels, but also record the growing trend to buy second-hand luxury goods or hire of such goods.In Friday’s annual report of BCG on the global market of goods and services luxury it is noted that “even the most optimistic scenario assumes a drop in sales of luxury goods in 2020, 35-45%”. The company’s specialists note that due to the high level of uncertainty, the revival of the sector will be gradual: in the worst case, total sales in 2021 may be 20% lower than in 2019, then 2022 will be fixed “slightly lower reduction.” Thus by 2023 and further sales in most categories has yet to return to pre-crisis indicators. “We see that the interest for luxury restaurants, hotels, resorts and cruises is reduced. 50-60% of consumers say they will spend less or much less in these categories, at least for the next six months. All this testifies to the urgent need of revision proposals from the players in the luxury segment. If the group “goods” a new reality — a transition to online, then entertainment is the exclusive formation of the chamber offers recreation and travel”,— said the managing Director and partner of BCG, head of the Advisory practice on the consumer goods and retail in Russia and CIS Ivan Kotov.Chinese consumers — one of the main engines of the luxury market in recent years — significantly changing their preferences because of the pandemic and the consequent restrictions on travel. 73% of polled Chinese consumers said that in the next 12 months will take in at least half of their expenses on luxury goods purchases outside of China to buy in China itself. In this regard, BCG expects rapid growth of the Chinese market for luxury goods, even faster than before the pandemic, but also believes that luxury brands need to make changes in marketing and distribution activities, focusing on regional markets.Speaking about the consequences of the pandemic of the market from the demand point of view of different generations, a consulting company notes that “most of the crisis affected people under the age of 35 years old (Millennials and generation Z), half of the respondents in these age categories reported a fall in revenues.” However, representatives of this group ��had the highest level of optimism about the future: 50% believe that the recovery will be quick. Among the older generation optimistic experience only 20%. Thus, BCG stresses, “from the point of view of market participants, Millennials and generation Z are of particular interest, taking into account the anticipated growth of their purchasing power in the coming years — it is expected that in 2025 people from this group will be consumers 55% of the luxury market— as well as the ability to influence other age groups, forming and anticipating market trends”.Among the main trends of market development in the current conditions, the study authors noted the continued growth in popularity of shopping on the Internet. In their opinion, online sales channels will increase their share after the abolition of restrictive measures because of a pandemic. Nearly half of consumers surveyed — 48% — said they intend to buy goods via Internet more often than before. While 36% of consumers intend to buy via the Internet more and more frequently than in conventional stores, and 23% will continue to shop just offline. Therefore, BCG believes that the growing popularity of online sales channels not only does not harm the brand store, but also an opportunity to attract new consumers, if retailers can strike the right balance between online and offline trade.Among the main trends of the present time also BCG calls a “new business model that changes the possession of luxury goods”. We are talking about the growing popularity of purchases of used goods, and the use of such goods by lease, not a purchase. The study notes that even before the pandemic COVID-19 two-thirds of respondents were willing to buy more second-hand luxury goods than ever before. It is noted that in the last 12 months, 25% of consumers surveyed bought luxury goods, were in use; 33% of respondents sold these products; and renting of luxury goods were used by 16% of consumers surveyed. Comparing the trends of second-hand and rental, BCG notes that the first variant of consumption is more preferable among the respondents. Buying second-hand is interesting 62% of respondents, and the rent of 45%. Among the reasons for this consumption option 44% referred to the desire to own luxury goods, but not to rent, 12% are afraid to damage the leased goods and incur penalties. With 18% of those who prefer to rent, explain that his desire to use the product a few times, and then return it; 17% said they can’t afford to buy new goods, while another 17% believe that renting allows them to use a more exclusive or unique luxury goods.Eugene Hostina the global market of luxury itemsand — a big change. A significant portion of the luxury segment becomes part of a sweet life for a seemingly non-targeted audience. This indirectly says the increased interest of the segment to the Internet as a sales channel. However, craving for luxury has long been accompanied by the progress of humanity — it can even be considered a factor in the evolution of production.Read more
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