The past two years should have been horrible for the €283bn luxury goods sector. Many of the usual triggers for high discretionary spending — confidence in the economy, international travel, social occasions — have been in short supply. Stores have closed, reopened and closed again; fashion shows and other key marketing events have been nixed or migrated online; supply chains have been squeezed; prices of materials and labour have gone up.
And yet global sales of luxury goods made a full recovery to pre-pandemic levels in 2021, according to analysts, as sector stocks — up 40 per cent year-on-year — outperformed the wider equity market for the sixth consecutive year. (Profits also made a full rebound thanks to rental renegotiations and other cost savings made early in the pandemic.) Fiscal stimulus, a strong stock market and increased household savings buoyed spending in the US, and with fewer opportunities to splash out on dining or travel, many consumers funnelled what they would have spent on luxury services into luxury goods.
But the recovery has not been even. It is the large, conglomerate-backed brands with their vast geographic reach that have gained as smaller players have struggled, sold up or gone bankrupt. And though luxury spending has returned to 2019 levels in the US, China and Korea, sales in Europe and Japan remain depressed (due to a lack of tourists for the former and slow vaccine adoption for the latter).