The global luxury goods market size is projected to reach USD 352.84 billion by 2027, exhibiting a CAGR of 4.6% during the forecast period. It stood at USD 316.16 billion in 2019 and USD 257.26 billion in 2020. Heightening luxury goods consumption by wealthier people worldwide will stoke the market growth, suggests Fortune Business Insights™, in its report, titled, “Luxury Goods Market, 2021-2028”.
According to the data published by Oxfam International in 2020, 2153 billionaires are present worldwide. These billionaires are wealthier than the total of 4.6 billion people altogether. Moreover, in this pandemic crisis, rich people have gotten richer. Forbes reported that more than 22000 billionaires have collectively made $1.9 trillion in the year of crisis.
The epicenter of the pandemic, China tops the ranking of wealthier people. It has more wealthy people than the U.S., states Credit Suisse Report on Global Wealth. It also mentions that the Asian country has 4.4 million millionaires. They make the world’s top 10% of earners.
This rise in wealth is spent by these wealthier people in the name of luxury brands and luxury goods. For them, the quality and brand of the product are of higher importance than the price. These consumers are willing to pay for premium products as they offer them innovative and richer experiences that make them spend on these luxury goods lavishly.
The COVID-19 pandemic has led to a severe economic downturn, impacting industries and businesses in a variety of ways. Companies and industries worldwide were shut. The lockdown led to the cancellation of several fashion-related shows. Due to travel bans, luxury goods that are purchased from airports, cruises, and duty-free shops were also affected. This all impacted the market growth negatively.
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Based on the product type, the market for luxury goods is divided into watches & jewelry, perfumes & cosmetics, clothing, bags/purses, and others. Out of these, the clothing segment earned 28.79% in terms of share in 2019. By end-users, it is divided into men and women. On the basis of distribution, it is segmented into online and offline. In terms of geography, the market is categorized into North America, South America, Europe, Asia Pacific, and the Middle East & Africa.
Drivers and Restraints
Rising Demand for Sustainable Products to Promote Market Growth
The new trend of sustainable products is making its mark in the luxury business. Leathers made from plants and fruits, such as pineapple are used to make jackets, shoes, and handbags replacing the use of animal leather.
Top luxury goods manufacturers, such as Prada signed an agreement with Credit Agricola Group to lower the usage of water and electricity. It is using safer raw materials to manufacture its products. It also promotes the usage of regenerated nylon. Such sustainable measures taken by these companies will benefit them in the longer run due to the current climatic crisis around the world and thus these environment-friendly initiatives are expected to fuel the luxury goods market growth.
On the flip side, the availability of second-hand products and their dupes are negatively affecting the market.
List of Key Players Covered in the Luxury Goods Market Report:
- LVMH Moët Hennessy-Louis Vuitton SA (Paris, France)
- Compagnie Financière Richemont SA (Geneva, Switzerland)
- Kering SA C (Paris, France)
- Chow Tai Fook jewelry Group Limited (Central, Hong Kong)
- The Estée Lauder Companies Inc. (New York. U.S.)
- Luxottica Group SpA (Milan, Italy)
- The Swatch Group Ltd. (Biel / Bienne, Switzerland)
- L’Oréal Group (Clichy, France)
- Ralph Lauren Corporation (New York, U.S.)
- Shiseido Company Limited (Tokyo, Japan)