Global sales of luxury goods are forecast to fall by 20 percent this year, with Europe most affected. It could take until 2023 to return to 2019 levels, according to forecasts by Altagamma and the consultancy Bain & Company.

Worldwide sales of luxury goods is expected to fall by 20 percent this year due to the Covid-19 pandemic, according to the Altagamma Consensus 2020, a survey carried out by Altagamma, the association of Italian luxury goods producers. A bright spot is e-commerce, with sales on retail channels seen up 16 percent and those on wholesale channels up by 12 percent.

Europe will be the region suffering the most, with a forecast of 29 percent drop in sales, followed by the Americas, with the North American market down by 22 percent and South America down by 21 percent.

Purchases by Chinese consumers are predicted to contract by 9 percent, by 14 percent for Japanese ones and by 16.5 percent for other Asian consumers. European are expected to reduce purchases by 25 percent this year and North Americans by 21 percent.

The products most affected by the decline are expected to be watches, forecast down by 25 percent, jewelry, down by 23 percent, and clothing, down by 21.5 percent. Leathergoods are expected to be more resilient, following with a drop of 17 percent.

But in the longer term, the outlook remains positive for the industry. Based on the Altagamma Bain Worldwide Market Monitor, carried out by Bain, the industry’s revenues will rise by annual average of 2-3 percent by 2025, even though the recovery will be slow. Bain expects the market to return to 2019 levels in 2022 or 2023 and then to rise to €320-330 billion in 2025.

Bain estimates that companies will have to become even more creative and innovate faster. They will also have to combine the introduction of safety and health measures while maintaining the appeal of buying luxury goods.