Luxury Goods Market Braces for Possible $43 Billion Sales Loss
Non-essential retailers are closing their doors to prevent the spread of the coronavirus, and the luxury goods market — which remains a predominately in-store business — is expected to take a $43 billion hit in sales, according to a report from investment firm Bernstein. The company said in an email to clients that the first half of 2020 is “likely going to be the worst in the history of the modern luxury goods industry,” Quartz reported.
Bernstein said it expects significant falls in luxury demand in China, Europe and the United States. “This scenario is worse than in 2008, as there doesn’t seem to be any offset — other than possibly a quantum of solace from online sales,” it said.
Consumers at all income levels are feeling less confident, according to Business Insider, which also said confidence among high-income Americans fell first and declined fastest when compared to middle- or low-income groups. Consumers are buying essentials rather than business segments considered discretionary, which luxury goods are.
“The coronavirus pandemic has begun to affect consumers’ views of their own financial situation and confidence in spending, a key difference from recent periods of depressed consumer confidence,” Morning Consult’s economic intelligence unit said in a press release.
While e-commerce makes up only 4 percent of luxury goods revenue, according to PYMNTS, the segment now needs it to support operations for an undetermined period. The online payments and commerce news site also suggests that enhancing the user experience through e-commerce platforms will be the key to maintaining consumer loyalty.
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