The COVID-19 axe is falling on the luxury goods industry. Management consultancy firm Bain & Co. is forecasting a global market slump comprised between 25% and 30% in Q1 2020. On an annual basis, the estimated revenue loss is set to range from €60 billion to €70 billion (equivalent to a 22 to 25% downturn), with a disproportionate impact on profits.
The Q1 figures reflect the sudden slow-down of consumption in China, the first COVID-19 hotspot and a country that in 2019 accounted for 90% of the luxury market’s global growth. Following the pandemic’s spread, the global scenario has worsened, as the emergency is affecting the world’s leading markets, starting from Italy, one of the industry’s manufacturing hubs.
“It’s likely that the effects [of COVID-19] on the luxury industry will still be felt in 2021, with different magnitudes and recovery speeds in the various countries affected,” said Federica Levato, a partner and the leader of Bain & Co.’s fashion and luxury division in Italy.