The global luxury goods market has returned to growth in the first quarter of the year, with signs that the industry could recover to pre-pandemic levels in 2021.

The market grew by 0 to 1 per cent compared to the same period of 2019, according to research from consultancy Bain.

The study shows that China continues to drive the recovery, while the US has also rebounded.

But the outlook for the rest of the year still remains uncertain.

Bain expects the market to reach between €250-€295 billion, depending on which one of two possible outcomes outlined in the report becomes reality.

The first scenario, which the consultancy said has a 30 per cent probability, is that the recovery path will continue throughout 2021, winning back 2019 market level as early as this year. In this case the market could accumulate up to €295 billion worth of sales.

Despite the strong momentum in the first few months of the year, full year growth is still being stifled by slower domestic luxury purchases and limited intra-regional tourism.

In this case, the full recovery to 2019 levels would be expected only in 2022 and the market would reach €250-265 billion this year. Bain said that this outcome has a 70 per cent probability.

“It’s clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study.

Bain & Company partner and report co-author Federica Levato said: “Brands have been forced to rip up the playbook and innovate rapidly in light of the crisis. As life hopefully begins to return to normal, customers are expecting a tech-enabled human relationship with brands. Winners will need to stay closely in touch with the key trends shaping the new normal lifestyle – all while remaining differentiated and creating a narrative that is true to their own culture.”

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