Luxury eCommerce Slowly Gaining Traction

Retail with luxury goods experienced a sharp decline in demand in the course of the COVID-19 pandemic. According to the Statista Consumer Market Outlook, revenues in the global Luxury Goods1 market fell from US$313.5 billion in 2019 to US$272.9 billion in 2020, as individual financial difficulties and an overall insecure global economic environment kept many consumers from spending money on exquisite and high-end products. At the same time, the global luxury goods segment was particularly hard hit by the month-long lockdowns and restrictions on stationary retail, as it is an industry with a well-established brick-and-mortar tradition that lays a focus on high-end boutiques with the special luxury touch-and-feel. Corona might also have opened up new doors for the luxury segment, though. The market is recovering relatively fast – revenues are likely to be back at a pre-COVID level by 2022 and increase further from then, according to the Statista Consumer Market Outlook. One of the reasons might be the general shift from offline to online shopping that could be observed as a result of the pandemic, which did not leave the luxury segment unaffected. Although the bulk of revenues in the global Luxury Goods market is still produced in stationary stores, the eCommerce share in the market has slowly but constantly been rising over the past years:

While in 2017, the share that offline sales channels contributed to the overall revenue in the global Luxury Goods market was still an overwhelming 92%, eCommerce passed the 10%-share mark only two years later in 2019. In 2020, the online share in the global retail market for luxury goods increased by another percentage point. Analysts from the Statista Consumer Market Outlook expect the share to increase further, slowly but steadily, to make up 14% of all revenues by 2023. The reasons for the development are likely to be diverse – one of them certainly being the coronavirus pandemic, as mentioned above. Beyond that, the digitally savvy generations Y and Z are reaching an age in which they potentially earn high incomes and can afford high-class products. Moreover, digital-first players like Net-a-Porter (net-a-porter.com) or Farfetch have emerged also in the luxury segment and demonstrate that selling high-priced products via online channels can be successful. Furthermore, according to a recent survey conducted by the Statista Consumer Market Outlook, online luxury brands have already made their mark in the awareness of many digital consumers in Europe. It might thus be only a question of time until luxury eCommerce gains momentum.

1: The Luxury Goods market segment in the Statista Consumer Market Outlook includes personal luxury goods like watches and jewelry, Apparel and footwear, eyewear, cosmetics and fragrances. Wine and spirits, food, furniture, hospitality and travel, luxury cars as well as artisanal and small-scale production are excluded.