Bain: From Surging Recovery to Elegant Advance: The Evolving Future of Luxury

Over the past two decades, the Bain & Company Luxury Study has become a reference point for the industry, but it has never seen a year of surging performance to match 2021. With personal luxury goods sales likely to be up by almost a third, the 20th edition of the study—released in collaboration with Fondazione Altagamma, the trade association of Italian luxury goods manufacturers—is a landmark in more ways than one.

The overall luxury industry tracked by Bain & Company encompasses both luxury goods and experiences. It comprises nine segments led by luxury cars, personal luxury goods, and luxury hospitality, which together account for 80% of the total market. After contracting in 2020 due to the pandemic, the market grew by 13% to 15% in 2021 to €1.14 trillion, according to our estimates. However, this is still 9% to 11% below 2019 levels.

Luxury spending adjusted to 2021’s constraints, with a shift from experiences to goods and experience-based goods. Luxury products in general were first to recover to their 2019 levels, driven by the loosening of pandemic restrictions and by lockdown-inspired home upgrades and blended living and working spaces. Experience-based goods (such as fine art, luxury cars, and yachts) almost fully recovered to 2019 levels, due to positive consumer traction across segments. Limitations to international travel continued to restrict spending on luxury experiences, which remained well below pre-pandemic levels.

Spending on experiences should be the last luxury outlay to recover historical highs, given its reliance on the resumption of international tourism and business travel.

The market for personal luxury goods—the “core of the core” of luxury segments and the focus of this analysis—has come roaring back, experiencing a V-shaped recovery in 2021. After a sharp contraction in 2020, personal luxury goods sales are set to beat their pre-Covid record, with the market forecast to grow by 29% at current exchange rates to hit €283 billion, likely finishing the year up 1% from its 2019 record.

Bain Partner Claudia D’Arpizio appeared on Bloomberg News to discuss the increase of personal luxury goods spending in 2021.