The market for luxury goods and luxury goods is experiencing a real test during the pandemic. Sales will fall by the end of the year in almost all premium product segments. Some revival on the eve of the New Year holidays was outlined in the jewelry sales sector. In addition, some buyers may perceive the purchase of jewelry as a smart way to invest their money.
Demand for premium jewelry in December 2020 increased fivefold YoY, according to a study by jewelry hypermarket Sunlight. TASS also confirms the news, citing Sunlight's internal study of consumer demand in the online jewelry segment in December 2020 versus December 2019.
The growth in demand is due to the growing interest of Russians in gold and diamond jewelry, experts say. Analysts have noted a significant increase in online jewelry purchases. Noteworthy is the 25% increase in the average check for gold items.
Some surge of interest in buying jewelry was also recorded in developed countries. Thus, it is reported that online jewelry sales in the UK are growing. “In April and May 2020, jewelry sales fell $ 3.8 billion from 2019 as stores were physically closed, but sales rose in the following summer months. Jewelry was sold $ 1 billion more than in the same period last year, "- note the authors of the New York Times. According to market research analyst NPD Group, jewelry sales were down about 30% year-on-year from March to October, but have rebounded somewhat over the past few months.
However, despite the noted growth in December, overall jewelry sales are falling. So, following the results of 11 months of this year, jewelry sales fell by a quarter in physical terms, according to the Russian operator of fiscal data, Platform OFD. In monetary terms, jewelry sales decreased by 14%. Fiscal data operator Taxcom reported that from June 1 to October 31, 2020 alone, sales fell by 23% compared to the same period in 2019. The main decline occurred in July - compared to June 2019, sales fell by 55%. At the same time, online jewelry sales are growing. According to the research agency M.A. Research, by the end of the year, the growth of the segment of online sales of jewelry in Russia will be 13-14%.
The segment participants themselves say that the jewelry industry's sales in rubles have grown by 15% year-on-year. “But prices for jewelry also increased by about 60% (wholesale price of jewelry made of gold for 1 year - NG). If prices increased by 60%, and sales only by 15%, it means that in physical volumes we have lost 35 percent, ”said the Association“ Guild of Russian Jewelers ”.
In Russia, the situation may differ from global trends due to the high share of shadow turnover in the jewelry market. Thus, according to Deputy Finance Minister Alexei Moiseyev, it occupies half of the market. In the zone of control of the Russian authorities are precious metals, stones and products from them with a total value of about 3 trillion rubles.
In general, almost all segments of the premium market show a drop. For example, according to the analytical agency "Autostat", the Russian luxury car market in November collapsed in annual terms by 28%. At the same time, 74 luxury cars were sold in physical terms in the last month. The largest drop was shown by the brands Maserati - minus 92%, Lamborghini - minus 50%, Bentley - minus 23%, Rolls-Royce - minus 18%. Moreover, some brands have not sold a single car for months. According to the results of 11 months of this year, sales of luxury cars decreased by 12%, amounting to 1,026 units, follows from the data of "Autostat".
The dynamics of sales of luxury and luxury goods in Russia as a whole is in the context of global trends, agrees the CEO of Fashion Consulting Group Anna Lebsak-Kleimans. “In the first half of the year, sales of brands - leaders of the luxury market fell dramatically. Online sales were unable to compensate for the losses caused by the closure of offline stores during the quarantine period. Russia, as a full-fledged participant in the global luxury market, also contributed to these negative indicators of the first half of the year, ”she told NG.
As a result, the decline in sales of luxury brands was observed in the range of 25-50%. Thus, sales at LVMH (Louis Vuitton Moët Hennessy) decreased by 38%, at Hermes - by 24.2%. Sales at Compagnie Financière Richemont, which operates jewelery, watch and apparel companies, fell 47%. Sales fell by 30% at Yves Saint Laurent and by 29.7% at Kering (which manages brands specializing in luxury clothing, watches and jewelry), says Anna Lebsak-Kleimans.
However, she continues, in the third quarter, the picture of the creature
It has changed. “Sales figures for the third quarter of 2020 for some companies even exceeded those of 2019. In particular, LVMH - an increase of 12%, Hermes - an increase of 4.2%. In the Kering group, Bottega Veneta has a record performance with an increase of 21%, Alexander McQueen and Balenciaga grew by 10%, Yves Saint Laurent - by 5%, ”the expert says.
Russia in the situation with luxury, according to the expert, found itself in an intermediate situation between "east" and "west". “We can talk about stabilization of demand and even growth of sales from leading large players. So, for example, the indicators of the third quarter of such luxury retail locomotives as GUM and TSUM also exceeded the level of the last year. In TSUM by more than 10% ", - notes Lebsak-Kleimans. In her opinion, an important reason for such processes is the absence of a foreign tourist flow in the Russian Federation, which provided up to 10-15% of sales. However, this was offset by the fact that wealthy Russians also spent their money not abroad, but in Russia, she points out.
Not everyone considers the situation in premium retail so good. Luxury retailers have suffered greatly due to the cessation of international tourism, and even though wealthy buyers made purchases in Russia, their revenue by the end of the year may fall to 40%, Mikhail Burmistrov, CEO of INFOLine-Analytics, noted earlier in the media. According to his calculations, GUM may lose up to 50% in revenue, and TSUM - up to 40%.
This year, according to analysts from the consulting company Bain & Co, the world market for the category of "personal luxury" (clothes, shoes, watches and accessories) will decline by 23%, to 217 billion euros. At the same time, the operating profit of the companies will decrease by 60%. Separately, it is emphasized that the market for luxury goods as a whole, which includes both luxury goods and private jets, yachts, fine wines and delicacies, has declined at the same rate and is currently estimated at about 1 trillion euros.
The fall at the end of 2020 will be the largest decline since 2009, and sales figures will return to the values of 2014. In 2009, during the period of the strongest financial crisis, the decline was only 8%, which is three times less than the forecast for 2020. Such "an unprecedented drop in market volume happened for the first time in the history of measurements," emphasize in Bain & Co. By the way, by the end of 2019, the luxury market showed an increase of 7%, amounting to 281 billion euros.
Europe took the brunt of the recession due to the shutdown of the tourism industry. In the EU, luxury goods sales were down 36% to € 57 billion. In the Americas, sales fell 27% to 62 billion euros. The only one that is showing the growth of the luxury market today is China. At the end of the year, China will increase sales of luxury goods by 45%, to 44 billion euros. It is believed that the reason for this is the purchases of Chinese citizens within their country.
Obviously, this is the basis for the company's positive expectations of an imminent market rebound. Bain & Co predicts growth from 10-12% to 17-19% in 2021, depending on the macroeconomic situation. “The market will be able to return to the indicators of 2019 only by the end of 2022 - the beginning of 2023,” the company is sure. At the same time, by 2025, the personal luxury market was supposed to reach 330-370 billion euros, the consulting company predicted.
Not all experts are so optimistic. "The recovery of sales in the global luxury goods market to 2019 levels is expected no earlier than the end of 2022 and will depend on the success of countries in the fight against the virus, the pace of recovery in international tourism and macroeconomic indicators," says the director of wealthy clients at BCS Mir investments ”Andrey Revenko.
“The activity of the Asian markets cannot fully compensate for the blows of the pandemic - the disastrous spring, the continuing stagnation of sales in Europe and other regions of the world. Major brands, market leaders, have a projected decline of 10 to 25%, ”says Anna Lebsak-Kleimans, believing that it will be difficult for the market to recover before 2023. The expert does not exclude that in the regions most dependent on tourism, the recovery may be delayed until the full recovery of the travel segment itself. For example, experts expect a full recovery of tourism in New York only by 2025, Lebsak-Kleimans points out.
At the same time, the jewelry segment has declined less than other sectors amid the pandemic and crisis, experts say. “For the whole year, the drawdown will be 20% on average in Russia. At the same time, the drop in sales of clothing is 40%, footwear - 35%, accessories - about 50% (including partly in the luxury category), ”says Pavel Sigal, First Vice President of Opora Rossii. The expert records an increase in demand for gold and silver products, as well as for platinum goods with natural stones. “Also, buyers have become more active than before to purchase massive gold items - probably, this is done as an investment, since the large weight of the item in gold is not so much of a design value;