Neiman Marcus’s bankruptcy filing on Thursday (May 7) may go unnoticed by many consumers.
Amid lockdowns and a global economic collapse not seen since the Great Depression, the luxury industry faces a challenge like never before, according to a Bain & Company survey.
While sales fell 25 percent in the first quarter, the slowdown is expected to accelerate in the second quarter and could lead to an estimated contraction by as much as 35 percent for the year, said the Boston-based investment firm.
While accessories have shown the most resilience, the survey found all luxury categories have seen declines. The biggest category to take a hit is watches.
“There will be a recovery for the luxury market, but the industry will be profoundly transformed,” said Claudia D’Arpizio, a Bain & Company partner and study author, in a statement. “The coronavirus crisis will force the industry to think more creatively and innovate even faster to meet a host of new consumer demands and channel constraints.”
A PYMNTS study paints an even more grim picture, at least for brick-and-mortar stores. While some shoppers said they miss the mall, only 4 percent of them said they “really missed it.” Among those who are shopping more online, just one-third said they will return to stores to shop when they reopen. Of those shoppers who preferred in-store shopping to online, only 40 percent said they will resume their normal shopping activities when those stores reopen.
A strong start to the year in China, Europe and the U.S. was quickly offset by the impact of COVID-19, the Bain survey said.
Researchers found luxury sales in Japan and the rest of Asia have also declined, at a slightly slower pace, and the consumer mood globally remains subdued.
Online luxury has remained resilient, while brand name stores and department stores have seen sharp drops.
Small- to medium-sized businesses (SMBs) are getting the message.
PYMNTS reported 38 percent of SMBs said they plan to reduce the amount of physical store space used to sell products.
It will take time for the market to recover. Bain & Company said it anticipates that a recovery to 2019 levels will not occur until 2022 or 2023.