The online luxury goods market was on a steady upswing through 2019, but the pandemic accelerated its growth. Reports show the 2020 global online luxury goods market will likely clock in at 49 billion euros (up from 33 billion euros in 2019). Despite global lockdowns, businesses shuttering in every country, and the economic uncertainty that persists today, the luxury retail market remains strong. And it is only set to keep expanding in the years to come.
According to Verified Market Research, the global luxury resale market is projected to reach $68.53 billion by 2026, growing at a compound annual growth rate of 15.53 percent from 2019 through that year. If your brand is in luxury retail, now is the time to examine how cross-border e-commerce will affect your business. Read on for trends across the world, information on who luxury goods buyers are, and how to adjust your marketing strategy to target the right audience for your products.
As with other forms of retail, luxury goods saw a huge spike in online sales in 2020 because of the pandemic. Statista even reports that online sales of luxury goods are expected to overtake the brick-and-mortar share over the next few years. Luxury goods companies are digitally transforming to accommodate the new, explosive demand for e-commerce, and they are digitizing and refining their customers’ shopping journeys to stay competitive. For example, an article on WWD notes that Italian companies and their business models are going through a “deep transformation” following the acceleration of online sales and social media influence on e-commerce. Many retailers say the brick-and-mortar experience will remain important, but none can deny the permanent place luxury sales has in the e-commerce market.
Regionally, the U.S. and China are leading the luxury goods market, according to Statista. The U.S. market is estimated at $94.5 billion, and China is forecast to reach a projected market size of $79 billion by 2027. Notably, Japan and Canada are also each forecast to grow at .4% and 1.5% compound annual growth rates respectively through 2027.
Statista also found that the Americas combined held 28 percent of the entire global luxury market in 2020, followed by China with 20 percent and Japan with 8 percent.
Women ages 25-34 are the most frequent visitors to online brand stores. According to Forbes, millennials are responsible for 32 percent of all personal luxury spending but will soon make up 50 percent of the total personal luxury market.
When expanding your luxury brand into the international market, start by looking at who’s buying. If millennials are projected to make up a huge portion of your buyers, consider what new luxury brands they’re visiting on your site and look at the available data in your social media channels. Social media marketing can be a huge driver for your brand and should be a priority for your business, in addition to providing a superior shopping experience through your website.
Millennials say poor website performance is their biggest frustration when shopping online, so luxury retailers must invest in bringing their historical brick-and-mortar experience to the online space. The challenge now lies in translating the white-glove experience of shopping at a high-end brand to an entirely digital environment.
Here is where luxury brands should look to technology for help. Software solutions can help you migrate an in-person shopping experience to an online one – personalized for every customer, no matter where in the world they are located. And knowing that the US, China, and Japan are leading the luxury goods market, you should consider expanding into those regions. But if and when you do, make sure to localize the experience for your shoppers so they feel as if they are shopping on a local website. Technology can help you create an exceptional cross-border experience for those shoppers, which in turn will boost conversion and sales.
If you’re interested in exploring how to grow your luxury retail brand worldwide, check out Flow today. Our software has helped luxury retailers market to their target audiences globally, helping them translate their in-person store experiences to online.