Whether you're purchasing a designer bag or splurging on a luxury watch, getting your hands on a high-end item can be a form of therapy and even create a sense of accomplishment. Buying luxury goods is a way to reward ourselves for special occasions, show off our sense of style to others, or invest in a quality piece.
Whatever the reason behind a luxury purchase may be, the fact of the matter is that people are splurging – but at what rates? We decided to explore the past, present, and future of the high-end market. To understand this topic, we analyzed Statista's 2020 Luxury Goods Report and surveyed 1,016 luxury item owners to find out more about their high-end taste and behaviors.
From necklaces and earrings to designer bags, luxury accessories are popping up in closets around the globe. Eighty-six percent of respondents owned luxury items, with the most common items being watches and jewelry (54%), eyewear (42%), and makeup and perfumes (41%).
Due to advancements in technology, an increasingly wealthy population, and sustainability initiatives being woven into product offerings, experts expect the luxury goods sector to grow. While luxury goods were steadily on the rise until 2020, the industry took a dip thanks to the coronavirus. With factories all over the globe coming to a halt, the supply of goods decreased, and people all over the world faced unemployment and furloughs.
But as the world starts returning to normal, the future of luxury goods is shining brighter. In 2021, it's expected that sales will jump by 13% and continue to grow through 2025.
In 2020, even though the industry saw sales drop by more than 13%, it still managed to sell $272,853,000,000 worth of items. By 2025, the luxury accessory industry's value is estimated to reach more than $380 billion. Leather goods sales are expected to see an 80% increase in sales compared to 2016, making it the fastest growing sector. Overall, though, fashion is expected to garner the highest sales volume.
The Pandemic's Impact
In 2020, the United States spent more than any other country in the world on luxury items. The United States accounted for nearly one quarter of global sales for luxury goods. To understand these numbers, we asked respondents how their desires for luxury items evolved during the pandemic. Nearly one in three people said their desire decreased and 43% said their spending also decreased.
A majority of people (60%) said their desire for high-end eyewear did not change during the pandemic, while around 30% of people reported a decreased desire for every other category.
Considering Iceland is Europe's most expensive country, most people who live there likely earn a fair bit. It's no surprise, then, to see Iceland topping our list of countries that are increasing their spending on high-end items.
Even though U.S. luxury goods revenues were the highest, they actually saw a decrease in spending of over $8 billion in 2020, while countries like Ethiopia saw a $26 million increase.
And while it's okay to indulge, 74% of people surveyed agreed that generally, the money spent on high-end items could've been better spent somewhere else.
In 2025, the same top 5 countries from 2020 are expected to maintain their positions as the world's highest spenders when it comes to luxury goods. Although their revenues are drastically different, the U.S. and China will actually grow by similar dollar amounts.
COVID-19 ultimately changed how consumers spent their money and influenced their desire to purchase non-essential goods, especially following a time of increased uncertainty. Still, 86% of our respondents had a pent-up desire to make up for certain purchases they skimped on over the last year. As the unemployment rate continues to decline, people may be feeling more stable in their financial lives. Whether it's on essentials, luxury items, or non-essentials, slightly more than one in three respondents expected their spending to increase in the coming year.
The Future of Luxury
Luxury items are a part of our global society and pop culture at large. Consumers' desire to splurge on these items wasn't drastically impacted by the pandemic, and the industry is expected to continue growing.
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Methodology and Limitations
For this study, we used two data sources: a survey of 1,016 respondents conducted by Coupon Chief, and the Statista Luxury Goods Report 2020. Among our 1,016 respondents, 516 were female, 490 were male, and 10 identified as nonbinary or did not provide a gender. Our respondents ranged in age from 18 to 77, with an average age of approximately 40.
In some cases, questions and answers have been rephrased for clarity or brevity. To help ensure statistical accuracy, all respondents were required to identify and correctly answer an attention check question. These survey data rely on self-reporting, and potential issues with self-reported data include but are not limited to the following: attribution errors, selective memory, and telescoping bias.
For additional information on the Statista Luxury Goods Report 2020, please visit: https://www.statista.com/outlook/cmo/luxury-goods/worldwide.
Fair Use Statement
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