The global luxury market is projected to return to 2021 sales levels as China’s removal of Covid-19 restrictions prompted the return of Chinese luxury travellers, according to a new report by Bain & Co.

The upwards trajectory is expected to be seen sometime during the middle of this year.

“We expect positive conditions to return before the end of the first quarter,” the authors of Bain’s report, led by senior partner Bruno Lannes, said.

(Source: Reuters/Lam Yik)

Meanwhile, another survey from Global Blue and Gusto Collective found 92 per cent of Chinese luxury travellers plan to travel overseas this year. About 90 per cent of shoppers plan to shop as much or more as pre-Covid during their next international trip.

“This indicates a significant opportunity for luxury brands to capitalise on the pent-up demand for shopping overseas as Chinese shoppers likely will make up for the lost time,” the report concluded.

To demonstrate, South Korea’s duty-free sales rose nearly 37 per cent on-month in February after China’s border reopened. The hike came amid an increase in Chinese resellers and renewed demand for Korean cosmetics after China’s reopening.

As cross-border travel was shut down due to Covid-19 restrictions, spending on luxury goods by consumers travelling abroad was instead spent inside China. Travel disruptions caused Chinese international purchases to reduce by about US$30.7 billion in 2021 compared to pre-Covid levels, according to Bain.

Last year, the personal luxury market dropped 10 per cent year on year, with nearly every luxury category and most brands experiencing their first major decline in five years through the year.