After a drop in 2020, the luxury sector managed to surpass its pre-pandemic sales in 2021.

It made an estimated 22 per cent jump to US$384 billion (S$507 billion), according to a November forecast by Bain and Co.

That growth was supported by the wave of post-lockdown US tourists visiting Europe armed with a strong dollar, as well as South Korean and South-east Asian tourists.

Another pleasant surprise was Europeans “who had been ignored for decades… and were more interested in luxury goods than expected”, said Erwan Rambourg, a luxury industry insider turned analyst and author of the book Future Luxe: What’s Ahead For The Business Of Luxury.

With the lifting of travel restrictions in China “there will be a considerable return of Chinese tourists but that will be more likely in the second quarter”, said Arnaud Cadart, a portfolio manager at asset manager Flornoy.

“The pandemic is still very active in China and it will affect lots of people.”

The Chinese tourists may be needed if the flow of US tourists slows.

“European boutiques need this rebound in Chinese clientele to replace its American clientele which could buy locally,” said Mr Cadart.

They also need to readapt to Chinese customers, who tend to travel in groups, and will join a large number of US tourists.

“There are already lines in front of the boutiques even without Chinese clients… they need more staff,” said de Montgolfier. Otherwise, they risk a “degradation of the experience” of shopping in a luxury boutique.

Another concern: The volume of merchandise that Chinese customers will want to buy is unclear. The sector likes to keep volumes low and does not discount to ensure exclusivity.

This article was first published in The Straits Times.

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