Germany Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Germany Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Germany luxury goods market is projected to grow at a CAGR of 7.9% during the forecast period (2022-2027).

During the COVID-19 pandemic, the demand for luxury goods diminished drastically as stores remained closed under lockdown regulations and international travel was also restricted. Further, the financial crisis due to the rise in unemployment added to the decline in the luxury goods market during the pandemic.

Further, the pandemic has highlighted the importance of e-commerce and social media marketing for effective brand communication, which in turn has enabled luxury goods companies to recover from demand disruption. Additionally, key industry players have restructured their digital marketing strategies to compensate for the closure of brick-and-mortar stores. For instance, Hugo Boss reported in its annual report that the company had a 66% rise in its online sales during the fourth quarter of the financial year 2020.

Moreover, the upscale malls in the region like Aquis Plaza, Gesundbrunnen-Center, and Westfield Centro, among others have offered luxury brands ample space to expand their operations in the country. This, in turn, is anticipated to drive growth in the luxury goods market during the forecast period.

Key Market TrendsBooming E-commerce Fashion Retail

Germany is one of the largest e-commerce markets in Europe, wherein clothing is a widely preferred category for online purchases. A large number of e-commerce users is due to the high penetration of the internet, increased number of smartphone users, and the availability of wide-ranging fashion e-commerce stores. E-commerce stores feature a large collection of luxury brands across different categories such as apparel, footwear, and beauty among others. For instance, the recent report published by The U.S. ITA (The International Trade Administration) shows that in 2021, 59% of online purchases were made through smartphones and 76% of shoppers purchased clothing from online fashion stores. In addition, digital marketing and the widespread use of social media are promoting the trend of online retailing. Therefore, the shift in consumer buying behavior due to the pandemic has driven the online sale of luxury goods in the recent past.

Rise in Demand for Sustainable Luxury Goods

Consumers are looking for sustainable fashion with growing concerns about the environment and are looking for ways to reduce the impact on the planet. Consumers are interested to purchase luxury products manufactured via eco-friendly and ethical methods and are recycling, and upcycling products. In response to evolving consumer perception, industry manufacturers are directing their investments in the development of sustainable product offerings. For instance, Jérome Studio, the Berlin-based luxury bags brand creates modern designs from sustainable leather derived from by-products of meat production. Further, the brand utilizes a 100% sustainable olive leaf tanning agent in the bag tanning process. The major sustainable fashion brands in Germany are Grüne Erde, Hessnatur, and ArmedAngels. Alongside, sustainable online shops include Avocado Store, Waschbär, Mr. & Mrs. Green, and Manufactum among others.

Competitive Landscape

Germany's luxury goods market is fragmented with the presence of many international and local players. Further, brands are investing in new product development; and strategic partnerships and collaborations to expand distribution networks across the country. For instance, in May 2021, BWG, a luxury watch brand launched a new product called The Bavaria watch, featuring a selection of three colored watch faces and two core design variants. The major players aim to strengthen their market position by launching sustainable products and engaging customers through advertisement campaigns across digital platforms. LVMH Moët Hennessy-Louis Vuitton SE, Kering SA, Hugo Boss, Marc O’ Polo Group, and Givenchy are the key players in Germany Luxury Goods Market.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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