Italy Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

Italy Luxury Goods Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

Italy luxury goods market is expected to grow at a CAGR of 4.9% during the forecast period (2022-2027).

The COVID-19 pandemic affected the sales of luxury items in Italy due to the cross-border travel restrictions, as the country is a luxury shopping destination for many American and Asian tourists due to the reduced tax benefits as well as purchasing a brand locally evokes a sense of excitement and authenticity. Apart from the demand side, the pandemic also affected the upstream of the supply chain. For instance, Almax, a Scandicci-based factory engaged in the production of bags for 10 luxury brands including Kering, Gucci, and LVMH labels reported a decline in orders from March to April 2020.

However, the pandemic offered new opportunities in e-retailing and key luxury brands began to plan and diversify their online distribution strategies to offset the sales downturn resulting due to the closure of brick-and-mortar stores with the commencement of COVID-19. To narrow the buyer-seller divide, the bulk of the players began establishing their digital platforms.

In the medium term, the market is expected to grow with the expansion of e-commerce fashion and the rising number of luxury brand boutiques. For instance, in December 2021, luxury brand Fendi opened its new boutique in Milan, inside Galleria Vittorio Emanuele II, showcasing luxury bags, shoes, and apparel for both men and women.

Key Market TrendsExponentially Growing market of Luxury Leather Goods

Luxury Leather goods are one of the fastest growing segments in the market. Italy is one of the favorable markets for luxury leather goods, some of the famous brands selling leather goods in Italy are Bottega Veneta, Furla, Miu Miu, Fendi, and others. In luxury leather goods, footwears hold a major chunk of the revenue, also major players' revenues primarily come from the luxury leather product categories such as shoes, bags, gloves, belts, and other fashion accessories.

Apart from shoes, leather bags are widely purchased as luxury goods in the country and Italy is the second largest importer of leather bags in Europe with a total import value of EUR 851 million in 2021, according to the statistics released by Eurostat. In addition, advanced technologies such as computer-aided design (CAD) and rapid prototyping (RP) are enabling the production of customized handbags as consumers are increasingly preferring curated fashion collections.

Evolving Branding and Marketing Strategies

Luxury goods brands operating in Italy leverage both print media and digital media platforms for advertisement and promotion. Further, key players conduct campaigns and exhibition shows to promote their brands and offerings, as these campaigns allow them to reach out to their targeted customer groups. In the age of fast-paced lifestyles, social media, and online channels play an important role in a shopper's purchase journey. This in turn has influenced the companies to evolve their marketing strategies and focus on brand building through social media platforms and e-commerce marketing. For instance, in 2021, luxury brand, Prada Group spent around 14% of its global expenditure on advertisement and promotions. Further, Gucci, one of the leading fashion brands has more than 33 million Instagram followers and around 15 million Facebook followers as of 2022.

Additionally, celebrity endorsements have been a popular marketing strategy for the overall fashion industry and hence for luxury goods manufacturers to enable effective brand communication. Moreover, celebrity endorsements allow a greater degree of attention to increase brand appeal to prospective buyers, thereby driving the sales of new designs and collections. For instance, in October 2021, Louis Vuitton selected Jung Ho-Yeon, South Korean model and actress as its global brand ambassador. Other Italian luxury brands utilizing celebrity endoresemnet include Versace, Gianfranco Ferre, and Dior, among others.

Competitive Landscape

The Italy luxury goods market is highly competitive owing to the prevalence of home-grown brands that are internationally recognized for their diversified and innovative product offerings. LVMH Moët Hennessy Louis Vuitton, Kering, Max Mara SRL, Prada Spa, and The Estee Lauder Companies Inc. are the major players holding a significant amount of market share in Italy. Major players are focused on the expansion of retail networks through partnerships and collaboration to reach a larger customer base. Additionally, digital transformation has enabled companies to invest in online distribution channels including e-commerce platforms and their own online stores. Ethical manufacturing, sourcing of sustainable raw materials, and social media advertisements are key business strategies adopted by Italian luxury brands to gain a competitive advantage in the fastest-growing market.

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