STEPHEN BROOKS Chief Executive Officer, Phillips 2021 has proven a historic year for Phillips. For the first time in the company’s 225-year history, we reached over $1 billion in sales, whilst achieving an extraordinary sell-through rate of 91%. Across the board, our six auction categories achieved new milestones, several of which had their most successful years ever, with Private Sales also firmly outpacing prepandemic levels.It’s out – uber rich Indians are splurging on the finer things of life like never before, and so are their global counterparts. The luxury goods market has never had it so good – and, interestingly, the COVID pandemic has had a major role to play in the appreciation of the market. The pandemic, and the recovery, majorly fast-forwarded structural changes in the luxury market, thus setting the pace for the coming decades.

The world is living it up

Report after report says the same thing – that the year 2021 has been a year of phenomenal growth for the luxury market. According to Euromonitor International, India’s luxury goods market plunged 33% to $5 billion in 2020, but in 2021, it grew to $6 billion, and will see consistent rise over the coming years.

Bain & Company’s Fall 2021 Luxury Study says that the luxury market rebounded in 2021, and is set to return to a historic growth trajectory. Bain estimates that the global personal luxury goods sales will have reached €283 billion ($324 billion) by the end of 2021, marking a 1% increase over 2019 levels, and 29% over 2020 levels. Earlier, full recovery was not expected until well into 2022.

As per the report, “Over the past two decades, the Bain & Company Luxury Study has become a reference point for the industry, but it has never seen a year of surging performance to match 2021. With personal luxury goods sales likely to be up by almost a third, the 20th edition of the study is a landmark in more ways than one. The market for personal luxury goods — the ‘core of the core’ of luxury segments and the focus of this analysis—has come roaring back, experiencing a V-shaped recovery in 2021. After a sharp contraction in 2020, personal luxury goods sales are set to beat their pre- COVID record, with the market forecast to grow by 29% at current exchange rates to hit €283 billion, likely finishing the year up 1% from its 2019 record.” The Knight Frank Wealth Report 2021 says that the number of ultra-high net worth individuals in India stood at 6,884, but it is projected to rise 63% to 11,198 by 2025; the number of dollar billionaires in India stood at 113, it is projected to go up to 162 by 2025, and that 20% of global luxury sales will move online by 2025. This is the high-end luxury item consuming segment, and with the segment itself expanding, sales of luxury items are bound to grow.

BIREN VAIDYA Managing Director, Rose Group of Companies In the past few years, the digital and web world has penetrated into markets and areas which were difficult to penetrate earlier. It has also given people access to so much knowledge about the space, thus creating aspiration, leading to the growth of the luxury market. Another reason for the growth of the luxury market is that during COVID times, people have been saving a lot of money and those savings are being spent now as people have not had retail therapy for a long time. Besides, there has been a lot of scarcity of goods, which has been created due to the pandemic, and this has created a lot of demand. Product availability is less, aspirations are high, and so, markets are growing.

Auction houses laughing all the way to the bank
Now, take a look at the data presented by notable global auction houses. The first jewellery auction of 2022 of British auction house Christie’s, Jewels Online, held between January 24 and February, achieved a total of $5,183,500, with 131% hammer above low estimate and 96% sold by lot. “The sale received record participation, with the highest number of bidders for any New York Jewels online sale,” Christie’s said. In its 2021 Luxury Market Report, François Curiel, Chairman of Christie’s Europe & Asia region, and Chairman of the Luxury Division, states: “2021 was a year of great growth for Christie’s luxury categories, which achieved total sales of $980 million. Our Jewels, Watches, Handbags and Wine auctions continued to serve as a pivotal entry point for many first-time buyers, who often go on to become cross-category collectors at Christie's. Our clients are global, with new registrants from the Americas (32%), Asia Pacific (37%) and EMEA (31%) participating in our luxury auctions. We continued to welcome the next generation of collectors to our auctions, last year 29% of overall clients in luxury auctions were millennial collectors. Building on our investment in digital technologies throughout the pandemic, the confidence in online auctions has continued apace. The average online lot value has tripled in value since 2019.” Close competitor Sotheby’s has a similar story to tell. As per its year-end media release, “Sotheby’s is proud to report a record year in the company’s history, driven by strength and depth of demand and an influx of new collectors, and powered by rapid expansion of offerings and platforms. Sotheby’s luxury auctions reached new heights in 2021, with global totals reaching over $1 billion for the first time, a new record for any auction house -- driven by a record number of bidders. More people participated in Sotheby's luxury sales than ever before, with 39% more bidders in 2021 than 2020.”

FRANÇOIS CURIEL Chairman of Christie’s Europe & Asia region, and Chairman of the Luxury Division 2021 was a year of great growth for Christie’s luxury categories, which achieved total sales of $980 million. Our Jewels, Watches, Handbags and Wine auctions continued to serve as a pivotal entry point for many first-time buyers, who often go on to become cross-category collectors at Christie's. Our clients are global, with new registrants from the Americas (32%), Asia Pacific (37%) and EMEA (31%) participating in our luxury auctionsAuction house Philipps also has a happy story to narrate. In its media release, Stephen Brooks, Chief Executive Officer, Phillips, is stated as saying, “2021 has proven a historic year for Phillips. For the first time in the company’s 225-year history, we reached over $1 billion in sales, whilst achieving an extraordinary sell-through rate of 91%. Across the board, our six auction categories achieved new milestones, several of which had their most successful years ever, with Private Sales also firmly outpacing pre-pandemic levels.”

Adds Cristel Tan, International Jewellery Specialist, South East Asia, Phillips, “At Phillips Jewels, the number of clients registering in jewels sales has doubled since 2019. In addition, we have increased our auction offerings from six auctions in 2019 to 12 auctions in 2021 (two out of the 12 auctions were cross category sales, which include watches, jewellery and art). This demonstrates the robustness of the market and reflects the appetite for well-curated jewels. For Phillips, since 2019, both the % of clients bidding online has tripled and the % of lots sold to online bidders has tripled. Furthermore, the total value of the lots sold to online bidders has increased 600% over the past two years.

FRANÇOIS CURIEL Chairman of Christie’s Europe & Asia region, and Chairman of the Luxury Division 2021 was a year of great growth for Christie’s luxury categories, which achieved total sales of $980 million. Our Jewels, Watches, Handbags and Wine auctions continued to serve as a pivotal entry point for many first-time buyers, who often go on to become cross-category collectors at Christie's. Our clients are global, with new registrants from the Americas (32%), Asia Pacific (37%) and EMEA (31%) participating in our luxury auctions.So, what’s causing the luxury market to appreciate?
There are multiple reasons for the growth of the luxury market worldwide – surplus money in view of no spending avenues owing to the pandemic, restrictions on international travel and the stock market boom being some of them. Says Biren Vaidya, Managing Director, Rose Group of Companies, Mumbai, “One of the main reasons for the appreciation of the luxury market in the past few years is the penetration of the digital and the web world into markets and areas which were difficult to penetrate earlier. It has also given people access to so much knowledge about the space, thus creating aspiration, leading to the growth of the luxury market. Another reason is that during COVID times, people have been saving a lot of money and those savings are being spent now as people have not had retail therapy for a long time.

“The third reason is that there has been a lot of scarcity of goods, which has been created due to the pandemic, and this has created a lot of demand. Product availability is less, aspirations are high, and so, markets are growing.

“The final and the most important reason is that most of the governments are very conscious of the growth of the economy and well-being of their citizens during a pandemic. So, most of the global economies are booming. This growth has flushed people with money, and therefore, the spending has increased. And of course, a lot of money was made through the stock exchange. The younger generation, that is youth between the age group of 25-40, has really made money with this whole new start-up and digital entrepreneurship, which is also creating spend, and thus growth. In the luxury space, people don’t buy just for an occasion, they buy because they like something, and they have the money to fulfil their aspirations.

Agrees Tan, “Luxury is now seen as a lifestyle, with the evolving nature of the global luxury market. The concept of an elevated buying experience, supported by a strong digital presence, has propelled this growth. The inability to travel over the last couple of years, coupled with new wealth creation, has spurred on more spending towards luxury. Enhanced digital platforms for buyers to explore social media and creative content, and interactive participation in online and live auctions – all this has contributed to strong sales in the luxury segment, despite the limited travel activity. Pandemic conditions have motivated more buying of tangible assets for clients and their loved ones. Now that restrictions are lifting, there is a rejuvenated atmosphere, with buyers excited to be out and about, purchasing and wearing high-end jewellery again.”

CRISTEL TAN International Jewellery Specialist, South East Asia, Phillips At Phillips Jewels, the number of clients registering in jewels sales has doubled since 2019. In addition, we have increased our auction offerings from six auctions in 2019 to 12 auctions in 2021 (two out of the 12 auctions were cross category sales, which include watches, jewellery and art). This demonstrates the robustness of the market and reflects the appetite for well-curated jewels. For Phillips, since 2019, both the % of clients bidding online has tripled and the % of lots sold to online bidders has tripled. Furthermore, the total value of the lots sold to online bidders has increased 600% over the past two years.Future trends
In these volatile times, it is difficult to predict how the global luxury market will behave in the coming days. While the pandemic uncertainty has been there all along, the pitch has been further queered by the Russian invasion of Ukraine. Russia, while home to a high-spending clientele, accounts for only about 5% of the luxury market, but the overall impact of the conflict on the global economy and global luxury is likely to be negative. Says Vaidya, “If the markets and economies continue the bull run, I think that we have a good next three years. I see this as a tremendous growth, specially in India, because our economy has grown and the size of our buying power is just being tapped. More and more of the population is starting to have surplus money and is spending on luxury items – the digital penetration has created a lot of aspiration for luxury amongst the young patrons.”

Projecting forward, Bain predicts personal luxury goods will continue their upward trajectory through 2025, advancing between 5% to 9% CAGR to reach €360 to €380 billion ($412- $435 billion). Philipps also believes that luxury markets will continue to enhance their digital presence and create new experiences to engage new and existing clients

And, in all likelihood, the growth will continue through 2025.