Every year brings an extensive list of predictions and trends that pop up in news feeds and inboxes around the world. However, this time possibility more than any other year, we are all staring at the future and hope to gain some perceptions into what our new normal will look like.
The coronavirus pandemic has transformed how we live and work in ways that we hardly imagined at the beginning of 2020. The global crisis forced millions of individuals to develop new ways of working, learning, shopping and, well, living (more economically).
It may seem to be counterintuitive to be thinking about the future of luxury and discretionary spending in a time of impending financial crisis, as unemployment rate soars and even the world’s most powerful markets are struggling to stay afloat. However, amid the uncertainties and unknowns brought on by the COVID-19, one point is clear: the pandemic has permanently changed, deepened as well as solidified consumer’s behaviours to create new imperatives for all luxury brands.
Luxury Is Frequently One Of The First Industries To Take A Hit In Times Of Crisis
However, the luxury industry is also one of the most resilient sectors there is. The luxury industry, bouncing back more strongly than perhaps anyone could have anticipated after the previous financial crisis, is case in point.
The pandemic questioned the global luxury industry: spending went down, shops closed, travel retail was nearly non-existent and fashion shows had no in-person audiences. However, according to Erwan Rambourg, while many regions are still struggling a lot, Asian markets have already moved on: Things have been rough however they’re already getting better. When we speak to colleagues or friends based in Shanghai, and we ask them about the pandemic, they tell us, ‘Listen, COVID-19 is just a vague negative souvenir. We’ve moved on’.
Indeed, in Mainland China in particular, some luxury brands had already gone ahead to reap the benefits of revenge shopping post-quarantine: in April 2020, Hermès’ flagship store in Guangzhou received record-breaking sales of at least $2.7M at its reopening. Similarly, luxury brands already returned to pre-COVID offline activation levels back in July 2020.
Relevancy Has Become The New Legacy
Luxury brands must deliver a timely and timeless format of meaningful value and empower expressions of particular identities. Luxury brands need to lean in as well as transform themselves from a brand-centric, controlled and confidential model to a more transparent, engaging in addition to a customer-centric organisation.
We can’t know with complete certainty what will take place in the aftermath of the pandemic; however we believe that elevated essentialism will be one of the key themes to take centre stage in the future.
Affluent consumers are indeed progressively aspiring to fewer however better luxury goods (or so-called “investment” pieces — with longer use potential and higher resale value) as well as relevant experiences. Luxury shoppers are very willing to spend a premium for the absolute best version of luxuries that not only answer a requirement however have a real purpose and create added value in their lives and others.
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