Some families are scrabbling around trying to decide whether to spend money on electric heat to keep them warm for an evening or put that money towards food to put on their plates. Thus, it might seem disingenuous to be thinking about spending vast amounts of money on a handbag or glittery piece of jewellery. Or, even planning a luxury getaway. However, wealth varies greatly among people, and luxury brands always seem to be in fashion.
Like every industry, the luxury market walked face-first into the pandemic. Thus, it took a bit of time to work out how it was going to navigate those first few uncertain weeks and months. Pre-covid up to 30 per cent of all luxury items were purchased by travellers outside of their home country. Indeed, in 2018, more than 150 million trips were made by Chinese holidaymakers. Often, for them, purchasing a luxury branded item is part of the whole travelling experience.
Almost overnight that entire industry came to a halt. The experiential industry of shopping luxury brands disappeared. In fact, many of those brands were reporting up to 70 per cent reductions in sales when filing their end-of-year accounts.
Add to that the fact that Italian factories had been shutting their doors for several months over covid. This then meant that 40 percent of those producing luxury goods were actually on a hiatus. Thus, it’s no wonder that panic might have set in among a certain sectors.
However, like every other industry, the luxury industry learnt to adapt to the changing landscape of commerce. They made choices to reinvigorate and reinvest in its future. Thus, ensuring that it remained buoyant and profitable despite the challenges.
While the high-end travel industry had to wait til travel restrictions were lifted, luxury goods could be moved into the online arena. In turn, this significantly expands the potential audience. Before, the concentration was on the traveller, and holiday maker making in-shop purchases as part of their holiday experience. However, targeted online marketing could pinpoint similar global audiences with disposable income. This was smart marketing, as these people could no longer spend money on expensive holidays.
Consequently, purchasing luxury silver bracelets seemed like a small treat in a world where you couldn’t actually do anything else.
Post covid the landscape is still changing, and the credentials that drive a luxury brand strategy and changing with it.
The fact of the matter is that those who are the primary target for luxury brands are not struggling. With this we mean they are not going to have the same struggles as those who are at the raw end of a cost-of-living crisis. For example, as we navigate a post-covid world, there is a growing sector of potential customers who judge brands not just by their ‘luxuriousness’ but by their ethical stance. Whether it is espousing a more green approach to production and distribution. Or, whether they incorporate policies around diversity and inclusion.
One thing is for certain, the world is still getting richer. Wealth across Asia particularly is continuing to fuel a desire in the populations to work hard. The people there look to bring themselves out of poverty. Often, luxury brands are tangible proof that progress in this respect is being made.
Many companies are creating a broader range of products. Many even offer smaller, more accessible and affordable product ranges. This feeds into a need to associate oneself with luxury. However, they still maintain the high-end, premium-priced products that are only within the reach of a certain demographic. Thus, fuelling the inspiration and work ethic of many who aspire to reach those heights!
The luxury goods market has skillfully navigated the latest economic fluctuations to ensure that it continues to inspire established and growing sectors of different populations the world over.