The market for luxury goods was one of the most impacted segments due to Covid-19. Luxury Connect, a consulting and advisory firm said in a report that the luxury market will see a decline of 30-50% this year. But as lockdowns are being lifted and other restrictions being eased across the world, the luxury market is expecting a revival. In China, when the lockdowns in major cities were eased in April, the consumers started to come out and the sales of luxury products dramatically increased.
As the markets reopened in China, the French high fashion luxury brand Hermes’ Guangzhou flagship store had reported sales worth $2.7 million. Other high fashion luxury brands such as Gucci, Louis Vuitton and Prada reported similar figures in sales. The Chinese term for ‘revenge buying’, called ‘baofuxing xiafei’ also become a buzzword in the luxury segment when consumers started showing ‘revenge buying’ behaviour. Though Boston Consulting Groups forecast shows that the Covid-19 pandemic will lead to a drop in global luxury sales of 25-35% in 2020 compared to last year. One of the reasons for the revenge buying phenomenon in China could be travel bans. “Fifty-sixty per cent of the luxury spending by Chinese consumers last year was made abroad. This year they aren’t travelling and that’s why the Chinese mainland stores are doing much better than ever,” said, Cecilia Morelli Parikh, founder, Le Mill, a Mumbai- based luxury store.
In India as lockdown restrictions are being lifted with unlock 1.0, such as the reopening of religious places, malls and hotels from 8 June, consumers will start coming out of isolation, which will increase the footfalls in major retail stores and shopping malls. The luxury market in India is not mature as compared to the luxury markets in the US and China, therefore the possibility of revenge buying behaviour by consumers in India is still uncertain. There has been also a trend for consumers in India shifting towards casual footwear and apparel in the fashion industry discarding pricey and premium items as a result of the lockdowns. According to an April report from Statista, a statistics and market data portal, India’s luxury goods market is expected to be worth $7,956 million in 2020 considering the potential losses due to Covid-19. In September as the festive season starts in India, there is expected a slight increase in buying in the luxury segment.
The pandemic and lockdowns could have had different effects on different categories of the luxury products and services segment. It is believed that the beauty, wellness and self-care segments will be the ones to pick up quickly from the crises. “The beauty and wellness category will see the first surge as soon as lockdowns are relaxed,” said, Abhay Gupta, founder and CEO of Luxury Connect, “People are used to the system of going to a salon for self-care and wellness and it has been missing for a while, so it will bounce back,” he added.