The luxury goods and categories segment has suffered significantly globally as a result of the global pandemic and related restrictions. According to Euromonitor statistics, luxury turnover is down 12% year on year. While 41% of shoppers surveyed said that their financial situation has worsened, they continue to indulge in expensive purchases in various luxury categories.
At the same time, we clearly observe a global trend towards conscious consumption. More and more people are turning away from excessive spending on non-essential items. It would seem that luxury and premium should be the outsiders in this economic climate. But rational consumers still choose high quality, which means that the premium segment of goods and services is relevant, if properly marketed and invested, as luxury spending is projected to grow by +17% in 2021-2022.
What kind of ‘heavy luxury’ investments are effective in times of pandemic and global economic crisis?
At the heart of luxury is always the notion of luxury, which reflects and shows the realization of one’s dreams, and investing in luxury confirms one’s own solvency.
This is why luxury and premium brands and players have consciously decided to develop new priorities and dimensions within luxury categories, which demonstrate their perceived worth to consumers even more successfully. For example, it has become popular not just to buy expensive watches and jewelry for pleasure and status but to specifically invest in art, watches, and jewelry.
Another notable trend that the pandemic has forced is the luxury audience’s focus on sustainability, environmental and social responsibility. More customers expect the brands they buy to induce positive change in the world. In doing so, it is not enough for a brand to only state its intentions – brands are expected to demonstrate real ongoing action in this area, regardless of geography or market.
Serious growth is expected for now popular ‘luxury as experience’ trend. In the era of the pandemic, thanks to multiple constraints, it is not just the brand and product that is becoming increasingly important, but also the interaction service: pre-purchase/during/post-purchase. The opportunity to pamper oneself after long months of lockdown comes to the fore, anchoring personal emotional moments of self-realization and giving a gift to oneself.
There is also a new twist on travel opportunities in the luxury segment. The desire to travel has never waned in luxury consumers, and many confirm that travel is their main interest, but expectations of high quality and personalized service when traveling have now been complemented by a focus on safety and respect for the distance.
Luxury travel is becoming increasingly personalized. Staffed yachts and villas are being replaced by expensive trips to previously unpopular regions, flights by private planes only, luxury stays in the countryside, and unique experiences.
Undoubtedly, digital and high technology, the development of which was spurred on by the pandemic, has not left the luxury segment untouched. The high quality of personalized, offline shopping, which is inherent to the luxury segment, continues to give the offline channel a leading position. Over the past year, however, shoppers have become accustomed to interacting with luxury brands online.
High-quality, very narrowly segmented visual content is crucial for attracting attention to luxury brands. Videos, blogs, interviews with designers and brand owners-all all work more than successfully and increases global brand loyalty.
Summarizing the aforementioned, the luxury goods market faces no threat. Yes, undoubtedly, people spend less now, but they spend wisely, understanding what exactly, in addition to “beauty,” can be obtained as a result.
Luxury brands that have built innovation and a new unique digital approach into their new strategy will be the winners, while others will suffer from declining interest and loyalty to their products and services.
In any case, luxury remains a struggle for its own relevance, and standing out from the crowd can be done in many ways, even in the era of the pandemic.
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