The market for luxury goods has gone beyond to pre-pandemic stages despite the shifting consumer behavior and decreasing demand at the beginning of the pandemic era.
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COVID-19 has posed significant difficulties for businesses across the world for nearly two years, and the global luxury sector is no exception. As the pandemic spread, consumers' spending habits altered, stores were forced to close, and traveling was severely restricted, which resulted in a steep decline in demand for luxury goods.
However, the market for luxury products has shown resilience in face of general disease instability, with several major brands experiencing a reasonably quick return in their sales (Monteton, 2020).
According to Kearney Luxury Study 2021–22
In the post-covid era, customers claimed that the desire to reward oneself came prior to the need to buy a new luxury item.
On the other hand, buying a gift for friends or family emerged as the least relevant motivation for making a purchase, especially among Gen Z respondents. This tendency to prefer spending their money on themselves underscores the generation’s reputation as being self-centric.
stated Monteton, adding the motivations behind luxury purchases are expected to stay relatively static, with rewarding oneself retaining its position as the top driving factor, over the next 12 months.
Interestingly, despite today’s sharp focus on sustainability and diversity, the least-relevant reason for making a luxury purchase across countries and age groups was consumers’ chosen brand’s support of a good cause, such as women’s rights, LGBTQ rights, or climate change. This highlights the fact that most luxury consumers are still more driven by the personal benefit they get from buying a luxury item than any positive social impact associated with that purchase.
From Travel to Digital
Other than shifting purchasing behaviors, one of the most significant changes in the industry was a shift to online shopping from travel shopping. Many of the top luxury brands in the world avoided selling their goods online until recently, focusing primarily on the physicality of their stores and that of “multi-brand, third-party stores” (Monteton, 2020). Even while this reluctance was mostly motivated by a wish to preserve full control over the reputation of their high-end businesses, many brands failed to develop the solid digital capabilities necessary to deliver these crucial components of their brand image online.
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Large, Renowned Brands over Niche Brands
Moreover, while several luxury companies have recovered from the pandemic's initial effects, the sector, in general, will go through some long-term adjustments. Although luxury customers' purchasing has remained largely stable, there has been a "noticeable shift away from experiences and toward tangible goods" because of COVID-19's restrictions on foreign travel.
According to Victor Graf Dijon von Monteton (2022) this year, luxury travel is anticipated to stay under pre-pandemic rates. However, buyers will soon wish to travel once more, even in the most restrictive nations, like Australia, which have begun to relax their regulations.
Changes to Stay
People are now used to buying luxury goods online, thus the transition to online shopping is here to remain. As we get through the epidemic, leading companies are going to become more prominent because many shoppers will move away from "niche brands" (Monteton, 2020). In addition, the long-term effects of young luxury consumers' self-interest in the market will also be intriguing to see. The importance of treating oneself may surpass that of providing gifts. Premium brands must be conscious of the various factors that influence luxury purchases and adjust as necessary (Monteton, 2020).
The Covid-19 had a huge impact on the luxury market and accelerated several previously established tendencies. The industry's essential promise of first-rate service and high quality is the main aspect that did not alter.
Reference: Monteton, V. G. D. von. (2022, March 7). How the pandemic changed the luxury industry. Kearney. Retrieved August 2022, from https://www.kearney.com/consumer-retail/article/-/insights/how-the-pandemic-changed-the-luxury-industry
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