As the luxury industry looks to recover from the coronavirus pandemic, it will rely on Asian markets beyond mainland China.
In a keynote presentation at the Future of Luxury eConference, a director from Agility Research & Strategy spoke about the attitudes of Asian affluents as they enter a post-COVID era ahead of the rest of the world. While optimism and luxury spending have seen declines, affluent consumers are still interested in traveling and spending as restrictions lift.
“The high-net-worth-individuals have really been more resilient — a lot of them have gotten richer,” said Amrita Banta, managing director at Agility Research & Strategy. “They’re also able to spend, and are really the people who have gone back to buying things that they love.”
Ms. Banta’s presentation was based on a survey Agility conducted in June 2020.
Future of Luxury eConference was produced by Luxury Daily
Asian affluents skew younger, with an average of age 38.4 years across eight markets. Thirty percent of affluents in Asia have net worths of at least $1 million, qualifying them as HNWI.
Ms. Banta described this group of younger luxury buyers as the “triple A consumer:” ambitious, affluent and aspirational.
Although these consumers are not as optimistic as they were in January, prior to the pandemic, they are feeling positive about returns in real estate and other investments (see story). Now affluents’ mindsets are shifting towards what Ms. Banta described as “revenge spending,” particularly in China, Japan and South Korea (see story).
Consumers are less optimistic about their economic situation and spending than they were back in January. Agility research shows that significantly more consumers continue to expect that their economic security, their property or investment values, and disposable income will all increase over the next 12 months, and they don’t expect them to decrease — a promising sign.
“People are coming out of the crisis,” Ms. Banta said. “They really need relief, they’re going back to the stores, they’re shopping.”
Luxury spending has not returned to pre-pandemic levels, but China, India and to lesser extents, Korea and Indonesia, are still showing positive spending levels after COVID-19.
Among luxury sectors, travel has been the hardest hit. This has had a trickle-down effect on retail, since Asian travelers have been an important demographic for Western luxury brands.
With travel restrictions still in place internationally, Asian affluents are opting for “staycations” or domestic travel. Lacking the ability to travel to Europe for luxury purchases, they have also become more accustomed to online shopping.
Lockdowns have shifted consumer preferences, as affluents have been choosing to spend more on cars, art and electronics, in addition to wellness offerings. Interest has rebounded in goods that are high-quality and improve quality of life.
“What’s happened post-COVID is that a lot of people think that they’ve gone through quite an ordeal and they want to pamper themselves,” Ms. Banta said. “They’ve been indoors, they haven’t been able to go out.”
Asian affluents’ perceptions of specific luxury brands have not shifted dramatically as a result of the pandemic.
“The bigger brands have really been in the center of consumers’ minds,” Ms. Banta said. “Niche brands, smaller brands that do pretty interesting stuff are also quite popular in Asia, especially amongst the Gen Z consumers.”
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