fbpx
Login

As we’re still struggling with an on-going health crisis, the luxury industry looks at ways of adapting to the ‘new normal’

COVID-19 could spur the biggest economic contraction since World War II, hitting every sector from finance to hospitality. In a previous article, we spoke extensively about the luxury consumerist shift from goods to experiences. But as people adjust to life in lockdown, the market changed its focus back to products.

From art to fashion, the ultra-wealthy are now more focused on long-term investments as opposed to short term purchases. The fashion industry took one of the hardest hits. The average market capitalisation of apparel, fashion and luxury players dropped almost 40 per cent between the start of January and the 24th of March 2020 — a much steeper decline than that of the overall stock market.

Before the pandemic hit, the fashion industry boasted $2.5 trillion in global annual revenues, but dire consequences are forecast. Job losses and financial hardship for people across the value chain are expected—from those harvesting the fibres used to make textiles to shop assistants selling the finished garment. This is just one example showing that humanitarian repercussions are expected to outlast the pandemic itself.

So, what are the consumer luxury trends that we’ve seen change/emerge during the COVID-19?

Wholesale Darwinism.

Even before the pandemic struck, independent luxury-goods wholesalers in Europe (many of which are small, family-owned boutiques) and some of the large North American luxury department stores were already struggling. This struggle is partly because of luxury brands moving to vertical integration over the past 20 years and, more recently, the growth of e-commerce. This pandemic will inevitably force some of these to collapse.

From the global traveller to the local shopper.

The luxury sector appeals to a global consumer: 20 to 30 per cent of industry revenues are generated by consumers making luxury purchases outside their home countries. In 2018, Chinese consumers took more than 150 million trips abroad; we estimate that purchases outside the mainland accounted for more than half of China’s luxury spending that year. Asian shoppers buy luxury goods outside their home countries, not only to benefit from lower prices in Europe but also because shopping has become an integral part of the travel experience. Buying a brand in its country of origin comes with a sense of authenticity and excitement. This means that for the foreseeable future, people will travel less and spend more locally. 

From ownership to experience, and back again.

“Experiential luxury”—think high-end hotels, resorts, cruises, and restaurants—has been one of the most dynamic and fast-growing components of the luxury sector. Millennials (those born 1980–95) opted more for experiences and “Instagrammable moments” rather than luxury items. Baby boomers (born 1946–64), too, were moving in this direction, having already accumulated luxury products over the years. While we expect the positive momentum of experiential luxury to persist, it will slow down in the short term as consumers temporarily revert to buying goods over experiences. However, the ultra-wealthy might develop a new consumer trend through social distance travelling on private jets to remote islands.

In terms of recovery, many global economies are undoubtedly about to face one of the biggest recessions since WW2. And the only way to get past it is to go through it. Purely speculative, one key way out of recession will be through cultural projects.

Consumers will be thirsty once more for live events, shopping sprees, gallery visits and immersing themselves in the arts once more.

According to The Guardian, creative industries contributed almost £13m to the UK economy every hour before the crisis struck. That sector was growing five times faster than the national economy. As a country, this is our strength, and there are jobs to be created. We should start talking about hooking up engineers with arts grads, designers with scientists, tech kids with care homes. Innovation happens in this cross-fertilisation and, post-COVID-19 world, which is where we need to be.

A thriving culture is not about the next artist to be exhibited at Frieze or the next McQueen. Nor is it about fame or glory. It’s about creating the conditions in which an ecosystem of artistic collaboration may grow. As we hit a global recession, I would argue that culture, far from being a luxury, becomes a necessity. How do we make that culture sustainable? We invest. As Eleanor Roosevelt said: “The future belongs to those who believe in the beauty of their dreams.”

Health & Wellness
Share your story:
Contact your Insignia personal assistant for details
Related articles
Health & Wellness
5 days ago
Healthcare Specialists Spearheading Our Wellness Journey in 2021
The COVID-19 pandemic underscored how dearly we hold trust, care, and peace of mind. Doctors are an essential piece of our medical prevention puzzle, but finding the right one can be a daunting task with so many practising...
6 months ago
The Ultimate Spring Detox Plan
We tend to associate spring with cleaning. Spring is the perfect time for a holistic detox as the season is synonymous with the symbolism of rebirth and new life. We talk a lot about detoxing our bodies, but what about the other...
1 year ago
How the pandemic has changed travel trends as we know them
It’s not surprising that travelling not only looks different in the post-pandemic world but is only set to change even more shortly. Months spent in isolation has amplified our wanderlust while lockdown has sent the travel...
1 year ago
How is the one per cent preparing for a second wave of COVID-19?
As the coronavirus continues on its destructive path, it is becoming increasingly clear that nations around the world were ill-equipped to deal with the pandemic. Everyone is now asking the same question ‘What do we need...
1 year ago
Harvest a Culture of Kindness to Drive Your Business Forward in the midst of a Global Pandemic
Luxury brands are utilising their production facilities to help combat COVID-19, from manufacturing surgical masks and gowns to feeding the vulnerable and providing mental health support to their employees. The luxury...
1 year ago
How private jets are preparing to fly in a world with a deadly virus
Everything you need to know about the new measures – including aircraft fogging and hospital quality air filters. In these unprecedented times, most of us are staying indoors while wondering when we can travel. During the...
1 year ago
How important is green space to our wellbeing?
The landscape of the world’s green spaces is ever-changing. But how big of an impact does it have on our health? A study in the Psychological Science journal argues that people living in urban areas with more green space tend...
2 years ago
Technology: The Latest Trend in Sports
We’re in an era of change and advancements in wearable technology. Wearable technology now offers different products that will suit your needs. The watches will monitor your heartbeat when sneakers will make sure they fit...
2 years ago
February half-term holidays: Insignia’s choice
From a Lion King-inspired safari adventure to the Ultra Luxurious Children Club in Maldives Insignia experts have discovered the most exciting and exclusive children’s programmes on offer at some of finest luxury hotels....
Insignia in the press
'Highly personalised and exclusive services to those who 
want to experience the best life has to offer.'
'Inside the $225,000 Oscars 2020 Gift Bag'
'Move over AmEx, here are by invitiation credit cards that cost $200,000'
'When AmEx Black Just Won't Do: A Gem-encrusted Card for .001%'
'The service is like having an invisible companion'
'British lifestyle management company takes the sting out of travel and daily life elevating it all to a lovely new life form'
'When you're exorbitantly rich, you can afford not to fret over things like your 15th wedding anniversary - at least if you're an Insignia member'
Insignia social