Luxury Leather Goods in Indonesia

2021 DEVELOPMENTS

Recovery begins, aided by investment culture amongst younger consumers

Sales of luxury leather goods saw a decline in 2020, albeit one that was not as significant as in other categories. Nevertheless, the COVID-19 pandemic took its toll on demand across all categories of luxury leather goods, with the worst results in luxury travel goods.

Social distancing and closure of retail stores contribute to poor sales performance

One of the main factors contributing to the poor performance of luxury leather goods in the pandemic was the inaccessibility of purchasing such items via in-store retailing channels during the strictest quarantine lockdowns. All non-essential retail outlets and shopping centres were ordered to remain closed for significant amounts of time to prevent consumers from spreading the COVID-19 virus.

The closure of Indonesia’s borders hits demand for luxury travel goods

Another reason for the lower sales during the pandemics was the closure of the country’s borders and grounding of numerous commercial flights for significant periods of both 2020 and 2021. These measures were taken as the Indonesian government sought to curb the spread of the COVID-19 virus by restricting the ability of the population to travel, both domestically and internationally, whilst also preventing foreigners from introducing the virus into local communities by banning them from entering the country.

PROSPECTS AND OPPORTUNITIES

A strong recovery expected for luxury leather goods as postponed demand is realised

Over the forecast period, it is expected that sales of luxury leather goods will recover quickly as many of those who postponed purchases of such products due to the COVID-19 pandemic during 2020 will realise their deferred purchases as soon as they are able to feel comfortable shopping in stores and as soon as they feel secure enough in their financial positions to spend money freely on non-essential items. However, this positive situation may take some time to emerge as many people were still very reluctant to mingle in crowds at the end of 2020 due to the threat of contagion.

Luxury bags and small leather goods set to face a slow recovery

Luxury bags and small leather goods is expected to generate slower sales growth than luxury travel goods during 2021 and 2022. This is because of the high prices charged for these goods, which places them at odds with the frugal and conservative approach to spending which has taken hold among the population of Indonesia since the onset of the COVID-19 pandemic.

The return of international travel set to spur growth in sales of luxury travel goods

Luxury travel goods can be expected to register very strong growth in sales over the forecast period due as international borders are expected to be reopened as soon as the COVID-19 situation is brought under sufficient control that governments feel that allowing foreign visitors into their countries will not pose a major risk of worsening the pandemic situation and presenting a significant health risk to their populations. Indeed, once international travel becomes a possibility again, it is likely that many Indonesians will be very keen to indulge their wanderlust via outbound travel, while many people in the Asia-Pacific and Oceania regions are expected to want to visit Indonesia, a country which is becoming increasingly well-known as an international travel and tourism destination.