While the global luxury goods market contracted notably, Asia showed signs of recovery as early as Q2 2020, minimising the impact of the coronavirus (COVID-19) pandemic. This report analyses the background to the quick recovery of personal luxury goods in the region from macro and micro views, with a focus on seven key markets, and provides insights into strategies that help brands capture the demands of the affluent consumer base in the region.
Personal luxury in Asia Pacific recorded the least contraction of all global regions in 2020, driven mainly by Greater China’s economic recovery, repatriated spending and pent-up demand from the resilience of the wealthy and affluent population. Over the forecast period, the reasonably favourable prospect of consumer group and income growth by 2030, especially from gen Z and gen alpha, will back the growth of high-value industries.
Although vaccination rollout has started in Asia Pacific, travel restrictions are expected to remain until the vaccination rate is able to attain herd immunity. The impact on markets heavily reliant on international spending, such as Hong Kong, Singapore and Japan, remains significant. Stable incomes and expenditure by local consumers at these shopping destinations will be prioritised.
With China registering strong 28% current value growth in personal luxury, the leader in the region shifted from Japan to China in 2020. The minimal damage to demand among Chinese shoppers will benefit their own country, as well as its neighbours, with the Asia Pacific region expected to expand its share in global personal luxury to 41% by 2020.
There is no doubt that digital innovation needs to accelerate in order for luxury retailers to stay competitive in the post-pandemic world. With careful planning and implementation, digital is a powerful tool for brand engagement and elevating personalisation across the customer journey. Technology and innovation will be fundamental to win, and the omnichannel experience must show zero friction to survive.
As gen Z and millennials will lead the personal luxury market in Asia in the coming years, companies and retailers should understand the values and consumerism of these consumer segments. Products customised to local culture, collaboration with popular characters, as well as personalised products, will be effective ways to stimulate rebound consumption. Circular luxury is expected to add emotional value to consumption among affluent Asian consumers.
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