Where and How Consumers Shop in Fashion and Luxury Goods

December 2020

The Coronavirus (COVID-19) pandemic is having an unprecedented impact on the fashion and luxury industry, which is facing further challenges owing to economic and political problems and income and wealth losses in key markets. This report offers a snapshot of how retail in these industries is being affected. It will also consider the key trends emerging from these shifts with an emphasis on digital innovation and where there is scope for recovery and opportunity for growth amidst the adversity.

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This report comes in PPT.

Key Findings

ramifications for how we shop in the “new normal" and in a post-COVID-19 world  Huge

As with all aspects of life, the COVID-19 pandemic will usher in a “new normal” that will have massive ramifications for how we shop. The pandemic is above all a human tragedy, and luxury and fashion brands and retailers will need to become more consumer-centric to ensure that their customers and staff feel safe and secure as the phased recovery begins. There is also the opportunity to ensure that sustainability, diversity and inclusion play a big role in making luxury and fashion fully accountable in the future.

The wealthy are not exempt from the financial impact of COVID-19

The number of adults in the top three wealth segments fell in 2020 over the previous year, as the pandemic caused financial market volatility and high-end property price corrections, thus denting the net worth of the ultra-HNWI, HNWI and affluent populations. Consumers are likely to cut back on spending in light of these difficult economic conditions.

Asia Pacific will lead the recovery in fashion and luxury retail

Driven mainly by China’s economic recovery, repatriated spending and pent-up demand, the year-on-year decline in spending on fashion and luxury in Asia Pacific is expected to be the smallest of all global regions in 2020, with a strong rise expected in 2021. The wealthy population is also expected to fare best in China, but downside risks remain.

Digital innovation accelerates and sparks corporate partnerships

In order to adapt strategies and remain competitive in a post-pandemic world, luxury and fashion retailers will need to explore the shifts in shopping behaviour that took place during this period of abrupt change. Digital innovation needs to accelerate, and companies should look to maximise corporate partnerships and efficiencies across all operations. Technology and innovation will be fundamental to win, and the “omnichannel experience” must show “zero friction” to survive.

Travel flows remain heavily disrupted, diminishing growth across key markets

  Whilst there may be some loosening of the rules over the 2020 festive season, travel restrictions remain in place across the vast majority of markets worldwide. According to the UN World Tourism Organization, 40% of destinations have eased restrictions, but the majority remain under some form of ban. The impact on markets heavily reliant on international spend, such as Hong Kong and New York, remains significant.

Key events so far
About this report
Fear and anxiety shift consumer shopping habits and focus
Key drivers shaping new shopping habits in fashion and luxury
Fashion and luxury hit hardest across all fmcg markets
Affluent population to decline in all regions impacting fashion retail
The US to post the largest absolute sales decline in 2020
China is the first major economy to show signs of recovery
COVID-19 impact to date on apparel and footwear retail
COVID-19 impact to date on personal accessories retail
COVID-19 impact to date on personal luxury goods retail
Assessing consumer appetite in fashion and luxury post COVID-19
Asia to lead in recovery with a brighter outlook set for 2021
COVID-19 and the impact on fashion retailers
Temporary store closures hit wholesale fashion and luxury hardest
Wholesale only brands forced to invest in omnichannel
Zalando collaborates with wholesale and store-based brands
COVID-19 exposes weakness in supply chain and route to market
Impact on supply chain and distribution channels
Luxury goods and fashion sales by retail format
Has COVID-19 changed consumer shopping behaviour forever?
E-commerce will be transformed by the COVID-19 pandemic…
…and continue on its major growth trajectory but will remain small
Virtual try-on features introduced into e-commerce and store-based
Ace & Tate introduces online styling advice and virtual try-ons
Bridging digital with the physical to create a hybrid store space
Bricks-and-mortar outlets still vital in short to medium term
Could online in luxury and fashion catch up on broader retail?
COVID-19 driven trends impacting where we shop for fashion
Travel flows cut by half creates further headwinds for retailers
Global travel shutdown leads to dearth of inbound shopping
Key fashion hotspots void of USD12 billion Chinese spending
Could China’s repatriated spending offer hope of a silver-lining?
Rise in Chinese domestic tourism threat to shopping destinations?
From “revenge spending” to “revenge travel”
Chinese spending at home versus abroad key to 2021 outlook
Key retailer survival strategies to reach consumers
Digital transformation has catalysed behavioural changes
Luxury and fashion brands aim to leverage “social retail”
Burberry ahead of the curve in digital innovation
Consumer demand drives last mile delivery services
Driving sales and loyalty through one-on-one digital consultations
Is this the end of “extreme consumerism” and fast-fashion retail?
Selfridges adds rental, repair, re-sell and refill models to initiative
Key takeaways

Luxury Goods

This is an aggregation of: Personal Luxury, Fine Wines/Champagne and Spirits, Luxury Cars and Experiential Luxury.

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