Where Consumers Shop for Luxury Goods

March 2021

Consumer spending on luxury goods continues to undergo unprecedented levels of channel shifts due to the long-term effects of the Coronavirus (COVID-19) pandemic and there is no doubt that the outbreak will be seen as a catalyst for a stronger move towards digitalisation in retail. This report provides a top-line overview of market performance and prospects across the key retail channels in luxury goods, including the impact of COVID-19, and outlines key trends within the global luxury goods bus

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Key findings

A "new normal“ across the luxury distribution landscape takes shape as transformations in shopping habits look like they are here to stay

COVID-19 has undeniably transformed the economic, consumer and retailing landscape. It has changed the way luxury consumers live, work and shop. Uncertainty remains high, but what is clear is that economies will not emerge unscathed, and the daily routines and lifestyles of luxury consumers will shift to accommodate these changes, potentially in the longer term, as a “new normal” takes shape.

E-commerce accelerates within non-store retailing

E-commerce will undoubtedly grow as consumers continue to enjoy the convenience of online shopping, and the shift to learning, working, eating, shopping, playing and socialising moves further into the home. Physical retailers will need to go above and beyond to create new bonds and build loyalty with customers who will be looking to be entertained, rewarded and valued.

Supply chain inadequacies cause for concern

At the start of the pandemic major disruption across the supply chain in luxury goods highlighted the inadequacies of the current models. Luxury retailers are taking a closer look at diversifying their existing supply chains to create a more effective model which is also more socially and environmentally responsible

Last-mile delivery being trialled globally to improve competitiveness

Many luxury retailers have been experimenting and innovating in terms of last-mile deliveries to improve competitiveness and loyalty, but, above all, to improve the customer journey and overall service, as this final stage of a purchase is one of the most emotional phases of the buying process.

Innovation is at the heart of the recovery for all retail channels in luxury goods

New strategies across the distribution landscape will be key to building resilience and one thing that should not be paused, despite the economic crisis, is innovation. At a time when consumers are worried about the state of the planet as well as social issues, luxury retail channels are urged to leverage investment in research and development to create new innovations that will resonate with consumers


Key findings

Industry Snapshot

Global luxury market contracts by almost USD173 billion
Asia Pacific leads in sales with China at the helm
Market casualties under increasing pressure from COVID-19 impact
Luxury sales take a tumble in key luxury goods markets
Luxury goods among hardest hit across all fmcg markets
All luxury categories threatened by unparalleled shock of COVID-19
Experiential luxury witnessed the deepest contraction
Luxury cars continue to navigate through a difficult period of change
Personal luxury adversely impacted by cull on discretionary spending
Luxury drinks shielded by influential and loyal niche consumer base

Impact of Coronavirus

Supply chain diversification as a result of the pandemic
Temporary store closures hit wholesale retailers hardest
Wholesale-only brands forced to make omnichannel investments
Global travel shutdown leads to dearth of inbound shopping
Shifts in luxury consumer shopping habits and where and how we shop

Channel Shifts

Channel shifts across luxury goods categories
COVID-19 accelerates luxury retail channel shifts
COVID-19 a catalyst for change in our shopping behaviour
Non-store retailing gains on the back of e-commerce growth

Store-Based Channels

Non-grocery specialists remain the biggest distribution channels…
…but the pandemic has disproportionately affected non-grocery channels
Grocery retailers benefit from being “essential” retail
Shifts in shopping behaviour help to boost sales for grocery retailers
Luxury department stores suffer steep declines
Leading luxury department stores the biggest casualties of COVID-19
Virtual try-on features introduced into the store-based channel
Burberry ahead of the curve in store-based digital innovation
Store-based retailers fatally exposed by bricks-and-mortar-heavy model

Non-Store Channels

Impressive uptick in e-commerce but digital divide exposed by pandemic
E-commerce in personal luxury heavily reliant on developed markets
Total e-commerce transformation swayed heavily towards the East
Digital divide and low e-commerce penetration increase exposure
2020 accelerates adoption of e-commerce across all luxury categories
Luxury fashion is most developed across the e-commerce channel
Fashion items are the second most common click-and-collect purchases
Cost outweighs speed in terms of desired delivery features
Despite its impressive growth trajectory e-commerce will remain small
Last-mile delivery being trialled globally to improve competitiveness
Louis Vuitton Singapore offers a greener last-mile “white glove” service

Future Developments

Brighter outlook for 2021 led by Asia Pacific
Consumers saving not spending adds to future uncertainties
Changes in consumer behaviour will shape future retail strategies
Physical and digital worlds will shift to create a more phygital retail space
Key takeaways




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