The Pandemic Hasn’t Spared Luxury Retail

Transcript:The Pandemic Hasn’t Spared Luxury Retail:
The Pandemic Hasn’t Spared Luxury Retail Unsurprisingly, the largest percentage (54%) of the fashion industry executives responding to the April–June survey for the United States Fashion Industry Association’s 2020 Fashion Industry Benchmarketing Study said their biggest business challenge was the pandemic. The study also revealed all respondents (100%) said they are postponing or canceling apparel orders from their Asia-Pacific sources, and almost half anticipate postponed or canceled orders will continue during the second half of 2020, and 40% into 2021. The 57.9% of respondents who said they were optimistic/somewhat optimistic about the five-year outlook for the industry was the lowest ever, while the 31.5% who were pessimistic/somewhat pessimistic was the most since 2014. Luxury Lives Online As with most retail sectors, luxury/fashion retail purchasing moved to the ecommerce channel with the coronavirus outbreak. According to data from Contentsquare, US online transaction for luxury products increased 45% during mid-April 2020. Even before the pandemic, almost half (47.5%) of all online fashion shoppers, responding to a Yotpo October 2019 survey said social media inspired their most recent fashion purchase, with 55.2% Gen Zers and 50.6% Millennials. Luxury retailer Fossil Group reported ecommerce sales accounted for almost 50% of all revenues during Q2 2020 (ending 7/4/20), compared to 13% for Q2 2019, while Tapestry’s ecommerce sales during its Q4 fiscal year (ended 6/27/20) increased by triple digits. Wealth Drives Luxury According to the Wealth-X Very-High-Net-Worth 2020 Handbook, very-high-net-worth (VHNW) individuals ($5 million–$30 million) increased 10.2% globally during 2019 to 2.67 million while ultra-high-net-worth (UHNW) individuals ($30+ million) increased 25.5%. The US had the largest increase in VHNW, or 15.8%, and $9.50 trillion in total 2019 wealth. China was second with an 11.8% increase, but only totaled $2.59 trillion. Japan +11.3%, Germany +2.8% and France +10.2% were the remainder of the top 5 countries. The Wealth-X Global Luxury Outlook 2020 reported VHNWs and UHNWs continue to spend for luxury items, but the pandemic has limited their high-end travel and restaurant visits, resulting in an increase in luxury services at their homes. Luxury Consumer Affinities The Wealth-X Global Luxury Outlook 2020 also calculated UHNW individuals’ affinity for luxury. Among those with $100+ million in net worth, individuals in Riyadh, Saudi Arabia had the highest level of affinity for luxury at 47.1%, with Moscow second at 28.4%. For those UHNW individuals with a net worth of $30 million–$100 million, Moscow was first at 4.3% and Los