“The pent-up demand from nearly two months of lockdown between February-March likely led local shoppers to purchase more aspirational brands than mass brands,” said Catherine Lim, a Singapore-based Bloomberg Intelligence analyst. “Consumers are definitely looking to treat themselves following the scare from the outbreak.”
That quote addresses the encouraging signs for luxury goods from China, where the luxury consumer has fed the market either through its domestic purchases or through international travel. With travel dropping precipitously due to the pandemic, Chinese consumers have spent lavishly in the post-pandemic economy. Bloomberg reports that luxury goods makers from LVMH to Kering saw double-digit revenue growth in Q2 over 2019, underscoring the strongest recovery trend.
The optimism on the topic was also fed by Macy’s Q4 plans, announced Wednesday (Sept. 2), saying the department store retailer has seen an uptick in luxury sales and will focus on luxury goods as a way to attract affluent consumers and raise profit margins.
Selling luxury goods online has also been trending. Tiffany’s Q2 earnings showed its eCommerce business was up 123 percent globally with key markets such as the United States and the United Kingdom up 122 percent and 93 percent respectively. That puts eCommerce at 15 percent of the company’s net sales for the first half of the year, almost tripling previous years.
“We were excited to see that the encouraging trends we cited for the first quarter, namely, increased sales in Mainland China and global e-commerce, accelerated during the second quarter and propelled our return to quarterly profitability,” Chief Executive Officer Alessandro Bogliolo said in a statement. “Importantly, our global sales trends have strengthened in August, with preliminary month-to-date worldwide sales through August 25th being slightly positive as compared to the same month-to-date period in the prior year.”
Movado also showed a spike in eCommerce sales with a 130 percent increase in Q2 over the same period in 2019. Cowen analyst Oliver Chen says the category’s future depends on customer strategy.
“The whole idea of customer centricity has rapidly changed. With the crisis, the way people are spending their time, luxury brands have an opportunity and a role to respond. A lot about luxury is understanding the customer and the new needs around family, cooking, home, culture, relief and relaxation,” he told the National Retail Federation. “For all of retail, the new opportunity is in rethinking the store experience in the home. It means livestreaming and finding ways to engage customers in a safe manner that is virtual. It also means fashion shows being very different and videocentric. Salespeople can really engage by mobile phone and other ways. Luxury always needs to stay on top of the changing consumer needs.”