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Translated by
Nicola Mira
Published
Oct 26, 2020
Reading time
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Luxury goods consumption redefined by Covid-19

Translated by
Nicola Mira
Published
Oct 26, 2020

Luxury goods consumption, in the lockdown, Covid-19-crisis era, has once again become an essential pleasure closely linked with personal well-being, and increasingly regarded as a localised, digital and sensorial experience, according to the World Luxury Tracking report (WLT), the annual survey of luxury consumption trends published by market research firm Ipsos. In the WLT’s 2020 edition, Ipsos has taken into account the current situation and the issues and upheavals caused by the health emergency.


In 2020, consumers are turning to luxury consumption for gratification and personal well-being - DR

 
The survey charted “a true redefinition of luxury under the combined effect of accelerated digitalisation and an increasingly prioritised need for indulgence and well-being, but also linked to the cost of stopping purchases while travelling, which had become an essential element of the market.” Consumer expectations must be reconsidered, “as we move towards a more fundamental and demanding consumption of luxury, a quest for self-fulfilment.”
 
Every year since 2007, WLT has analysed the expectations, influences, brand relationships and purchasing patterns of the wealthiest cohorts of the population. For the 2020 edition, WLT surveyed 8,200 affluent consumers from the USA, China and Europe, focusing for the latter in France, Italy, Germany, Spain and the UK.

The Covid-19 pandemic has prompted affluent consumers to spend a considerable amount of time on the web. During lockdown, nearly 70% of interviewees from China, 51% from the USA and 35% from Europe purchased luxury goods online, and they plan to shop for luxe items online even more frequently, chiefly on multibrand sites (68% of respondents), on labels’ e-shops (51%), on pre-owned luxe sites (21%) and on social media (8%). According to Ipsos, “they expect an efficient experience and above all they want to find exactly the product they are looking for. Personal data protection is a key expectation for 86% of them.”
 
Luxury shopping is once again an essential pleasure, linked to personal well-being. Product categories involving a sensory experience have been the most sought-after during lockdown periods, especially skincare, perfumes, wines, champagnes and spirits. In terms of purchasing intention, fashion and accessories are well positioned, while jewellery and watches are lower down on the list of purchasing intentions in western countries.
  
Another finding is that consuming luxury goods is once again regarded as a privilege. The consumers interviewed by Ipsos “are aware that they are part of an elite. This is a more recent phenomenon in Europe and the US, whereas the pleasure of being part of an insider circle was already a classic motivation in China,” according to the report.


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“Beyond these common denominators, namely an increasingly digital [customer] experience, a need for sensoriality [sic] and emotions, and an increasingly sophisticated product culture, we observe polarised attitudes across the zones: optimism and materialism in the Chinese cohort, resilience and new hedonism among Americans, and caution and shelter from anxiety in Europe,” said Françoise Hernaez, Director of Cultural Intelligence at Ipsos.
 
Affluent consumers are above all seeking authentic, high-quality products with genuine added value. For 95% of Chinese interviewees, luxury products must boost one’s self-confidence. For 89% of Americans, they must provide exceptional emotional experiences, while for 85% of affluent Europeans interviewed, these purchases must represent safe, long-term investments.

Chinese consumers displayed entrenched optimism, even though they have been impacted by the crisis (45% of them reported loss of earnings) and said they need to economise. An attitude that “aligns” with a certain degree of nationalism, but is equally rooted in the genuine optimism of a huge country whose middle class is in full bloom, according to Ipsos.
 
Chinese interviewees were the most numerous in stating that luxury is essential in their daily lives. As many as 49% of them recognised they are more willing to consume luxe items now than before the crisis. A trend that is fostered by the high degree of digitalisation characteristic of brand relationships in China, whether via live-streaming sessions allowing products to be tested and compensating for the lack of in-store contact, or through meetings on WeChat with shop assistants from luxury labels, and even via the presence of luxury brands in online gaming.

These practices are intensifying, and they “[draw] the outlines of new relational modes with connected customers who continue to consume online more than ever before, and also demand that their digital journeys are fluid, intuitive and fun,” indicated Ipsos.
 

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Affluent US consumers have proved to be especially resilient, considering that the Covid-19 pandemic has affected them heavily, and that they too have been impacted by decreasing earnings. Ipsos noted that “there is nevertheless a greater attraction to luxury. A renewed perception of luxury as directional, but also rich in imagination. Luxury is more than ever a dream-space and an escape from an anxiety-provoking context, one in which consumers expect creativity, dreams and innovation.” There also is a strong attention for product categories related to well-being (beauty products, skincare, wine) to the detriment of classic luxe categories such as watches and jewellery.
 
European interviewees stated their earnings have been less affected by the economic crunch than those of their US counterparts, but their confidence in their respective countries’ economies has been harder hit (-10 confidence points in Europe compared to 2019). They displayed a profound need for reassurance and a certain aversion to change: 73% of them don’t want to make any changes in their purchasing behaviour.

However, affluent European consumers are keen to cosset themselves with new luxury experiences (for example personal care regimens, visits to spas and restaurants), and are slightly less interested in traditional luxe categories. And while personal well-being is the dominant trend, the ethical dimension is also making inroads. Europe is the only region where Ipsos observed constantly rising expectations for cruelty-free products and ethical and environmental pledges by luxury labels.

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