R. Suri, Toronto
As the COVID-19 crisis continues to rage, businesses are trying to keep up with the changing global economic order and the associated changes in consumer behaviour. While many countries have lifted the lockdown, consumers are nevertheless exercising cautious and are staying home and safe. If they do engage in out-of-home activities, it is usually to shop for essentials or to get together with families. What does this mean for luxury retailers? Predictions are that global luxury sales may drop by 35 percent by the end of this year. Leaders however can enthuse purpose in this situation by adopting change and making decisions aligned to the new situation.
Consumers world over are finding it difficult to adapt to this new normal. Some of the trends, impinging upon market shares of major retailers are: decrease in consumer optimism, as consumers in most countries believe that Covid-19 will continue to affect their routines for a longer period of time; drop in spending on discretionary items, such as high-end apparel, because of decreased economic activities resulting in truncated cash flows. Though consumers are pulling back from spending on high-end products, an increasing trend is observed in spending on categories like restaurants or items used in the maintenance of restaurants, such as vacuum cleaners, crockery, etc. It is so because consumers are willing to spend on things that involve well-being, self-care, and health.
Consumers may take time to return to buying luxury fashion items, until then, companies should strive to revise their market plans to include safety and decontamination measures for a higher level of customer satisfaction. Having said that, consumers will still galvanize towards utility-maximizing luxury fashion items.
This pandemic has taught the majority of the people new ways to shop, work, grow, buy, and connect socially, besides affecting an overall improvement in personal lives.
The demand for the retailer has increased manifolds in the context of changing consumer behaviour and new economic realities. New brands backed up by dynamic business plans are in calling to weather the crisis or to avoid extinction.
