Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity,” said French fashion designer and businesswoman, Coco Chanel. Well, if not quite ostentatious opulence – ‘luxury’ certainly has always connotated comfort and high-living, for a price.
Luxury is luxury because it comes at a price and prices opt for a downward curve when the economy is on a slide, the way it has been for the world at large over the past year. In India, we were already dealing with a sluggish economy and the pandemic tipped the scales towards the ‘not so favourable’ scenario.
Luxury goods began to gather dust on shop shelves not just in India but across the globe, mostly because the stringent lockdowns announced to battle the coronavirus restricted travel and movement. A Bain & Company report says the luxury sector is likely to contract by up to 35 per cent in 2020. It also predicts signs of recovery in China (a market responsible for 90 per cent of the growth in the global luxury market in 2019), which could bring in some happy tidings. A change is in the air, however – a change in the way consumers engage with luxury.
Broadly speaking, aspects such as ethics, sustainability, innovation, comfort, ease and digital are the sum total of the changes apparent in the luxury sector. This change in perspective, which trumps aesthetics and glamour that luxury offers, is expected to remain important in the future. What this change implies is that while the ‘aspirational value’ of luxury products and services are still intact, (which keep these products and services on the highest rung in consumer preference) a quest has begun for a more purposeful aspect of luxury goods.
For example, during the lockdown, instead of jetting off to a beach, one sat in a lazyboy chair and watched Netflix on a Samsung Quantum Dot TV with Sony WH1000XM4 noise cancelling headphones on. When craving for a snack, one ordered from the Oberoi hotels food delivery service, while lounging around in a pair of Bottega Veneta track pants. So you see, the desire and love for luxury stayed but comfort and ease played a bigger role in the choice of luxury goods.
In times of crisis people are known to crave luxury for emotional comfort. Former Esquire Editor, Lee Eisenberg’s 2009 book, Shoptimism: Why the American Consumer Will Keep on Buying No Matter What highlights this phenomenon of emotional buying among other things. Research by Statista indicates that despite the dip in revenue and sales because of the coronavirus, earnings from luxury goods and services is set to increase from $285.1 billion in 2020 to $388 billion in 2025. A significant extent of this growth is expected from the economic recovery in China and the more ardent leveraging of the digital medium by luxury goods manufacturers to engage with consumers.
According to Sunjae Sharma, Vice President and Country Head, India Hyatt Hotels, “It’s a brand-new world which greets both our guests and us in the wake of the Covid-19 virus. The world is having to realign, keeping in mind various precautions which are now necessary owing to the pandemic.”
“Hotels though, as just the past few weeks have shown us, still remain a place of comfort and safety for guests and customers in this #newnormal,” he goes on to say. Sharma believes the focus of the hospitality sector should now be on “reimagining experiences and hospitality”, and on providing luxurious experiences in a safe environment. Automation and contactless services to avoid or minimise human contact with exposed surfaces will become a priority, he feels.
“Hotels are likely to emphasise on curating and enhancing personalised dining experiences, such as private dining in a premium suite, intimate meals in garden suites etc. The need of the hour is also to introduce new QR code display menus so guests can browse options and order from their own mobile device at the hotel. Additionally, caring for employees – along with guests – is very important, there will be renewed efforts towards ensuring safety of all employees,” says Sharma. “There are many innovations and trends that the sector will be witnessing,” he goes on to say, “while welcoming guests back to our hotels.”
THE DIGITAL ROUTE
Over the last few years, digital sales of luxury goods were quite healthy and most luxury brands were happy going the digital route given the busy lives of consumers and their love for the medium. A case study by Business of Fashion shows that globally each year consumers bought €33.3 billion (about $37 billion) worth of personal luxury goods online till 2019. As has happened across sectors, in luxury too, the digital route has assumed greater importance because of restrictions on movement brought on by the pandemic.
“Covid-19 has definitely had an impact on the business, however at the same time it has challenged us to become better for our consumer. It has made it possible for us to reach out to our consumers via other channels and encouraged us to be innovative and entrepreneurial,” says Simi Dewan, Country Head (DGM) of L’Occitane India.
“At L’Occitane, we have been innovating with digital marketing by further building our identity in India with a robust digital outreach plan. Additionally, with a paradigm shift in consumer behaviour, there has been a rise in curating a more connected and personalised experience in current times,” she says. Dewan says L’Occitane had introduced new models such as WhatsApp for Business, Pay and Collect its consumers. “Through this model, we aim at delivering right at the door step through just a single click,” she says.
Samrath Bedi, Executive Director of Indian Luxury cosmetic and skincare brand, Forest Essentials, which specialises in Ayurvedic preparations, echoes the same sentiments. He believes, “Online channels are set to become more important than ever. Shoppers have increased online purchases during the crisis. We think this behavioural change will last beyond Covid-19.”
Bedi discloses that in the absence of “the touch-and-feel experience at stores”, the company was leveraging visual mediums like Instagram and YouTube to show consumers product textures, benefits, application methods and so on. “However, our physical stores will continue to function as fulfilment centres,” he goes on to say, “and are a vital component of omnichannel fulfilment in a post- Covid-19 world.”
“We have also introduced a new ‘Speak to Your Store’ feature on our website. Customers can now connect with their favourite in-store staff or expert over a phone call or a video call and make the most of a personalised shopping experience and get their products delivered to their doorstep,” Bedi tells us.
An interesting trend was witnessed during the lockdown. High-tech gadgets saw a massive increase while most of the world was confined indoors. In this sector too, aspiration led the way and it was noted that consumers did not mind spending that little extra for some high-tech bling.
“While we see overall demand being strong, we also see consumers willing to spend on premium products as they see higher usage of the device and want to invest in better experience. Our premium lifestyle brand, Yoga and our premium gaming brand, Legion, are both seeing high traction,” says says Shailendra Katyal, Executive Director & Head of Consumer PCSD, Lenovo India.
Kaytal says, “Our share of premium notebooks has grown 37.7 per cent year-on-year in Q1 to cross a 20 per cent share.”
Says Gireesan Gopi, Business Head, Home Entertainment, LG Electronics India, “Consumers are preferring premium or mid-segment products, unlike in the past where only LCD/LED technologies were available. Now, with OLED self-lit Display technology, 4K IPS Display, consumers have better choice and are ready to invest.”
ETHICS & SUSTAINABILITY
What has been noted recently is that for new buyers of luxury, sustainability and comfort are as important as aesthetics and glamour. Luxury buyers who form the Millennial and Gen Z segment are more aware of the need and the importance of preserving resources, mother nature and our planet.
“I think the pandemic has shown everyone what is really important and needed in life. Everyone is back to basics. Similarly, for customers consuming luxury, the past few months have convinced us and them to invest in items one can wear or use, not only repeatedly within the same season, but more importantly, for years to come,” Rina Singh, Founder & Designer of eka & eka Core.
“ In the fashion space, I believe that season-driven fashion will significantly reduce in the years to come. I introduced a line of trans-seasonal collection called eka Core in August 2020, featuring essential pieces in sustainable textiles, guided by ideals of comfort and timelessness,” Singh tells us, adding, “The transitional line has been created with the aim of adding longevity and versatility to an everyday wardrobe.”
At Forest Essentials, Bedi is convinced that affluent consumers are rethinking and re-prioritising their consumption patterns, making them less conspicuous and more responsible towards society as well as the environment. They are becoming interested in knowing what is in the product, rather than going by just the perception. “There is an increased desire for transparency from brands, so consumers will seek out brands that align with their personal values. Consumers may be driven to buy luxury for ‘conscientious value’ rather than ‘conspicuous value’. In the longer term, because of this crisis, people may be willing to spend more on sustainable brands that ref lect their own values and beliefs,” he says. All in all, the pandemic has changed the luxury sector and hopefully, this will be a positive change. Brands need to re-think, restructure and re-strategise to emerge stronger from the crisis. Ethics, sustainability and ease will rule the sector, with higher dependence on the digital medium.