Image Credit: Louis Vuitton
Despite an economic regression in 2020 due to the devastating consequences of the Coronavirus, luxury goods have seen an increase in sales, especially during the second half of the year. In fact, by the summer of 2020, sales were increasing significantly due to e-commerce development and tourism being permitted again.
Chinese customers have always contributed to a large percentage of luxury sales. According to McKinsey, between 2012 and 2018, China contributed to more than 50% of the global growth of luxury spendings and is expected to reach 65% by 2025. But as travel bans and lockdowns were put into place in early 2020, the industry experienced a plummet in sales. However, as the limitations to purchase luxury goods grew, so did the desire of buying these specific goods. According to Women’s Wear Daily, Hermès reportedly made $2.7 million on its first day of reopening its flagship store in Guangzhou’s Taikoo Hui, one of the wealthiest areas in China, back in April. This helped make up for the potential lost revenue as customers were eager to spend money on a long-awaited face-to-face luxury shopping experience.
As lockdowns became stricter around the world and many retail stores were forced to close down, e-commerce platforms became a notable place for customers to make their purchases. This was not only a form of entertainment during a period which lacked stimulation but also a type of therapy for those missing the experience of shopping. According to Financial News, online purchases increased by 7.8% for shoppers in their 20s and by 21.4% for those in their 30s.
Many designers and luxury retailers saw a significant increase due to their efforts in developing a user-friendly e-commerce experience. New strategies, AI development, in-depth product descriptions and quicker check-outs are some of the many steps e-commerce retailers took in order to improve their websites. BoF states that the online designer boutique Farfetch had their sales go up by nearly 75% since 2019, amounting to $365 million in revenue. In addition, the Kering group, which manages the likes of Gucci, Saint Laurent, Balenciaga, Alexander McQueen and many more designer brands, reports that 13% of yearly sales are attributed to e-commerce, doubling 2019’s data of 6%.
Although the fashion industry was expecting a shift towards e-commerce by the mid-2020s, the Covid-19 related restrictions forced brands to act much quicker. According to McKinsey, in 2019, between 10% and 15% of global luxury sales were generated by e-commerce. China and Europe were spending the least online, while the US saw the biggest spending. However, by 2020, all three regions combined made up 50% of global luxury online sales. Jean-Jacques Guiony, the CFO of LVMH even said, “When I see the amount of business that we’ve been able to generate in the last six months on our e-commerce platform, I think there is a future for these platforms to generate a significant amount of the global sales.” Although everyone is eager to have their favourite stores open again, e-commerce has imposed itself as a genuine and significant source of revenue, which will certainly stay post-pandemic.
More on CULTED
See also: DID FASHION REALLY SLOW DOWN IN 2020?
See also: THE TOP 10 COLLABORATIONS OF 2020
