Bain & Company identifies six emerging consumption trends as the luxury industry looks to make sense of the current coronavirus crisis.
As of March 25, the consulting firm is forecasting a 25% to 35% contraction in the global luxury market year-on-year in the first quarter. Looking ahead to 2020 as a whole, Bain has modelled three scenarios, with the intermediate one predicting a drop of between 22% and 25%, amounting to a decline of €60bn to €70bn. Profitability will be disproportionately hit, highlights the company.
China’s market recovery, however, is an emerging bright spot—one of the six covid-19 consumption trends identified by Bain. Consumption is expected to restart in China before other markets (if indeed coronavirus remains under control in the country) and ongoing travel restrictions mean that many purchases that would have taken place abroad will happen in China.
There is also the rise of what Bain dubs a “post-aspirational mindset”, with consumers expected to favor brands with a purpose as ethics become as important as aesthetics.
Heightened environmental and social consciousness is also tapped as a trend, and may lead brands to rethink the end-to-end product lifecycle, supply chain management and what happens with unsold stock.
The other trends are strengthened local pride and an expanding need for inclusion: with consumer finances taking a hit, brands will have to work harder to create more accessible price points.
Lastly, digital shopping looks set to stay. While consumers will return to shop in physical stores, some digital shopping habits built during the covid-19 outbreak will remain, particularly if brands up the ante in terms of user experience, digital marketing and online assortment, concludes Bain.
