With international travel increasingly difficult, Chinese luxury consumers are indulging in shopping sprees instead, according to a new study by consulting firm Agility Research & Strategy.
Fifty percent of interviewees foresee an increase in their domestic leisure trips, while only 34% of respondents expect to increase their international travels.
This phenomenon has the potential to help certain segments and industries rebound faster on their roads to recovery, as they cater to the new demands of high-net-worth individuals (HNWI).
The findings are a follow-up to the firm’s initial series of interviews conducted in late-January/early-February of 2020 at the beginning of the COVID-19 pandemic.
Consumers’ spending expectations for the next year have declined across all categories since January, with travel-related categories registering the steepest drops. The report found that travel experiences are down to 38% (from 54% in W1), airline tickets are down to 33% (from 49% in W1), and hotels/accommodations are down to 32% (from 50% in W1).
Skincare, makeup, and clothing are still strong earning segments, and Agility predicts that consumers are more likely to boost their spending on these categories, with 39% of respondents saying they will increase their spending on skincare (down from 49% in W1), 38% on makeup (down from 48% in W1), 37% on fashion clothing (down from 45% in W1), and 35% on fashion jewellery (down from 44% in W1).
Similarly, apparel and cosmetics luxury brands should have a smoother transition out of COVID-19 compared to other industries.
Other highlights from the Wave of The Trend Lens consumer study include:
- Buying products that say “Made in China” is still trending: 60% of younger consumers (age 21-34) have purchased an item from a Chinese luxury brand over the first six months of 2020. Moreover, 77% of consumers are willing to buy a product from a Chinese brand in the future.
- An increasing number of HNWIs are preferring to shop online, especially consumers from smaller cities who don’t have multi-brand stores and physical showrooms where they live: 71% of respondents have purchased luxury products online in the past six months, and for the 21-34 age group, that percentage is even higher (77%).
- The “upgrade trend,” continues, with 54% of the HNWI planning to buy more expensive luxury items. HNWIs are becoming more selective with their purchases, which means they are less willing to buy trendy or lower-quality products, instead preferring investment pieces.
- Sustainability remains a priority, even in the post-COVID-19 world. Over 83% of respondents intend to do more for the environment, 81% want to buy more from sustainable brands, and 78% plan to invest more in sustainable companies.
“China has emerged as a resilient market and one that seems to be a bright spot for luxury brands this year,” said Amrita Banta MD, Agility Research & Strategy. “Along with China, affluent consumers from Indonesia and India were also more optimistic across key metrics while Malaysians, Japanese, and Singaporeans seemed more cautious about the economic climate and were looking to cut back on their spending.”
For the study, Agility interviewed 1,040 affluent and HNWI individuals in mainland China, with each respondent having a minimum of US$1 million in assets under management (excluding their primary residence).
Sourced from Jing Daily