Spending in Asia-Pacific on luxury goods is set to contract by 3.4% this year – a fall, compared to last year, of $2.1 billion, as consumers rein in spending on expensive items and focus on smaller treats instead.
So says market intelligence company GlobalData, which predicts total spending in the region will dip to $60.3 billion, compared to $62.4 billion in 2019.
The sector has been hard hit by the economic fallout from the COVID-19 pandemic, say GlobalData analysts, and the closure of a number of luxury-branded stores across the region makes it unlikely sales will recover in the near future.
The looming global economic downturn is already forcing consumers in the region to put aside plans for non-essential, big-ticket buys, which hits the luxury market especially hard.
“COVID-19 has forced luxury brands to postpone their fashion shows, cancel promotions events, and has disrupted supply chains,” GlobalData retail analyst Suresh Sunkara said.
“However, since the start of the second quarter of this year, several countries in the region, including China, Japan and South Korea, have lifted most of their lockdown measures to bring normalcy in their economies, while countries such as India have begun phased relaxation of lockdown measures,” Sunkara added.
“This will bring some relief to luxury retailers as they can now open their stores and resume operations.”
Because international travel restrictions are still in place, duty-free stores – a major channel for luxury sales – have been closed. The result of sales declines and store closures in the region, Sunkara said, was bound to force luxury retailers to re-evaluate their price positioning and launch affordable luxury lines to revive volume sales.
Meanwhile, in China, German luxury car maker Mercedes–Benz has announced the closure of Mercedes Me Beijing, the largest of the Mercedes Me concept stores in the world, which opened in 2016, the South China Morning Post reported.
The closure of the combined store and 2,400-square-metre dining area in Beijing’s nightlife area highlights the difficulties for both the luxury retail and hospitality sectors in managing the fallout from the coronavirus pandemic and the lockdown that followed.
A number of jewellers, luxury fashion brands, and luxury car makers have launched similar themed restaurants, the SCMP reports. But analysts forecast more closures will come as diners stay at home and brands remove non-core parts of their businesses.
Sourced from GlobalData, South China Morning Post