COVID-19 changed the world as we know it, and so the post-COVID era requires us to reconsider different aspects of our lives, with the way that we spend our money being a key part of this. Even the world’s richest individuals are not exempt from this re-assessment, with finances that were undeniably affected by the pandemic, albeit in different ways to those who are less wealthy.
The Global Wealth Market Post-COVID-19 report by ResearchAndMarkets.com estimated a decline of 7% in the global wealth market in 2020, due to the coronavirus. This was thought to hurt HNW and UHNW individuals significantly thanks to their likelihood to invest and appetite for riskier asset classes, which have experienced declines mirroring the 2007-09 recession. Thankfully however, the report also predicts that 2021 will see a healthy bounce back, with the global retail savings and investments market set to increase by 10% over this year.
With some HNW and UHNWs having lost a portion of their wealth, and others having simply reconsidered their lifestyle in the wake of the pandemic, luxury spending trends have been somewhat reshaped. Below, we’ll explore what luxury consumers are looking for from brands in the post-COVID era, based on the recent Post-COVID19 Luxury Consumer report by insights group Altiant, which surveys affluent and HNW individuals from China, the UK, the US and France.
Luxury spending trends for 2021 and beyond
Luxury shoppers have had time to reflect on the amount that they buy, and some have not liked what they’ve seen. Over a third of wealthy individuals from France, the UK and the USA, plus 16% of HNWs from China, said that the pandemic has made them question their consumption of luxury goods. This is supported by further data which shows all those surveyed to have strong intentions to consume luxury in a more sustainable way, led by the Chinese market (57%) and followed by the US (33%), France (32%) and UK (30%).
For these individuals then, it is more important than ever that brands offer something that makes them feel better about making that purchase. To meet these demands from their audience, brands should work to make their products or services more environmentally-friendly, and should highlight the sustainable journey their business has been on in their marketing campaigns. They could also consider teaming up with a charitable cause, to help add a further purpose to their clients’ purchases.
This focus on sustainable luxury has led to many affluent and HNW individuals putting more importance on locally produced products – 40% of British respondents, 37% of those from the US, 34% French, and 25% from China said they intended to shop more locally after the pandemic. From a marketing perspective, this shows the need for companies to reach out more to the audience on their doorstep (e.g. in their city, region or country) and perhaps focus less budget on global campaigns, depending on the brand in question.
Some parts of the luxury travel industry have fared much better than others post-pandemic. While the Altiant report shows that cruises and flying commercially have both seen a decline in interest amongst the world’s wealthiest, some 63% of HNWIs said that they will spend the same amount or more on hotels and resorts after the pandemic as they did before, and 42% said the same for spending on private jets, helicopters and yachts.
One clear luxury shopping trend is that affluent clients were less willing to purchase long-haul flights after the pandemic, with 45% of global HNWIs claiming that they will book less long-haul flights for leisure than before the crisis. In order to win this clientele back, airlines must focus their marketing around the safety precautions that will be in place on their flights, with measures such as distance between passenger seating, strict cleaning protocols, and health checks and sanitiser distribution at boarding all being ranked the highest when affluent individuals were asked how airlines could make them feel safer.
Online vs in-person shopping
The next big luxury spending trend driven by COVID-19 is how people like to shop in the post-pandemic era. Unsurprisingly, some 45% of the world’s wealthiest admitted to shifting more of their luxury spending online during the confinement – 64% from China, 51% from the USA, 42% British and 34% French. This included a rise in purchasing luxury items through social media, with 28% of global HNWs increasing their spend on social platforms during lockdown, although it should be noted that this number is largely driven by the Chinese wealthy consumers, 50% of whom have increased their purchasing through social media.
It is likely that this trend will continue long after the pandemic is over, with many HNWIs discovering the convenience and reliability of online shopping during the COVID crisis; traditionally, clients preferred to purchase luxury items, or have someone else purchase for them, in-store, allowing them to assess the quality before buying. However, when asked how much they would spend in luxury retail stores after COVID-19 compared to before, 41% of people said they would spend less, 36% would spend about the same, 22% said they would spend more.
To respond to the preferred shopping methods of their clients, luxury brands must ensure that their website is extremely user friendly while effectively conveying the beauty and quality of their products, and must make sure that every part of their e-commerce journey is smooth, from the moment someone discovers the product on social, to when they add an item to their basket, to its delivery to their doorstep.
Meanwhile, those that wish to entice HNWIs back into their bricks and mortar stores should do everything they can to make shoppers feel more comfortable, and ensure that their marketing tells people about these measures. Only 7% of those surveyed by Altiant said that they would feel safe going back to a store without any protective protocols, while measures that the affluent said would make them the most comfortable include limiting the number of customers in the store, sanitiser at the entrance, and sanitised changing rooms between customers.
One thing that doesn’t seem to have been heavily affected by the pandemic are people’s favourite brands. Globally, just 16% of luxury shoppers have discovered new preferred brands during the COVID crisis, while more than 50% said that they would remain loyal to their favourites, with this figure jumping up to 72% of HNWIs in China.
In the post-pandemic era then, businesses must put extra effort into showing their clients how much they value and understand them, to ensure that they maintain this loyalty in a market where less people are looking for new companies to shop with. This may include offerings such as personalised sales for your most dedicated customers, gifts for those who spend over a certain amount with your business, or early access to new products. However, the pursuit of new clients must continue if your brand is to grow, so don’t let your ‘awareness’ suffer as a result of your strengthened retention campaigns.
We have seen how affluent clients’ spending habits have changed during the pandemic, and while some of these changes may pose a challenge to your brand, part of being successful is being able to constantly adapt to meet the demands of your audience. Understanding the luxury shopping trends of affluent consumers is the first step to ensuring your brand’s relevance in the post-pandemic era. To find out how we can help you take the next steps, get in touch today.