According to new research by digital operations platform Brightpearl, just one in 20 consumers (5 per cent) are looking to buy luxury apparel such as designer handbags over the next twelve months. Meanwhile, only 6 per cent is looking to spend on luxury watches, jewellery and fine art in the same timeframe.
The survey, which polled 2,000 consumers, points to a crisis in the luxury sector with a major switch away from ‘frivolous’ spending. Overall, luxury spending is likely to be down by 24 per cent in 2021, says the company.
“The luxury sector will be impacted hugely,” says Derek O’Carroll, CEO at Brightpearl. “As people continue to tighten their belts, and with the knowledge that many major events are likely to be cancelled again this year, it seems people will be shying away from splashing out on a pair of premium boots or a handbag that they aren’t sure they’ll be able to take out to show.”
Despite the new restrictions on movement likely to last at least until the spring, holidays are currently the most popular ‘big ticket’ item, with 39 per cent of consumers still planning a summer break.
But financial uncertainty is forcing shoppers to rethink how they spend their money. Four out of ten (43 per cent) say they have changed their shopping habits drastically. A quarter of shoppers have seen their income hit since Covid, though 21 per cent say they are saving money by working from home. Only 40 per cent have seen ‘no change’ to their financial situation, with 63 per cent saying they need to be ‘very careful’ with their money. Around 40 per cent are cutting down on ‘frivolous’ spending over the next twelve months.
Brightpearl’s O’Carroll adds: “Shifts in spending habits apparent at the start of the pandemic are likely to accelerate this year as we grapple with fresh restrictions on movement likely to last well into the spring.
“It is going to be a choppy 12 months for the luxury sector as consumers move away from frivolous spending and concentrate on pure survival mechanisms. The harsh reality, though, is there will be winners and losers across all categories. What firms do next counts.”
Brightpearl has distilled the data into a new report on the habits, categories and spending of shoppers over the next twelve months. https://www.brightpearl.com/winnersandlosers
Bristol-based Brightpearl works with retailers introducing new software that puts orders, inventory, financials, POS (point of sale) and CRM (customer relationship management) in one place.