How is the Luxury Industry getting transformed during COVID-19?

The COVID-19 pandemic transformed how we live and work in ways we hardly imagined at the beginning of 2020. The global crisis has led millions of people to develop new ways of working, learning, shopping and living more frugally. Luxury is often one of the first industries to take a hit in testing times, but it is also one of the most resilient sectors. The luxury industry, bouncing back more strongly than perhaps anyone could have speculated after the last financial crisis.

Luxury brands must lean on and transform themselves from a brand-centric, controlled and confidential model to a more transparent, engaging and customer-centric organization, adopting digitization during the pandemic.

Let's look at top trends of how the luxury industry gets transformed in the future:

Rise in Digital Purchase

Covid-19 undoubtedly stimulated the speed of digitization as companies had no other option but to go online to survive. Many customers who traditionally purchased through physical luxury mansions have switched to online websites for the first time during the pandemic. There is also an upsurge in demand from buyers living in tier 2 and tier 3 cities who had limited avenues earlier to buy their favourite designer labels at the click of their fingertips. Considering the demand, some of these buyers are likely to stick to this option in the post-pandemic world.

Consumers love Shoppable Content

Shoppable content is a type of content that offers consumers a direct opportunity to purchase a product within a few clicks. The type could include shoppable images, articles, videos, and social media content, live streaming and digital magazines.

Nowadays, social commerce allows users to buy their favourite goods and services without exiting applications to reduce cart abandonment. Moreover, such platforms are democratizing e-commerce, as they enable smaller and less digitizes businesses to sell without a direct-to-consumer platform.

Attracting More Customers

The fear of coronavirus still looms large around the world. Consumers are shying away from visiting physical stores. They are making focused, to the point visits to retail outlets to meet their luxury purchase requirements and not spending time on window shopping and browsing through goods in the physical stores. The ticket size of purchases has increased due to a decline in, frequent visits. Additionally, consumers have become more informed and are very clear about their needs and preferences. Therefore, marketers need to go the extra mile to engage and attract customer's attention during such times.

The Advantages of Personalization

As per Forbes Insights, 40% of marketing executives report that personalization has a direct impact on maximizing sales, basket size and profits in direct-to-consumer channels like e-commerce, while another 37% point to increased sales and customer lifetime value through product or content recommendations. Over one-third of respondents have seen surges in their transaction frequency as a result of personalized strategies.

This is why an increasing number of luxury brands are now joining this game, enabling buyers to transform iconic products into unique signature pieces.

Back to Possessions

Luxury consumers cannot travel today. They cannot splurge money on lavish dinners or big fat weddings, either. In such a scenario, affluent people are parking a large amount of money on possessing luxury goods. They are celebrating their special moments, such as birthdays and anniversaries, by purchasing high-end labels. Possessions have become a way to feel satisfied at the time of this crisis. This trend will be more prevalent in the short-term until experimental luxury again gains momentum.

Video Ads can Help Digital marketers

For years, marketers have agreed that video is indeed dominating, and it is now confirmed. As per one billion hours of video are watched daily, and more than 2 billion logged-in users access the platform monthly. Consequently, 85% of businesses use video in digital marketing, and 92% of marketers claim that it is an integral part of their strategies. In this context, it is justified that video ads are now one of the significant trends for 2020 that professionals need to master.

Pre-loved Luxury Taking Lead

A report by ThredUp in 2020 reveals that 50% of individuals are decluttering their closets more than pre-Covid era as they are spending more hours at home.

An increasing number of young consumers today are seeing the brands in their closet as not just a way to express them but also as a valuable tradable resource. Pre-owned fashion allows cash-strapped aspirational buyers to live the dream of owning luxury goods without making a big hole in the pocket at the same time.

Technologies make Bidding Smarter

As per eMarketer, digital ad spending will reach USD 517.5 billion by 2023. Google as the biggest digital ad seller in the world in 2019, accounted for 31.1% of global advertisement spending, the equivalent of USD 103.73 billion while Facebook as number 2, with USD 67.37 billion of the net and ad revenues.

Budget efficiency is of the essence, as brands want to choose the advertiser that delivers best results. Google started implementing machine learning (ML) in the mechanism, trying to shape action-time bidding into smart bidding by optimizing conversions.

Darwinian Jolt

A recent report by Deloitte indicates that the leading ten luxury profitable brands sold more than the next 90 combined. The luxury players are turning into bigger than ever while the weak are traumatized by the global pandemic; therefore resulting in massive consolidation in the industry.

Most stressed players like debt-laden multi-brand retailers and cash-poor independent brands are finding it difficult to survive. The complicated situation of 2020 undeniably increases the likelihood of more mergers and acquisitions and consolidation within the luxury industry.

Chatbots brings Uniqueness

According to Comm100's 2019 Live Chat Benchmark Report, the average wait time is 48 seconds. If they are told to wait longer, they tend to quit the chat. It again proves that users have been accustomed to quicker and facile communication.

Additionally, chatbots rely on complicated algorithms; they are faster at looking for information and recognizing users' details, consumers' patterns. Moreover, an AI chatbot predicts user behaviour that means it knows when the consumer leaves a site, places an order or needs help. In this way, it is easier to improve market efficiency.