Luxury consumption in the United States has been impacted by the Covid-19 crisis, but affluent American women have showcased incredible economic resilience, according to Stephanie Sandler, President of Ifop Inc. North America. In a recent study, Sandler reveals that despite the absence of an active social life, a vast majority (87%) of affluent American women continued to buy luxury items during the crisis. This is interesting considering that luxury purchases are typically associated with social events, travel, and special occasions, all of which were put on hold due to lockdown measures. However, the nature of luxury consumption has changed during the pandemic.
Instead of revenge buying, where consumers make purchases to compensate for missed experiences, affluent American women engaged in reward buying. The emotional act of buying luxury goods brought them pleasure during the boredom of staying at home. As a result, sales of skincare products significantly increased as women transformed their homes into spas and indulged in self-care. Home decoration and furnishing also experienced accelerated growth as people paid more attention to their surroundings.
Looking ahead, while analysts talk about the potential for a new Roaring Twenties, Sandler believes we won’t see it until 2022 due to the complexity of the crisis and ongoing uncertainties. However, 75% of affluent American women are optimistic about returning to physical stores in the second half of 2021, indicating a desire for the in-store shopping experience.
Regarding e-commerce, online shopping is gaining ground in all luxury categories. Although high-end luxury items and products with a strong sensory value are still preferred for in-store purchases, the pandemic has pushed luxury brands to heavily invest in technology, digital tools, and online sales platforms. Luxury consumers have become more accepting of virtual try-ons, augmented reality, and AI-powered robots, facilitating a personalized shopping experience.
While livestream shopping events on social media still have a relatively low penetration rate, they are experiencing growth in 2021, reaching 29% of women. With the mobile phone becoming a new shopping mall, social commerce is expected to play a leading role, especially with the closure of physical stores. Social media platforms such as Snapchat and TikTok are no longer limited to teenagers, and their usage among affluent American women is rapidly increasing. The study also reveals that customers are receptive to virtual consultations, seeking a direct brand experience.
In terms of the future of American department stores, Sandler is skeptical unless they reinvent themselves. The generic and uniform approach of department stores, along with the availability of the same offerings and discounts online, poses a challenge. Sandler predicts the rise of new multi-brand platforms and physical stores that cater to customer demands for convenience, integrated experiences, and unique surprises.
Overall, the Covid-19 crisis has undoubtedly impacted luxury consumption in the United States, but affluent American women have displayed resilience and adapted their luxury purchasing habits. The pandemic has accelerated the shift towards e-commerce and personalized digital experiences, while also creating opportunities for innovative multi-brand platforms and stores.
