Luxury goods market hit by pandemic as shoppers refrain from frivolous spending

Just 6% of British shoppers are planning to buy business suits in 2021, according to a new Brightpearl survey on how Covid will impact on spending.

The survey points to a crisis in the luxury sector with a major switch away from ‘frivolous’ spending.

Just 8% of shoppers had made a ‘big ticket’ purchase since the initial lockdown (March 2020) such as a car.

Only one in 20 consumers (5%) are looking to buy luxury apparel such as designer handbags over the next twelve months.

Just 6% are looking to spend on luxury watches, jewellery and fine art in the same timeframe.

Overall, luxury spending is likely to be down by 24% in 2021.

“The luxury sector will be impacted hugely, who wears a suit to a meeting on Zoom?”, said Derek O’Carroll, CEO of Brightpearl which allows retailers to streamline their operations, and which recently raised $33M to boost its platform.

O’Carroll adds: “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 the most popular ‘big ticket’ item with 39% of consumers still planning a summer break.

The survey of 2,000 consumers from Brightpearl, highlighted other shifts in spending patterns which will have a huge impact on retailers over the next year.

Brightpearl’s analysis reveals that consumers are showing less loyalty to brands since the pandemic struck.

Almost half of consumers (45%) say they have been open to trying new brands.

Four out of ten shoppers (43%) say that uncertainty over the economy has made them change their shopping habits drastically.

A quarter of shoppers have seen their income hit since Covid, though 21% say they are saving money by working from home.

Almost one in ten (8%) live in a household where at least one person has lost their job.

Only 40% have seen ‘no change’ to their financial situation with 63% saying they need to be ‘very careful’ with their money and 40% are cutting down on ‘frivolous’ spending over the next twelve months.

The Brightpearl survey also shows the big winners and losers since Covid.

Groceries  (up 19%), garden equipment (up 17%) are the winners while fashion (down 24%), entertainment  (down 20%), electronic goods (down 17%), toys and gifts (15%) are the losers.

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 entire 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.

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