If scarcity is a strength in luxury then COVID has created a bonanza for luxury enthusiasts. An exodus of office workers and dearth of global visitors has hampered the luxury rental markets of Mayfair and Knightsbridge in London, forcing landlords to slash their rents or see their properties stay unoccupied. The number of luxury pads up for rent in central London has surged by 75 per cent from a year earlier. In fact, the global lockdown has cost the travel industry an estimated 935 Billion dollars and travel is being restricted even further in countries including Canada meaning that if I wanted to indulge in a little pampering in Mexico or Costa Rica, I could easily go. Getting back into the country might prove to be somewhat difficult. Ah, luxury in the time of COVID. How does one enjoy the better things in life when so much has been restricted?
Even LVMH is not immune to the effects of the lockdown and restrictions globally, with reports of the mega-deal with Tiffany’s on the verge of falling apart. Not surprisingly, COVID recognizes the benefits of second hand luxury which was already booming before the pandemic struck in 2019. This is of course a boon to those of us who are excited to watch the shift in consciousness around consumption and how to protect our earthly assets in the pursuit of material wealth. What COVID did was amplify our need to reassess what it is exactly that we define as needs when it comes to luxury and how we can still indulge despite its evident shift. Luxury apparel and accessories consignment grew to a $24 billion market before COVID, and has been projected to reach $51 billion by 2023, driven largely by millennials and Gen Z.
While travel destinations were restricted for most, there were those who chose to stay open, and as a result, saw a surge in increased COVID cases. Dubai has become one of the foremost travel destinations in the world and has promoted itself as the ideal pandemic vacation spot. Given the encroaching downturn in the real estate market, Dubai was already on its way to seeing losses that a lockdown would have exacerbated. Hotel occupancy rates surged to 71 per cent in December, mostly from visits from British travelers tired of the at home restrictions and dreary weather. Instead, they reveled in the open beaches and bars and supported an air route ranked busiest in the world over the first week of January, this from OAG, an aviation data analysis firm. For those who do die of COVID-19, Emirates Airlines offers to pay $1,800 to help cover funeral costs. Seems a risk worth taking to indulge in a little luxury.
For most of us however, lockdown has meant being unable to take advantage of international travel. It has meant being cut off from loved ones and socialization. Without Michelin restaurants and in store shopping excursions, suddenly our ability to indulge in some of our favorite luxury pastimes has meant a scarcity of enjoying the finer things in life. What then has that meant for the average person looking to engage in some retail therapy? It’s meant at home shopping, with Amazon proving to be the big winner. Introducing, Amazon Luxury Stores. Right now the Luxury market is in flux, and Amazon has found a new channel for its revenue.
This is perfect timing for Amazon. Suddenly, “the lifestyle everyone has adopted is uber-casual. Casual on steroids now. I haven’t used a handbag in a year, and I’m broke. Do you really want to have that handbag to wear to a party? It’s $6,000 and you can get it for $1,000 now, but you’re not going to that party, there is no party.”
The most interesting trend to emerge is luxury anxiety: Milton Pedraza, founder of the Luxury Institute, said more people are going on resale sites to sell their possessions out of necessity, including higher-income people who have lost jobs, “well-heeled people with expensive possessions,” especially among the so-called HENRYS (high earners not rich yet), who may be eager to sell their high-end apparel and accessories, or start to do so if anxiety and insecurity continues to rise. But that has created a lot more supply than demand to soak it up. This introduces a new concept in buying psychologying: buying during times of anxiety. Essentially, anxiety increases our preference for options that are safe and provide a sense of control. What better option is there than Amazon, who has proven how safe and reliable a service they are. What would really work well for Amazon right now would be to provide a second hand luxury showroom (safe and secure), along with a link to a luxury supplier like LVMH (safe and secure). That is a deal I imagine would remain very much intact.
There are still significant declines to be made aware of. The luxury market demand in the U.S. may fall more over the next 18 to 36 months, he said. “Right now, lots of brands are depending on China more than the U.S. and Europe.” Mr. Xi is once again the visionary. His foresight has created a burgeoning market for China that will readily be sustained by its own billionaires.
Essentially, what has happened is that those of us who wish to remain on the safe side of COVID risk and opt not to travel, have a resource in the money saved from the tourism industry losses. That creates opportunity. We have more time on our hands now. We can’t travel. So the way we are rewarding ourselves is by shopping online.
At the end of the day, we still like to reward ourselves with little luxury treasures where we can, that feeling will never subside. Luxury is emotion and in a time of flux like this, identifying who we are with a sense of abundance reminds us that this is not the worst of times. The scarcity will subside though, despite luxury’s preference for it. It’s going to be one hell of a party when this is all over. Buckle up. Boom times ahead. Shout to out Mr. Xi, he kept the party going all along, and created the lockdown first, which resulted in the reopening of their economy. China is way ahead in the game.