While most citizens in Southeast Asia are still struggling with social restrictions due to the COVID-19 pandemic, despite its economic impact the virus has not completely wiped out people’s appetite for luxury goods.
According to a recent study by e-commerce aggregator platform iPrice Group, Google’s searches for top luxury and fashion brands have increased in Southeast Asia in recent months. Netizens’ searches for French brand Louis Vuitton increased by 555% in May and June compared to January and February, a similar trend perceived by fashion house Yves Saint Laurent (+306%), and Chanel (+274%).
Fashion items such as clothing, bags, and shoes are the most sought-after, followed by skin care products and perfumes. The interest also extended into sportswear, where limited-edition sneakers saw an uptick in search impressions. Adidas saw a whopping 577% increase in searches, boosted by its Yeezy line, while Nike increased by 604%.
Aside from clothing, skin care, and sportswear, Southeast Asians are also looking into investment luxury watches. Swiss brand Rolex and its sister company Tudor logged an increase of 160% and 51%, respectively. “Shoppers are probably taking advantage of COVID-related sales in these items. These are things they can resell in time,” an iPrice spokesperson told KrASIA.
More customers are shopping online
The study didn’t provide reasons behind the skyrocketing increase in searches, but the major reliance on e-commerce platforms due to lockdowns and limitations to outdoor activities could explain the uptick in search impressions.
“The interest in luxury items probably remained the same; it’s just that since people can’t really physically browse luxury items anymore, they transferred online,” said the spokesperson.
One contributing factor might be that globally, wealthy people are getting richer. According to Forbes’ daily tally, the number of billionaires increased in recent months, while billionaire’s wealth also grew by 9.5% in just 23 days amid the COVID-19 outbreak.
The increase in online searches for luxury might also be explained as a result of “revenge spending.” The term was first coined in China, referring to a spending surge in the aftermath of the Cultural Revolution ended in 1976. In modern days, the phrase could be used to illustrate how shoppers release pent-up stress from lengthy lockdowns by making more purchases than normal.
For instance, after the Chinese government gradually lifted the lockdown and allowed stores to reopen, luxury outlets in many Chinese cities saw rapid bounce backs. An Hermès store in Guangzhou made USD 2.7 million in sales on the first day it reopened in April, according to CNBC, while the Hangzhou Tower mall, which only opened for five hours on February 22, achieved more sales than on the same date a year ago, South China Morning Post reported.
In Southeast Asia, shoppers spent an average of USD 127.50 per person on luxury items across e-commerce platforms, from February to July this year, according to iPrice. Some, like Dorothy, an insurance company employee based in Jakarta, who requested KrASIA to withhold her last name, decided to search online but to go to physical stores to buy what she was after.
“After finding the item I want, I usually check for its availability and price by phoning the store. Then, I browse online to compare prices. However, sometimes it is cheaper to buy offline than online, considering the item price plus shipping fee,” Dorothy, who bought a Prada tote bag and a bottle of Annick Goutal perfume for IDR 7 million (USD 476), told KrASIA.
Other netizens found an escape in online shopping during the pandemic. “Actually, it’s kind of therapeutic, browsing branded items on Instagram. Moreover, nowadays they do a lot of live sales there,” said Mia Rafdianti, the head of product development at a Jakarta-based startup.
In the period of partial-lockdown imposed in Jakarta, which lasted for four months, Rafdianti spent around IDR 20 million (USD 1,360) on bags and shoes from Balenciaga, Gucci, and Louis Vuitton, which she bought from Instagram sellers.
“When it comes to bags, I love to use different ones each time. But I think my purchases now are sort of impulsive buying to release stress over this pandemic,” she said.
Although gross merchandise value (GMV) of online sales for luxury items is currently lower than in-store purchases, the number is predicted to increase as customers stick to their online shopping habits. A recent report by Facebook and Bain & Company suggests that online shopping has become mainstream, even in previously unpopular categories such as groceries. The region is projected to have 310 million digital consumers by the end of 2020, a figure which was previously predicted to be reached in 2025.
Total GMV of online sales is forecasted to reach USD 53 billion by the end of this year, with an average of USD 172 per person. The number is predicted to triple in 2025, reaching a sum of USD 147 billion.
Luxury brands need to step up their digital presence
To capture this growing market, luxury brands need to increase their digital presence, focusing on customer engagement, according to iPrice.
Of all the luxury brands analyzed, iPrice found that Prada and Gucci had the lowest increase in Google’s searches, at 27% and 70% respectively. The low numbers might be an effect of backlashes from the Black Lives Matter movement, as both brands were accused of using racist designs.
Although the Black Lives Matter movement started in the US, its impact rippled into countries in Southeast Asia, sparkling other movements such as Papuan Lives Matter in Indonesia. Local brands have been also affected, such as Indonesian Dear Me Beauty, which was called out for its rude response when asked about why it doesn’t have shades for dark-skinned customers. The company quickly issued an apology afterward.
On the contrary, YSL and Chanel saw an uptick in internet searches in Southeast Asia countries, which could be explained by their successful cooperation with Rosé and Jennie, members of K-pop girl band Blackpink, as Korean idols are gaining fans in the region. Items used by them, like YSL’s Solferino bag which Rosé often carries during her travels, saw an increase in searches and purchases.
Aul, a shopper who requested KrASIA to withhold her last name, bought a bag and a shirt from Chanel last month, after seeing the items worn and used by BTS members V and Jin. “I wanted to wear something like what Jin wears, just like that,” she added.
According to a 2018 report on digital transformation in the fashion industry by consultancy firm Deloitte, digital technologies empower customers to take on a more active role in determining the values of a brand. If a company makes a misstep, loyal shoppers will quickly call out the company on social media or other channels to demand an apology, so that the items in their wardrobes won’t be associated with negative values.
As luxury goods are mostly purchased for emotional satisfaction, creating a sense of prestige for shoppers, scandals will tarnish the emotional values carried by those brands, the study pointed out.
“They [customers] want to interact, belong, influence, and be the brands from which they buy. Informed, selective, and in charge, they care about how they look in public and on social media, and about the perception of the goods they buy and own,” the report explains.
Therefore, it’s important for brands to maintain a good reputation to retain good sales.