APAC luxury retailers to benefit from ‘post-COVID-19 normal’ period, says GlobalData

Several countries in the Asia-Pacific (APAC) region like India and Malaysia are dealing with the second spurt of the COVID-19 pandemic. However, as much as the pandemic proved to be a threat, it also created opportunities for regional luxury retailers and international retailers operating in the APAC to leverage technology and reach customers at a personal level by using the social media platforms such as WeChat and TikTok. The APAC remains the fastest-growing luxury market driven by the early recovery in China, the largest luxury market in the APAC and the second-largest globally, says GlobalData, a leading data and analytics company.

To illustrate, Burberry flagship store in Shenzhen allows shoppers to interact with the window display using the WeChat app and allows them to listen to their favorite music in fitting rooms. Similarly, Luxury Pavilion, a platform owned by Alibaba’s Tmall, recorded a 159% increase in its y-o-y sales during Q1 2021 due to its digital expertise such as 3D store display services and augmented reality trails. This attracted both luxury brands and shoppers to showcase and shop products respectively using the platform.

Ankita Roy, Retail Analyst at GlobalData, comments: “Though the region reels through tough times on both economic and social fronts, the revival of the Chinese market provided a boost to the luxury retailers operating in the region. The higher degree of internet penetration along with more social media exposure has opened new opportunities for luxury brands in the region as customers grow more informed than ever before. Luxury retailers must explore innovative ways of delivering the same experience which they have always been known for prior to the pandemic, by blurring the line between online and offline retail channels. Luxury brands must increase their digital engagement with shoppers via collaboration with marketplaces, as these marketplaces are not just limited to being trading platforms but also deliver meaningful data insights to target the right set of customers.”

Louis Vuitton, a French luxury retailer, has announced the closure of its downtown duty-free stores in Hong Kong with operator DFS to shift its focus from downtown duty-free business to airport retail. While the downtown stores in Macau and Okinawa are expected to remain open, the decision will have a significant impact on the regional luxury market. The company plans to massively expand in the Chinese market by 2025.

Ms Roy concludes: “Louis Vuitton, with its brand prowess and tremendous customer reach, is interested in capturing travel retail sales in China buoyed by the recovering luxury consumption and growing domestic tourism industry. The strategy makes more sense as the Chinese government focuses on boosting domestic luxury retail sales. With the planned opening of six new airport stores in China by the end of 2022, Louis Vuitton will be able to benefit from the growing Chinese luxury demand uninterrupted by global travel restrictions as the duration of the pandemic still remains unpredictable.”

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