As the COVID-19 outbreak continues to slow in China with no domestic cases yet still with a moderate yet consistent number of confirmations of new cases who come from abroad.
”As life is returning to a ‘new normal’, medias has been outrageously touting a ‘rushed’ or ‘revenge-spending residents go outside and resume activities, a term that’s been discussed frequently in the media is coming to the fore: “revenge spending.” While sales may slowly return it is outrageous to speak about such a booming recovery of the luxury market.” says Oliver Petcu, CPP
Offline stores are already seeing foot traffic. It was reported that the high-end Hangzhou Tower mall opened for five hours on February 22 and achieved more sales than on the same date a year ago.
”However, the one key outcome of the Covid-19 is fear and fear of the unknown. The speed of spreading also left many worried about not having time to prepare for such future crisis – therefore saving and ‘investment factor’ will be key to understand new spending habits. Even if domestic travel returns to normal, Chinese wealthy are unlikely to take to any international destinations given the aggravating turmoil.
Mention must be mentioned that only a very feeble rebound in China’s luxury market, is the fact that there is still no vaccine and proven, as i one specific medicine. Covid-19 has also shown that such a virus does not choose between rich and poor. No private clinics or VIP treatment was even conceivable ” Oliver Petcu, CPP
According to the latest report from global communications consultancy group Ruder Finn, 82 percent of over 800 consumers surveyed in mid-March with an annual family income of over a million RMB think the virus is negatively impacting the Chinese economy, particularly those between the ages of 36 and 45. They are planning to cut back on spending in the jewelry, handbag, and beauty sectors but showed more willingness to spend on travel, fine dining, and high-end leather accessories.
“Revenge spending won’t become a mainstream phenomenon,” said Gao Ming, SVP and Managing Director of luxury practices in greater China at the Ruder Finn Group. “Certain types of luxury goods may experience a warm-up in consumer demand. However, brands are facing a bigger challenge in addressing the cut-back on spending, and they ought to learn how to build relationships with consumers in the post-virus era.”
Another report on the HNWI consumer segment showed similar results: that the experience of going through a devastating pandemic has led consumers toward conscious spending shifts that range from choosing sustainable brands to saving more money for retirement.
Watch brands such as Patek Philippe, Rolex, Audemars Piguet which demonstrated a clear increase in pricing, however, the fact that luxury watch brands have overall accumulated stocks therefore we may see a different approach and perception when it come to value increase.