Wounded by Pandemic, Online Luxury Faces Long Road to Recovery

ForwardPMX’s latest report analyzes the current and future state of the global online luxury sector, which is poised to see a decline in sales that could reach 45 percent and is forecast to not fully recover until 2023.

But the 39-page report also describes the luxury market as a resilient industry, with brands forging ahead despite headwinds. And then there are the opportunities in China, where consumers there are expected to generate half of all luxury goods purchases in the world in the next five years.

ForwardPMX’s 2020 luxury report also put a spotlight on luxury brands that are capturing industry-leading site traffic and wooing shoppers on social media with engaging content. The bulk of the report, though, focuses on global online data for the top luxury brands — a candy bowl for data and marketing experts.

In a letter to clients in the report, James Townsend, global chief executive officer of ForwardPMX, noted that the luxury market, like many sectors in 2020, “has felt the effects of a health crisis, the consequent economic impact, as well as social unrest occurring throughout 2020. Consumers have developed new behaviors and priorities, and the luxe sector has had to adapt. Despite the challenges this presents, many luxury brands are pressing forward with a courage and boldness that defines them at their very core — reaching beyond product to deliver heart and new relevance to inspire tomorrow’s generations of luxury consumers.”

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Townsend also praised efforts by many luxury brands to help during this time of crisis. Whether recalibrating product lines to make PPE for essential workers or shifting formulas from fragrances to hand sanitizer, luxury brands have stepped up to the plate. Townsend praised the companies’ brand partners and promised to lock arms during a challenging time.

“We remain truly humbled by our clients’ resilience and unwavering devotion to their cities, their people and to their craft in this difficult year,” the ceo said. “As partners, we look ahead with optimism, working to drive the advancement of brands’ digital agendas across their businesses and acting as strategic guides to ensure brands are agile and fit for the changing world.”

Digging into the report’s data, ForwardPMX said that in the U.S., overall search volume for luxury brands increased 9 percent year-over-year, but the growth came “at a time when site traffic to those same brands dipped 2 percent year-over-year.”

“This growth suggests that brand demand has been resilient in the face of uncertain health, social and economic times — but also that luxury consumers are choosing to engage with brands elsewhere — whether multibrand retailers, social platforms, resale sites or fashion content sites,” the authors of the report said. “The challenge going forward is the same online as in the real world: welcoming back consumers, whether into reopened boutiques or reinvigorated brand sites.”

The growth in search volume also backs up what retail analysts have said for the past few months: consumers, many stuck at home, are spending time searching for and researching brands online.

The top brands in share of search volume in the U.S. are Louis Vuitton and Gucci with 17.7 percent and 9.8 percent, respectively. Michael Kors took the number three spot with 6.4 percent search share and was followed by Balenciaga with 4.6 percent and Coach with 4.1 percent. In sixth was Chanel with 3.9 percent, followed by Burberry with 3.7 percent and Ralph Lauren with 3.6 percent. Off-White came in with 3.5 percent, and was followed by Versace with 3.2 percent at number 10.

In China, Louis Vuitton was number one, followed by Gucci, Dior, Chanel, Hermès, Burberry, Jimmy Choo, Coach, Armani and Saint Laurent.

In regard to U.S. online market share, measured by traffic to sites, Michael Kors was tops, followed by Louis Vuitton, Ralph Lauren, Coach, Gucci, Chanel, Dior, Burberry, Hermès and Versace.

Other notable findings in the report include insights about social media. “Instagram maintains its lead in the number of luxury followers, and its total grew the most at 12 percent, year-over-year,” the report stated. “In China, WeChat and Weibo still dominate the conversation, with emerging channels like RED and Douyin becoming increasingly important.”

Other findings include a shift to younger demographics, who embrace luxury. “In the U.S. as well as nearly all countries studied, Millennials and Gen Z are the largest cohorts among luxury brand site visitors, represented at considerably higher rates versus the general population,” authors of the report said.

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