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​Outlook for Luxury: Conservative Buying

Published on: 15-May-2020

Dining and out travelling aside, what do people miss most during a lockdown? Heading out to the stores to buy non-essential items, it seems.

A day after Hermes reopened its flagship store in Guangzhou last month, it recorded S$3.8 million in sales, said to be the highest for a single boutique in China.

Some have termed it "revenge shopping", or overindulging in retail therapy. While it sounds like hopeful news for struggling retailers, revenge shopping doesn't happen across the board.

"It only appeals to those with extra cash," says Dr Lynda Wee, adjunct associate professor, division of marketing at Nanyang Business School.

Dr Kapil Tuli, professor of marketing and director of Retail Centre of Excellence at Singapore Management University says, "Revenge shopping is a one-off expression of pent up demand that only the ultra-rich indulges in."

Dr Wee says, "for the majority, they will adopt a wait-and-see attitude as their careers and lifestyles are reimagined and changed."

In the meantime, Dr Tuli says it is important to be prepared and ready to make up for lost sales. 

This includes assuring shoppers that they have taken the necessary safety precautions, including crowd control, effective social distancing, cleaning and sanitising of merchandise, temperature checks, contact tracing and hygiene protection for employees.

He foresees that store layouts will be updated to be consistent with safety and assurance protocols. "This is pertinent both from the business and public policy perspectives," he says.

More people may have turned to online shopping during this period, but Dr Tuli says that businesses should see online platforms more than just an avenue to sell.

They should think about social commerce, using social media to engage with consumers, show merchandise and address queries. "If online is only viewed as an avenue to sell, then retailers are likely to lose out on opportunities to serve and therefore retain and potentially cross and/or up-sell to their customers," says Dr
Tuli.

Dr Wee says that post Covid-19, shopping needs to show empathy, empowerment and evolution. 
"Shopping needs to be supported by human empathy. Emotional appeal engages and sells more than rational appeal. So build a relationship with your consumers."

She adds, "retailers should empower their staff to do more than take orders - to make connections, identify customers' pain points and offer customer-centric solutions."

They should constantly evolve their method of sales. "If retailers are relevant, they will always have customers," she says.

As with most other sectors, luxury furniture retailers in Singapore have also been impacted by Covid-19. 

But there have been some silver linings too. Lim Choon Hong, managing director for Xtra says, "the fears and anxieties arising from the pandemic are
obviously not very conducive to the consumption of luxury products. 

This may not affect the high networth individuals but many others will either postpone their purchases or lower their budget."

Money spent on big-ticket items such as kitchens and wardrobes have dropped, but Xtra has seen growth in home office furniture sales. "Interest in Herman Miller ergonomic chairs increased when more people started working from home," says Mr Lim.

While P5 has also seen an increase in sales for home office items, its marketing manager Terence Choo says they are not out of the woods. "It will be about survival of the fittest," he says. 

Despite the circuit breaker, business still goes on. P5 is regularly showing its furniture range on social media platforms and focusing on its online shop.

Stores not only had to deal with slower sales locally, they also felt an impact when the outbreak hit Italy. Jennifer Soh, general manager for sales and marketing at Space Furniture says, "Covid-19 hit northern Italy hard. 

The epi-centre for the virus is also the heart of furniture manufacturing. Many of our partners had to
close their factories temporarily."

What happens when this is over? Ms Soh says, "Post Covid-19, there will be new ideas from designers, rethinking how people work and connect." She cites the Westside modular sofa set from Poliform as an example, which can be configured to accommodate many users while still allowing each to remain at a distance.

While the market may not have an appetite for excessive luxury furniture in a pandemic, Mr Lim believes that with people appreciating their home more, he is hopeful that "consumers' taste will gravitate towards quality furniture that lasts and has high regard for original design and environmental sustainability."


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