by Jayne Alexander, Managing Director, The Dovetail Agency
The events of the past year have, unquestionably, been difficult for large numbers of people. Yet, as we begin to find our way out of the pandemic, it is vital that we start to look for the positives, and to determine how we can best recast recent circumstance within an optimistic narrative.
In the luxury sector, spending ability has been thwarted by the removal, or limitations, of possibility. Travel has been limited; restaurants have been closed – and the purchases that ordinarily align with these activities have been sidelined in the name of futility.
What this means for the luxury sector, however, is that spending power has been, not lost, but suspended. According to a Knight Frank Wealth Report, global wealth has remained firm, in spite of the pandemic. Statistics also indicate that numbers of Ultra High Net Worth Individuals (UHNWI) grew by 2.4% in 2020.
Additionally, it appears that the mood around the post-pandemic climate is ebullient. Markets are predicting increase, or at least stability.
Times of intense restriction are often followed by periods of exuberance. We have seen this throughout history, in the flourishing of Renaissance arts that followed the Dark Ages, or the excesses of the Roaring Twenties after World War One. It is likely also to be the case that, as restrictions ease, the economy will recover. That pent-up spending power will seek a release – and it is the luxury market, more than any other, that is likely to feel the impact of this. Indeed, according to a recent McKinsey report, we can expect to see a spate ‘of revenge shopping’ as consumers, so long deprived of the ability to indulge, enjoy the revival of congruent luxury sectors.
The re-opening of entertainment and hospitality venues will impact on the fashion and jewellery sectors, as individuals look to once again socialize in restaurants and theatres. Moreover, after so many months of dining at home, the easing of restrictions will see people eager to make restaurant bookings, in order to once again enjoy fine dining and the company of friends in an atmosphere of elegance.
Another sector we have missed in these turbulent times is travel. Consumers have grappled with limitations on where we can go and when we can go there, even while wanting to adhere to guidelines and minimise risk. The psyche around travel, as lockdown eases, is not only the urge to return to activities perhaps once taken for granted: it will also be the desire to immerse oneself in an environment different from the one we’ve been largely confined to for the past year.
Even so, although spending power is likely to be strong when restrictions lift, this is not to say that luxury consumers will have exactly the same mentality as they did pre-pandemic. Inevitably, awareness, concerns and priorities have changed – and luxury providers must answer this shift in attitude by adapting their offerings to encompass philanthropic activity, as well as heightened awareness around cultural and environmental impacts. Indeed, research indicates that more than 40% of UHNWIs are interested in environmental, social and governance-focused investments than was the case one year ago.
Where luxury consumers are concerned, the marriage of shifting priorities and pent-up spending power is likely to manifest at a very emotional level. People have been separated from loved ones in ways far more difficult to comprehend than time or geography; with restrictions lifted, they will be eager to reunite with family and friends in settings that enable them to focus solely on time together. They will want to convene in beautiful spaces with wonderful food and service. There will be a very understandable desire for ‘wanting it to be perfect’ – a desire that high-end providers will be qualified to satisfy.
We have already seen that accommodation, at every level, is booked out over the length and breadth of the UK – and providers are meeting this demand by increasing prices and, at the same time, adding value, in the awareness that clients want now, more than ever, to really spoil themselves and their loved ones. Having the ability to really indulge in terms of accommodation, restaurants, spas and shopping has taken on greater significance than ever, as people seek to transport and spoil themselves while remaining on home soil – indeed, the British market, in particular, is demonstrating a willingness to lavish themselves with a ‘treat mentality.’
People are keen to spread their wings and venture overseas and from May 2021, the pent-up demand for domestic travel will extend to the exotic locations we have all been daydreaming of for the last year.
After a period of anxiety and restriction, providers are more than ever aware that their clients want, expect and deserve unfettered luxury. As we emerge from the Coronavirus pandemic into our next normal, it is perfectly reasonable that consumers will experience moments of caution – and it is luxury providers who will be well-placed to meet the overwhelming mood of relief, celebration, enthusiasm and, above all, a genuine passion for indulgence.