Analytics | COVID-19 | Luxury

Luxury Digital Retail Hits Turning Point After Weeks Of Declining Traffic & Purchases

Jean-Marc Bellaiche
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April 13, 2020
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Read Time: 3min

To provide understanding during this uncertain time, we are closely monitoring the impact of coronavirus on digital consumer behaviors. Find all the latest insights on our Covid-19 eCommerce Impact data hub.


Luxury Industry Reels From Coronavirus Impact

While many markets are feeling the negative effects of the ongoing crisis, the luxury sector is hurting more than many adjacent industries such as fashion and beauty. 

Overall traffic to luxury sites was down -26% last week (Sunday April 5th) compared to before the beginning of the outbreak (or, reference week), while transactions dropped -18%.

In comparison, traffic to fashion retail sites is up +4%, while the volume of transactions has grown by +23%. The beauty sector tells a similar story, with visits up +14% and transactions more than doubling (+106%).

The volume of pages viewed by visitors to these sites has followed the traffic trend, with a significant decrease since the start of the oubreak. The time spent per session however has remained stable, indicating that for visitors who are browsing luxury sites, engagement has not been particularly affected by the crisis.

Good News In The Last Two Weeks As Traffic & Transactions Grow

It’s not all doom and gloom for the sector though, as the last two weeks have marked a turning point: traffic was up last week, and transactions have been growing steadily now for two weeks. This shows that consumers are now settled in quarantine and most of the spend goes online today, including for non-necessary products such as luxury goods. 

Traffic in Asia, in particular, picked up significantly last week, forecasting perhaps a similar uptick in the west as restrictions ease up. Overall, global brand websites seem to be doing better than local eCommerce stores.

Affordable Luxury Most Severely Impacted By Coronavirus

High-end luxury is proving more resilient in the face of changing eCommerce habits than the more affordable end of the market. Affordable luxury brands have seen a -32% drop in the volume of transactions since the beginning of the outbreak. 

And while high-end luxury is seeing a greater shortfall in traffic, transactions have actually increased by +8% over the past seven weeks. 

With many consumers feeling the negative impact of the current situation on their finances and refocusing their budgets on necessities or needed improvements to improve the circumstances of their quarantine (upgrading their home office or tech equipment, for example), luxuries are some of the first to be cut. 

Customers of the very high-end luxury market, however, appear to be feeling less stress on their finances, accounting for the stable — even positive — trend in transactions. 

Super high end luxury and mega brands are also less impacted because the intrinsic value of the products is often higher than that of accessible luxury goods. Some mega brands are even able to keep most, if not all, their value in the second-hand market, which can be reassuring in times of crisis.

Traffic of high and affordable luxury in over a month

 

Transactions of high and affordable luxury in over a month

Hard Luxury Is Slightly Less Hurt Than Soft Luxury Sector

Hard luxury (jewelry, watches) and soft luxury (clothing, leather accessories, etc) are similarly impacted in terms of traffic, with approximately one quarter fewer site visits than before the outbreak.

When it comes to transactions, however, hard luxury is faring slightly better than soft luxury, recording a -10% decrease in purchases versus soft luxury’s -20%. It could be that these often higher price point items are associated with the higher-end brands, which are weathering the storm better than their more affordable competitors. 

Another explanation could also be that hard luxury goods are often associated with gifting, and while self-indulgence might be on pause these days, the need for gifting continues (birthday, anniversary…), with purchases now all moving online because of the interruption of brick-and-mortar commerce.

Traffic of hard and soft luxury in over a month

 

Transactions of soft and hard luxury in over a month


Join our webinar next week,
From Convenience to Necessity: How the Coronavirus Is Impacting the Grocery Sector. Featuring our Chief Strategy Officer Jean-Marc Bellaiche, this insight-packed webinar will share our latest findings on customer behavior and how the grocery industry is adapting to the new reality — April 16th, 1pm.

 

 

Hero image via Adobe Stock, by artmim

Author

Jean-Marc Bellaiche

Jean-Marc is the Chief Marketing, Partnership & Strategy Officer. Prior to working at Contentsquare, he was a SVP Strategy and Business Development at Tiffany & Co from 2014 to 2018. Before that he was a Senior Partner at the Boston Consulting Group (BCG) for 22 years, where he led the global luxury, beauty and fashion practice