Fashion has long been a major driver of luxury spending, but in recent years buyers in Asia have become the major force in the luxury goods market. According to a recent Forbes article, luxury fashion sales have been buoyed due to increased spending from Asian consumers while U.S. spending has started to slow. What does this billion-dollar trend mean for the future of luxury fashion? Read on to find out.
1. Shopping Splurge: Luxury Fashion Flourishes in Asia
As wealth increases in Asian countries, so does the trend of luxury fashion. The affluent are willing to show off their money and dress accordingly, fueling growth in the fashion industry. High-end luxury brands have taken notice, expanding their reach even further in Asia, creating unique avenues to market luxurious garments and accessories.
Fashion labels ranging from Balenciaga to Prada now offer exclusive lines for these affluent customers. More and more, luxury fashion stores are popping up in Asian countries where international brands are flourishing. There are also growing insurgence of Asian-based luxury fashion stores such as India’s Fab India and Indonesia’s Bomanta selling designer goods from around the world.
- Fab India – a growing Indian luxury fashion store offering designer goods from around the world.
- Bomanta – an Indonesian luxury fashion store with items from internationally renowned brands.
- Balenciaga – the luxury fashion house offering exclusive ready-to-wear clothing and accessories.
- Prada – the premium Italian fashion house offering haute couture.
2. U.S. Luxury Spending Cools Off
After several years of consistent growth in the luxury goods sector, U.S. spending has cooled off in 2019. The decline is driven by a number of factors, including:
- Growing concerns about the economy resulting in reduced consumer confidence
- Sluggish economic growth
- Declining demand for luxury products
As a result, sales of luxury items to American consumers have declined significantly. While the luxury industry remains strong, with many top brands continuing to increase prices and marketing budgets, the sharp fall in U.S. spending has become a cause for concern.
Lower demand has caused a number of companies to cut back on marketing and promotional efforts. This reduction in spending has resulted in fewer customers purchasing luxury goods, and a corresponding drop in sales. In response, some companies have resorted to deep discounts and other cost-cutting measures in order to remain competitive.
3. Seeking Sophistication in the East: Asian Consumers Value Quality Over Quantity
The Demand for Quality
In the East, consumers are shifting focus. From speed and quantity, towards sophistication and quality. As Asian households become more affluent and consumer culture develops, they demand products that are of high quality and connect to a aspirational lifestyle. This is creating opportunities for businesses to introduce innovative products and services.
- Asian consumers are increasingly looking for reliable, high quality products.
- They want products familiar to their lifestyle, and that evoke a sense of luxury.
- As incomes rise, they demand more from the products they use.
Staying Ahead of the Curve
As Asian households continue to strive for sophistication, many businesses are looking how to stay ahead of the curve. Companies should evaluate how meet the needs and desires of those affected by this shift. Consumers in Asian countries expect brands to understand their needs and provide products and services to meet them.
- Businesses must recognize the changing demands of Asian consumers.
- Companies must look for new ways to provide quality products and services.
- Income growth is allowing consumers to invest in higher quality products.
4. Luxury Commerce Bypassing Traditional Retailers as Digital Expands
Technology is rapidly changing the way people consume, as advancements bring greater convenience and cheaper alternatives to traditional retailers. Luxury brands have joined the digital wave, with high-end commerce being more accessible than ever before. Here are some of the ways luxury commerce is turning the industry on its head.
- E-Commerce Apps: High-end fashion is no longer relegated to brick-and-mortar stores. While most brands have produced e-commerce versions of their website, some also offer dedicated apps and platforms which feature exclusive deals and collections. These apps help brands create an intimate, curated shopping experience for customers — something that often isn’t achievable in physical stores.
- Social Media Promotions: Instagram has become the go-to platform for major luxury labels to promote their products. By leveraging influencers, social media has created a new way for companies to put their designs in the spotlight. These promotions also often generate a virality that’s impossible to duplicate in a physical setting.
The digital world has empowered high-end fashion labels when it comes to widening their reach. With the emergence of luxury e-commerce websites, apps, and social media promotions, traditional retailers have been pushed to the side. This shift has given luxury brands a fresh opportunity to connect with consumers all around the world.
The luxury fashion world is responding quickly to the changes in consumer spending and the growing demand from Asia. It seems that Asia is driving luxurious fashion to the forefront of the global economy. With careful observation, strategizing, and evolution, luxury fashion can become a dominant global industry.
