The Asia-Pacific luxury-goods market is projected to sink by US$2.1 billion this year as pessimistic consumers switch from big-ticket items to the affordable-luxury realm.
Retail intelligence group GlobalData has forecast luxury sales in the region will decline by 3.4 per cent to reach $60.3 billion this year, compared to $62.4 billion last year.
The industry has been hard hit by the coronavirus pandemic, leading to the closure of numerous luxury stores across Apac. Sagging consumer confidence across the region means luxury retailers are not expected to regain their sales growth anytime soon, according to the GlobalData.
In addition, the threat of an extended Covid-19 crisis and an impending global recession will force consumers in the region to cut back on big-ticket items, especially luxury products, impacting on the Asia-Pacific luxury-goods market.
“Covid-19 has forced luxury brands to postpone their fashion shows, cancel promotions events, and disrupted supply chains,” said GlobalData retail analyst Suresh Sunkara.
“However, since the start of the second quarter of this year, several countries in the region including China, Japan and South Korea have lifted most of their lockdown measures to bring normalcy in their economies while countries such as India have begun phased relaxation of lockdown measures. This will bring some relief to luxury retailers as they can now open their stores and resume operations.
“International travel restrictions are still in place, resulting in continued closure of duty-free stores in airports, a major contributing channel for luxury sales. As a result, store closures and sales declines are bound to force luxury retailers to re-evaluate their price positioning and launch affordable luxury product lines to revive volume sales in these testing times.”