For the future of these rising luxury trends, “the highest rising brands will be the ones able to build on their existing excellence while also making adequate efforts to rewrite rules, change the normal with extraordinary and recreate a future in sync with their social responsibilities.” remarks former MD Sotheby’s and LVMH, Gaurav Bhatia.
The global luxury goods industry is one of the very few sectors that have been able to excel despite the Corona Virus-induced slump over the global markets.
Surprising as it is, the demands of luxury goods have been of late, exceeding expectations with upsurging percentages of growth marked and rising of some promising new-sub segments in the domain. As the industry now escalates to a super-paced Covid recovery, we are yet taken back to the beginning of the pandemic where, however, the scene wasn’t quite the same.
Gaurav Bhatia Sotheby’s former Managing Director highlights how the year has been one of constant adaptation, newness, and change that has been fundamental in bringing the segment of luxury a far way ahead of the catastrophe of the former year.
With the onset of the pandemic, people have fairly started to see life from a very different perspective. As a result, a certain sensitivity to uncertainties had begun to sprout, where buyers reacted by saving all they had as the first prompt to the Covid shock.
However, the behavior changed months soon into the pandemic where savers started to deliberately invest intangible assets to be resources that cushion them for future economic uncertainties.
This form of value diversification was backed by how the luxury industry, through time, has been a classic contradiction to the economic theory of decrease in demand as prices shoot up the category of luxury goods have infinitely been more desirable as their prices rise, attracting more customers and increasing in market value.
This has made luxury goods one of the most sought-after investments to make now. But, as the physical markets stood frozen amid the lockdowns, an increasing appetite to shop was also one big contributor that held the industry in place.
People missed everyday errands like shopping and were mostly pulled through quarantine by social media activities. However, as more influencers stood on the other side of the screen, portraying the luxury of living, people started to live their lives through them.
This had unanimously been another game-changer that attracted lots of eyes to exquisite brands and goods. Maison Head and ex MD LVMH, Gaurav Bhatia remarks how “luxury goods have been known to be scarce, if not unique,”; and so these purchases made consumers derive meanings as ‘timeless investments’ if not a therapy to cope with the frustration of being locked home.
The change in consumption patterns also marked the higher than ever desires to shop for value now. Buyers wanted to invest in goodies with meaningful and enduring values instead of only being symbolic of high status.
And so, some of the segments within luxury gained more momentum than the others, while luxury rose in popularity over the mindless purchases.
People sought quality when they shopped now to be able to invest in things that are valuable, exclusive, or of a high standard. This desire inevitably led them to luxury brands for the trust, brand value, and customer loyalty they sold along with their products.
Maison, CEO Gaurav Bhatia comments on the current trends of shopping as “Brand Identity has become a big draw for buyers today. People are increasingly spending time on the internet, they are making informed purchases. They sort through ratings, filter through the entire genesis of a brand before making a purchase. Netizens today would not easily invest in something they don’t see value in.”
To understand this current boom in demands of luxury, we are yet taken back to crisis-like situations in history where a similar consumption trajectory sprouted amongst the public.
Gaurav Bhatia reminds us of the Financial Crisis of 2007-08, where the recession shifted people out of investments in equities to swap to purchases intangible assets.
Sub-segments of luxury like fine art, classic cars, and many more were popular in culture and in those times. However, the purchase of deluxe has clearly, through history, never stood as something aimed to support people’s basic needs but has been symbolic to varying emotions and sentiments.
Crisis-like times around the past have seen an up-rise in luxury shoppers for how these goods were seen as a once-a-while prize people accorded to themselves for sustaining through tough circumstances. Gaurav Bhatia dedicates the phrase “luxury-therapy” to explain this crisis-induced consumer behavior.
LVMH marks a wholesome 8% of organic growth as of 2021, rapidly recovering from the Covid losses from the past. The industry of Fine-wines has been one at the forefront of the most sought-after luxury items today, recording an organic growth of 36%.
“The value of age-crafted wine is something that would never go out of worth,” says Gaurav Bhatia, former MD of LVMH. Other segments like fashion and leather goods also accounted for an increase in growth with the craze of luxury bags -with Dior and Hermes Birkin Bags being increasingly sought-after goodies.
Other sectors like shoes, jewelry, and luxury cars have also boomed with demands in the present times. As the ex-MD of luxury companies like Sotheby’s and LVMH, Gaurav Bhatia marks these changes in the industry as consumer choices that are now seeking cultural and creative excellence.
People are shopping local, making great use of what is around, yet at the same time, online auctioning has let these markets open for the entire world.
An increase in demand also sprouts through this channel. With big brands like LVMH already making to post-Covid with their business recovery and growth module, they have been classic examples of brands that are interested in being better, incorporating a wider consumer base, and more resources to drive their business.
In this enlarged space of luxury goods to thrive in contemporary circumstances, Gaurav Bhatia elucidates how “the highest rising brands will be the ones able to build on their existing excellence while also making adequate efforts to rewrite rules, change the normal with extraordinary and recreate a future in sync of their social responsibilities.”
Gaurav Bhatia is a Mumbai-based seasoned expert in luxury, having led esteemed international luxury brands like Sotheby’s and LVMH as their former Managing Director and Marketing Director.
He has previously been an advisor to the Maharashtra Economic Development Council as a luxury expert. He is the founder and CEO of the luxury advisory cell, Maison India.