Oh Dior: Lux­ury brands drag­ging re­cov­ery chain

Tourism re­liance slow­ing sec­tor’s Covid re­bound, says re­tail boss

Weekend Herald - - Business - Aimee Shaw

While over­all re­tail sales are pick­ing up, one cat­e­gory i s feel­ing the pinch of the Covid- 19 pan­demic much harder. Mar­ketview data shows sales in the lux­ury re­tail­ing seg­ment of the mar­ket were down 41.1 per cent in the five months from April to Au­gust.

Spend­ing in the cat­e­gory has al­most halved to $ 28.7 mil­lion in the pe­riod, down from $ 48.7m over the same pe­riod in 2019. These fig­ures do not in­clude cash trans­ac­tions.

In Au­gust, which in­cluded a pe­riod of Auck­land’s re­turn to level 3 lock­down, sales in the lux­ury seg­ment de­creased by 42 per cent on ac­tiv­ity in July. Spend­ing in July was down 2.6 per cent on the same time a year ear­lier.

With Ki­wis grounded in New Zealand, and in­ter­na­tional travel off the cards over the past six months, New Zealan­ders have had more money in their pock­ets and have been will­ing to spend more do­mes­ti­cally on dis­cre­tionary goods. But per­haps not so much at the high- end tier of the mar­ket.

The Mar­ketview data, which can­vasses ac­tiv­ity among lux­ury brands in­clud­ing Louis Vuit­ton, Prada, Gucci and Tiffany & Co, among oth­ers, shows July was the best month for spend­ing since Jan­uary, how­ever July lev­els were still down on the same time last year.

Sales of lux­ury cars, art and col­lecta­bles have touched new highs in re­cent months, but this has not been the case for the likes of a pricey hand­bag or ap­parel.

There has, how­ever, been a trend to­wards more be­ing spent on jewellery.

Re­tail NZ fig­ures show re­tail spend­ing since the na­tion­wide lock­down in April has been up in the months of June, July, Au­gust and Septem­ber, de­spite a sec­ond, Auck­land- wide, lock­down at the end of Au­gust.

Economists put this down to a com­bi­na­tion of low in­ter­est rates, a strong hous­ing mar­ket un­der­pin­ning spend­ing and con­sumers spend­ing more do­mes­ti­cally as the

bor­ders re­main shut in­def­i­nitely.

The en­cour­ag­ing spend­ing trends, how­ever, are not ex­pected to last as the in­crease in do­mes­tic ex­pen­di­ture i s not ex­pected to cover short­falls in pur­chases by in­ter­na­tional vis­i­tors over the peak sum­mer months.

And de­spite monthly in­creases, col­lec­tive spend­ing over the past six months is down al­most 3 per cent.

Oc­to­ber to Jan­uary is typ­i­cally the most lu­cra­tive pe­riod for lux­ury goods re­tail­ers, likely due to the higher num­ber of in­ter­na­tional vis­i­tors. But with the bor­ders still closed for tourists and a tran­stas­man bub­ble still not in place, de­clines are ex­pected to con­tinue.

Auck­land’s lower Queen St in re­cent years has been evolv­ing into a lux­ury re­tail­ing precinct. It is now home to Prada, Dior, Gucci, Louis Vuit­ton — and typ­i­cally queues of ea­ger in­ter­na­tional shop­pers — and will soon wel­come the coun­try’s first Bul­gari store, op­er­ated by French multi­na­tional LVMH.

Fash­ion brand Mon­cler i s also ex­pected to take up a ten­ancy in the area, on the cor­ner of Queen St and Cus­toms St.

Greg Har­ford, chief ex­ec­u­tive of Re­tail NZ, said the drop in spend­ing among lux­ury goods re­tail­ers could be at­trib­uted to fewer in­ter­na­tional stu­dents and next to no vis­i­tors in the coun­try, groups which typ­i­cally fre­quented this type of stores.

“They are mostly big in­ter­na­tional firms so they’re not go­ing to dis­ap­pear any time soon. But what we might see . . . is some as­sess­ing about whether they can sur­vive in the New Zealand mar­ket,” Har­ford told the Week­end Her­ald.

“There is still clearly a mar­ket for those high- end prod­ucts, where these re­tail­ers will be im­pacted is by the tourist i ssue. They are there of­ten, though, to sup­port the in­bound tourist mar­ket and vis­i­tors to New Zealand and there are lots of un­cer­tain­ties around when or if vis­i­tors will re­sume.”

Har­ford said lux­ury re­tail­ers’ sales had not bounced back as quickly as those of other more af­ford­able chains as its core de­mo­graphic was miss­ing from the mar­ket

Re­tail ex­pert Ben Goodale, chief ex­ec­u­tive of Auck­land- based mar­ket­ing agency Quan­tum Jump, said it was not sur­pris­ing that lux­ury ap­parel sales were down. New Zealand was gen­er­ally not a brand­con­scious so­ci­ety, he said.

“Hand­bags, shoes and jewellery from high- end global re­tail­ers like Gucci and Louis Vuit­ton tend to ap­peal to high- net- worth vis­i­tors and a much smaller sub­set of the lo­cal mar­ket so it’s not a huge sur­prise their sales are down,” Goodale said.

“By con­trast, sales of lux­ury cars, art, high- end hi- fi and elec­tron­ics, kitchens and other home lux­u­ries are do­ing re­ally well, fu­elled by bet­ter- off Ki­wis who have spare dis­pos­able cash be­cause they can’t go overseas this year.

“The do­mes­tic mar­ket is spend­ing here some of what they might have spent overseas, whereas re­tail­ers re­liant on vis­i­tors are likely to con­tinue to ex­pe­ri­ence re­duced sales un­til the tourists re­turn,” said Goodale.

Many Ki­wis, iron­i­cally, in­cluded shop­ping at lux­ury brands as part of their overseas travel, which could be an­other rea­son why some Ki­wis were not splurg­ing on lux­ury ap­parel and hand­bags, Goodale said.

Ki­wis’ readi­ness to spend un­used travel bud­gets do­mes­ti­cally hasn’t ex­tended to lux­ury brands.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.