Luxury has been one of the most affected industries in the retail sector due to the COVID-19 pandemic.
The crisis led to the closure of several luxury stores across the Asia-Pacific (APAC) region, bringing their revenue stream to a standstill during the first half (H1) of 2020.
Against this back drop, brands are turning to affordable luxury to stay afloat and survive in the market, according to GlobalData, a data and analytics company.
As covered in the latter half of this article, athleisure demand also is set to boom.
According to GlobalData’s Retail Intelligence Center, APAC luxury sales are forecast to register a negative growth of 3.4% to reach US$60.3bn in 2020, compared to US$62.4bn in 2019.
GlobalData retail analyst Suresh Sunkara said a number of factors have influenced this outcome.
"COVID-19 has forced luxury brands to postpone their fashion shows, cancel promotions events, and disrupted supply chains.
"However, since the start of the second quarter (Q2) of 2020, 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.”
However, due to low consumer confidence in APAC which is currently at an all-time low, luxury retailers are not expected to regain their sales growth anytime soon.
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.
Sunkara said retailers will diversify to meet the challenge.
“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 decline 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.”
Athleisure is the new black
The athleisure market in the Asia-Pacific (APAC) region is set to boom as casual workplaces and WFH take hold, GlobalData predicts.
The athleisure market, including all clothing and footwear expenditure, in the APAC region is forecast to rise to 18.5% reaching US$193.3bn market value by 2023.
GlobalData’s ‘Global: Clothing & Footwear – Athleisure, 2018-2023 Report’ reveals that in 2018, the athleisure market accounted for 14.3% of all clothing and footwear expenditure in the APAC region.
GlobalData retail analyst Hrishabh Kashyap said retailers need to adapt to demand.
"The versatility and comfort of these clothing lines drives the mass market appeal for athleisure.
"Despite the current COVID-19 scenario and the majority of population staying indoors, working from home and exercising at home has helped increase the demand of clothing lines.”
To leverage this potential, leading international and local brands are shifting their focus to athleisure wear and the results have been fruitful.
In 2019, Nike’s collaboration with South Korean rapper, G-Dragon, for its Air Force 1 range of sneakers sold out in just 0.06 seconds post launch in China, underpinning its popularity.
Adidas and Nike lead in terms of international brands in the APAC region and have placed China as a specific market to target for organic growth opportunities.
Despite increasing levels of competition in China, domestic brands such as Li-Ning, Anta and Xtep had a strong 2019 following impressive 2018 performances.
Other brands such as Erke, Qiaodan, Kbird and 360˚ are also expected to gain traction over the next five years. Following the success of these brands, various international and local fashion brands are investing in the athleisure market to extract more benefit out of this fast growing trend.
Kashyap said that trend will continue.
“Athleisure resonates with the millennial way of life. With shifting attitude towards health and fitness, and demand for multipurpose wardrobes, athleisure closes the gap between fashion and sports perfectly well.
"The tech savvy, ever online generation gets shopping inspiration from social media influencers and retailers have been proactive in using sports stars, pop stars and fitness influencers to advertise so that their followers take notice of the trend.
"Trends such as sustainability and eco awareness will shape the future. More gender sensitization, female empowerment, sense of inclusivity irrespective of color, race, religion, body type will play an important role as awareness related to these issues grow.
"Technology will have its own role in shaping the market — smart fabrics and alternative categories such as athleisure personal care products etc. create opportunities for retailers to catch customers’ attention."