During the lockdown, luxury consumers’ buying behaviour, particularly online, has been, rather unpredictable.
The year didn’t start on a good note. The pandemic brought the world’s strongest economies to its knees. In the times of restrictions on movement and partial to complete lockdown in India, luxury sales from brick-and-mortar stores has taken a severe hit. But does this mean that online businesses may have a different story?
“Thanks to the lockdown, many people are spending a lot of time online,” says Nakul Bajaj, Founder & CEO, Darveys, a six-year-old site that sells authentic luxury brands from stores across the world at discounted rates or prices that one gets abroad. He, however, is quick to add that people are apprehensive and thus the amount spent on luxury items may be affected, but there are also those who aren’t deterred.
Bajaj sights the example of a customer who placed an order worth `2.88 lakh just a few days ago. “Currently, we are taking full payment in advance and keeping the lockdown in mind. The delivery of the product is scheduled after three to four weeks. In spite of this, the consumer made this purchase,” he says. However, in the past few weeks, the website has also gotten many cancellation requests. “Before the lockdown, five orders out of 100 would be cancelled every day, but now that number has shot up to 20 to 25,” he says. So, consumer behaviour is unpredictable. Those paranoid about the future aren’t buying and then there are also those who continue to shop.
“There is obviously an evident shift in consumer behaviour in terms of buying. The mindset and mental health of people have taken a toll, as there is no motivation or willingness to indulge in shopping for non-essential goods,” says Kaabia & Sasha Grewal, sisters and Co-Founders of eight-year-old Outhouse Jewellery.
They sell jewellery that has contemporary designs, mostly statement pieces, on outhouse-jewellery.com.
The Grewals add that as no one knows when would the crisis end, there’s a certain demotivation reverberating through consumer circles, affecting the buying sentiment. “For people, luxury jewellery is not the need of the hour. A few who are keen want to wait and watch out.”
The entrepreneurs aren’t just dealing with losses due to the dip in the number of sales, but also at losses made on inaccessible stock lying in the warehouses. “As everything is in a state of complete lockdown, accessing stocks in warehouses and factories has become impossible,” says the sister duo. “ Initially, we did a few online sales, but currently there is a plunge in consumer confidence and willingness to spend.”
For Darveys though, that’s not the case. Bajaj’s business model is different. They don’t rent warehouses to stock goods. They connect directly with the stores across the world. “Our website shows products that are available in stores in various parts of the world. Due to COVID-19, many brands based in Europe and America are suffering huge losses and hence are giving massive discounts,” he says. The business became challenging after New York came under COVID-19 attack. The building that housed his office in the Big Apple was completely locked down. “Overnight, we had to move around everything and had to look for another place for the office. That was extremely challenging and difficult,”
On the upside, many new consumers are checking the products on Darveys as the luxury brands are dolling out great discounts to sustain. Several stores in Italy, Spain and the US, that regularly gave 25 to 30 per cent discounts are now offering 45 to 50 per cent discount. “For a consumer who’s always keeping an eye on the latest collection launches abroad, this is the time to steal the deals,” says Bajaj. The brands abroad are giving great prices for luxurious goods to be able to pay salaries to their employees, ensure cash flow and keep the company afloat.
The current situation will change sooner or later. And while the government is doing everything in its capacity to contain the pandemic, some help in terms of taxes and subsidies may bring relief to retail business owners.