By Anul Sareen and Julia Illera
Personal accessories sales in the Asia Pacific declined by 16% in 2020, as the COVID-19 pandemic led to national lockdowns, social distancing, store closures and travel restrictions, thereby causing regional demand to suffer. However, the level of decline was one the smallest when compared to the 19% global decline, as it was the first region to enter the recovery phase. Furthermore, consumers from the Asia Pacific drove sales domestically as they were unable to travel, spend and shop overseas. The industry also benefited from a polarisation in consumer spending, towards either the highest end brands or the lowest priced deals, with some consumers buying fine jewellery and other luxury goods as an investment.
Source: Euromonitor International
The Asia Pacific remains home to the highest spenders globally, with markets such as Hong Kong, Singapore, Taiwan, South Korea and Japan ranked in the top 10 markets by per capita spending in 2020. The region also remains an engine of growth for personal accessories, thanks to its growing middle class and increasing number of HNWIs.
Source: Euromonitor International
The lifestyle changes caused by COVID-19, such as travel disruption, have meant that wealthy consumers, in particular, have been able to spend more money on discretionary items, including fine jewellery and luxury handbag as they are unable to spend in other areas of their lives, such as eating out and travel. Higher domestic spending contributed to an increase in sales of personal accessories in the region, but it only partially compensated for the losses associated with tourism spending.
Factors including attitudinal and consumption shifts, the fast pace of digitalisation and changes in channels of distribution, have proven crucial in protecting the industry from further sales losses in the region, and are anticipated to remain vital in the long-term recovery of personal accessories.
The rapid migration to digital technologies mitigates decline in sales
Companies competing in the Asia Pacific were forced to enhance digitalisation beyond distribution as consumers adopted a digital-first mindset pre- and post-purchase. Historically dependent on in-store retailing, the industry had to invest in e-commerce capabilities and develop complementary in-store digital tools alongside their e-commerce offerings.
Source: Euromonitor International
In markets like South Korea, e-commerce sites directly operated by brands or department stores gained relevance as these tend to be most trusted by consumers in terms of the authenticity of products. For instance, Tiffany & Co, opened an online store on Kakao Gift, a shopping platform built on the nation’s most widely used mobile messenger app KakaoTalk.
Similarly, in Hong Kong, leading industry player Richemont upgraded its online services providing free home delivery and flexible refund capabilities, whilst also offering the option to order products to try on at home. The company also introduced one-on-one virtual consultations via its brands’ official websites. In China, the adoption of livestream and private domain marketing via WeChat was also seen, with leading luxury players including LVMH and Gucci using livestreaming.
Companies in categories such as eyewear accelerated deployment of digital services moving beyond transactional websites towards digital health and remote eye care, to answer the need for accessibility, convenience and immediacy of treatment. They also look to replicate virtually their in-store offer, including adoption of augmented/virtual reality tools such as frames try-ons at home to maintain engagement and sales. For example, Chinese eyewear retailer Chow Tai Fook rolled out initiatives like cloud kiosks, a new CRM platform on WeChat, and customized pieces. Others, like Luxottica India Eyewear Pvt Ltd expanded its digital presence in India through its ‘Smart Shopper’ digital initiative, which includes the offering of its entire range of products under one single online store and virtual try on.
Changes in channels of distribution in the Asia Pacific
Amid changing consumer preferences in the Asia Pacific, as well as growing middle classes and rising consumer purchasing power in markets such as China and India, the region has accounted for a growing proportion of sales for all companies in recent years. As a result, industry players have prioritised their physical retail and e-commerce footprint in the region. This has become more so crucial during the pandemic, as retailers seek to grow their brands’ sales in tandem with growing market sizes. Although historically retailers have been dependent on in-store retailing, COVID-19 has forced the industry to rethink its distribution channels to better reach and engage with consumers in the Asia Pacific.
In India, retailers experienced the challenging task of reaching out to consumers due to the strict lockdown imposed by the government. The lockdown restricted people from moving out of their houses. To overcome this situation where consumers were both unable and afraid to go outside, retailers developed innovative approaches such as setting up mobile retail stores within the premises of housing societies. For example, retailers such as Max Fashion and Reliance Trends worked on setting up these stores within the community area of residential societies over the weekends which allowed consumers to shop apparel, bags, sunglasses, etc. from the comfort of their community. Retailers also offered video tours of the store to consumers to show them the collection. For example, fine jewellery retailer Tanishq offered video tours of their store to consumers. In addition to this, retailers also visited the residences of the consumers to show them the collection at their homes and help consumers make a purchase decision. Fine jewellery retailer Tanishq and eyewear retailer Lenskart were amongst the few players that leveraged the strategy.
In the case of Japan, the pandemic resulted in Direct-to-Consumer brands growing faster than traditional wholesale brands. For example, in the case of fine jewellery and watches, several consumers in Japan still enjoy trying out products before making a purchase. They also prefer styling different pieces of accessories in their daily lives. To cater to this consumer base, subscription services such as Laxus in bags and luggage and KARITOKE in watches are rapidly expanding their user bases following the COVID-19 pandemic. Even spectacles retailer Megane Super launched a subscription service where members can replace spectacle lenses or frames for a monthly subscription fee of JPY1,000, JPY2,000, or JPY3,000 depending on plans. With this the company is encouraging consumers to have multiple spectacles in for different usage occasions to ease eye stress.
In South Korea, mobile-exclusive brands are gaining traction as it is easier to attract consumers, especially the younger generation within the 10-20 years age bracket. An example of this is the Korean jewellery brand Didier Dubot which is owned by Sejung Corp. The company worked towards strengthening its positioning by launching Debong Didi, a jewellery line exclusively available at Kakao Gift.
Source: Euromonitor International
Adapting to the new global era
With the pandemic disrupting consumer behaviours, purchasing patterns and income levels, retailers are expected to be creative while focusing on their distribution strategies. In order to stay ahead, companies would have to focus on a stronger omnichannel presence which allows them a competitive advantage. Identifying evolving purchase trends and channels through which consumers are quite comfortable shopping would transform the distribution strategy and help businesses grow globally.
About the Authors
Anul Sareen is a Consultant with Euromonitor International, Bangalore. He leads the research of the Fashion industry in India, which includes apparel and footwear, personal accessories and eyewear, and luxury goods. As an industry thought leader, he engages with leading companies and has a strong interest in supply chain topics within the fashion industry.
Connect via: Linkedin, Email: [email protected]
Julia Illera is a Senior Consultant at Euromonitor International, Sydney with a focus on Beauty and Fashion. Julia advises clients across beauty and personal care, and consumer health by helping them to make better strategic and commercial choices by identifying and aligning their strategies with critical macrotrends. Her expertise extends across the APAC and ANZ markets.
Connect via: LinkedIn, Email: [email protected]
