Specialty retail UBS Evidence Lab inside: How has the luxury consumer changed post Covid-19 outbreak?

Chinese consumers' outlook for their personal financial situation has deteriorated due to the pandemic. UBS Evidence Lab survey shows that 51% still expect their situation to be better than last year, a positive for European Luxury players.

17 Sep 2020

Despite the pandemic, 51% of Chinese luxury consumers expect an improvement in their personal financial solution in the next 12 months

How Chinese consumers expect their personal financial situation to change in the next 12 months

Source: UBS Evidence Lab ( >Access Dataset)

This chart shows Chinese luxury consumers expect an improvement in their personal financial situation in the next 12 months

Consumer sentiment seems weaker, but luxury has been taking share of wallet

The 10th wave of UBS Evidence Lab luxury surveys in China, France and Italy showed a Covid-19-related deterioration in consumer sentiment as fewer consumers expect their financial situation to improve. However, interestingly, the allocation of spend to luxury has increased among Chinese consumers (21% vs. 18% in 2019) and remained largely stable among the Europeans, likely explaining the strong rebound in sales post lockdowns and in our view boding well for the festive season. The results of the survey suggest to us that luxury fundamentals remain as strong as ever.

Appetite for travel is not gone despite limited visibility

Despite investor concerns that consumer behaviour regarding tourism may change in the years to come, the surveys show that the vast majority of the participants still plan to travel. Among the respondents, 72% of the Chinese, 85% of the French and 87% of the Italians plan to travel in the next 12 months, with Europe still remaining the top destination. Although the visibility remains limited we believe this is a positive sign, given the importance of tourism to global luxury markets (c40% of sales).

A rise in luxury online shopping

One notable change in consumer behaviour following the Covid-19 outbreak seems to be increasing preference for shopping luxury online which, boasting attractive profitability, is positive for the sector. According to the surveys, brand.com will be the top shopping destination in the next 12 months among the Chinese consumers (42% vs. 39% in 2019), but also "other online" as well as "second-hand online" have registered significant increases in responses (in total 31% vs. 7% in 2019). Among French

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