MORE than 2 years into the pandemic, many observers have become increasingly pessimistic on physical retail. Oft-cited reasons include higher online shopping during lock-downs, travel restrictions and the lack of tourists.

Amid the doom and gloom narrative, many bright spots in the retail landscape have been overlooked.

Here, we take a closer look at some of the star performers in retail and how they have astutely navigated all the market headwinds, changing consumer trends and even transformed themselves.

The rise of luxury

Major luxury houses have performed well in the face of the pandemic. With travel restrictions, consumers started spending their travel money on luxury items.

In March 2022, Chanel increased prices on some of its bags again, after 3 price hikes in 2021. Some of its signature bags now cost up to twice their prices in 2019 pre-pandemic.

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According to analysts at Jefferies, Chanel has raised prices of its iconic handbags by an average of 71 per cent since before the pandemic. Not to be outdone, Louis Vuitton increased its prices in February 2022 by as much as 26 per cent.

Concurrently, there is a worldwide shortage of popular iconic Rolex watches and their prices have sky-rocketed in the resale market. Despite the lack of tourists, a few luxury boutiques like Gucci, LV, Chanel and Dior often see queues outside their stores here even on weekdays. Last year, super high-end car sales in Singapore surged by 40 per cent.

The Asian consumer

Asia is the fastest-growing consumer market for major brands especially in luxury, athleisure and street fashion. Luxury brands have been quick to target Asian customers, featuring South Korean global superstars across many brand campaigns. Louis Vuitton's global ambassador is Squid Game actress and model Jung Ho-Yeon while K-Pop powerhouse BTS has featured strongly in LV's men's collection. Gucci's global ambassador is EXO's Kai while Celine roped in Lisa of Blackpink.

Over in Greater China, Jackson Wang is the ambassador for Fendi and Cartier and has even designed a sell-out capsule collection for Fendi. The use of Asian ambassadors for these brands signifies the growing influence of Asia as a major force in fashion, pop culture and consumerism.

The Gen Z consumer

Luxury brands no longer target only the elite and older, more affluent customers. The fastest growing customer segments of luxury are Gen Y and Z and many of the brand campaigns specifically target this younger group of consumers.

As Gen Z are not known to be brand-loyal, retailers are working harder to understand what drives their buying decision; for example, they seek authenticity and they favour brands with more compelling stories. Their power to influence buying decisions of the older Gen Y and X further cements their influence in retail trends.

Street fashion

Street fashion has taken over the fashion scene by storm. Luxury players Dior Men and Balenciaga are helmed by streetwear designers. The late Virgil Abloh, who founded Off-White, was also Louis Vuitton's artistic director for its menswear collection. He had been assigned a creative role across all LVMH's brands just prior to his untimely demise.

The collaboration between Louis Vuitton and Supreme was a massive global success, inspiring more collaborations like Adidas X Prada, Dior X Nike and Gucci X North Face.

Sneakers have also become a status symbol especially for the youth market. Rare collectibles like a pair of Michael Jordan's sneakers sold for US$1.47 million while Kanye West's Grammy-worn Nike Air Yeezy 1 prototype from 2008 sold for US$1.8 million.

Omni-channel retailing

Prior to the pandemic, many retailers were already feeling the heat from online shopping, and some swiftly adopted omni-channel strategies. The pandemic merely accelerated the conversion from physical to omni-channel retail.

That said, physical stores remain a very important platform for major brands, allowing shoppers to experience the brands in a multi-dimensional platform and building brand equity and loyalty along the way. The new Adidas Brand Center in Orchard Road is a perfect example of how a retailer establishes a strong presence in the heart of Orchard Road to create a multi-sensory physical buying experience that complements, enhances and interfaces with its online channel.

Social commerce and the metaverse

In recent years, brands have been leveraging social channels to engage and sell to customers, with TikTok blazing this trail. Used correctly, social channels enable retailers to create communities, interact and connect with consumers to build their brands.

Retailers already exist in gaming and metaverse virtual marketplace platforms, where virtual goods like non-fungible tokens (NFTs) are traded.

Late last year, Nike acquired RTFKT, a digital design studio producing trainers and other collectibles that can be worn across different online environments. Balenciaga is no newcomer to the digital realm, from its video-game inspired LookBook to its collaboration with Fortnite on virtual and physical apparel.

Last year, gaming platform Roblox hosted the Gucci Garden, a 2-week art installation to engage Gen Z consumers. A Gucci Dionysus bag sold for 350,000 Robux, the virtual currency of Roblox, equivalent to US$4,115.

Does this spell the end of physical retail? Hardly. Gen Z is projected to account for 40 per cent of the global physical luxury goods market by 2035. Brands targeting this demographic have been quick to recognise and adopt the metaverse as an added dimension to woo Gen Z.

Survival of the swiftest

The one thing we have learnt from this pandemic is that the narrative about e-commerce killing physical retail is starting to sound like a broken record.

From Chanel and Louis Vuitton raising prices, to the worldwide shortage and skyrocketing prices of Rolex iconic timepieces, to the surge in supercar sales in Singapore, to fashion houses successfully navigating the metaverse and physical realms, to the rise of limited-edition sneakers, to long waiting lists in award-winning restaurants, retail is here to stay, virtually and physically.

Brands that are retreating or consolidating were likely already struggling even prior to the pandemic. In the past 2 years, we have seen how successful retailers have been quick to understand the Gen Z mindset and connect with these customers at an emotional level.

Whether in the virtual realm or through physical stores, these brands are seamlessly engaging their customers with authentic and immersive shopping experiences. This, with the help of rising Asian superstars and engaging social commerce platforms, will truly define the idea of New Retail in the new retail landscape.

• Sulian Tan-Wijaya is Executive Director, Retail & Lifestyle, Savills Singapore