The New Consumer Landscape and Work-From-Home Impact | The Retail & Consumer Index

This content piece was written by G & Co. Team & CEO Juan Manuel Gonzalez. This is part of The Retail & Consumer Index Newsletter. Subscribe here.

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It’s no doubt the whole world’s been impacted by the pandemic, and even more so now that things have returned to normal. As we look ahead into 2024, we’re taking a look at how the consumer landscape has been shaped, and how consumer behaviors and sentiments are impacting retail strategies. 

This week:

• The Secrets Behind Totême’s Success 
• Richemont Sees Growth Easing as Economic Worries Rise 
• How Work From Home Has Reshaped What Americans Buy 

The Secrets Behind Totême’s Success

Source: Business of Fashion

Our Take: 

In a landscape dominated by maximalist trends and large luxury groups, Totême has carved a niche in luxury retail with its timeless designs that eclipse the flashier designs from larger brands. The brand’s surpassion of €100 million in sales serves as a testament to the efficacy of its quality-focused and consumer-centric growth strategy. 

This approach, trading in flashy logos for enduring pieces is less of a gamble and more a stroke of retail genius.

Highlights: 

• Elin Kling and Karl Lindman's Totême stands out in the luxury fashion market with its emphasis on minimalist, timeless design, steering clearof the trends of logomania and maximalism. Their approach has proven successful, with the brand achieving over €100 million in annual sales and expanding its global presence through new stores and product categories. ‍
• Totême's growth strategy is centered around quality and consistency, appealing to a post-pandemic desire for sophisticated yet practical clothing. Their focus on direct consumer relationships and selective wholesale partnerships has cultivated a loyal customer base, contributing to steady, profitable growth since the early stages. 
• As Totême approaches its tenth anniversary, the brand is planning to introduce new product categories such as jewelry. In addition to this, Totême maintains substantial potential for further organic growth and expansion in various markets and channels. 

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Richemont Sees Growth Easing as Economic Worries Rise

Source: Business of Fashion

Our Take: 

As a luxury strategy agency and consulting firm, we observe that Richemont's recent financial struggles are indicative of wider market challenges. The luxury sector is currently at a critical juncture, with shifts in consumer spending patterns emerging as a result of worldwide economic forces. In this dynamic landscape, luxury brands, often steadfast in tradition, must now embrace change to progress. As they navigate evolving customer preferences and global economic conditions, it's a stark reminder: adapt or be left behind in the race for relevance and returns. 

After all, even the most timeless brands must ultimately reset their watches to the pace of the ever evolving world. 

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Highlights: 

• Richemont, the Switzerland-based luxury goods holding company, reported first-half profits below forecasts amid economic worries and global tensions, leading to a 6% decline in its shares.
• The luxury company's sales growth slowed to 5% in the July to September period, compared to 19% in the previous quarter, with Chairman Johann Rupert citing inflation, economic slowdown, and geopolitical issues as key factors.
• Despite the challenges, Richemont remains optimistic about the medium-term outlook, planning to invest in boutiques, products, and marketing, aiming to gain market share during the slowdown. 

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How Work From Home Has Reshaped What Americans Buy

Source: The Wall Street Journal

Our Take: 

Post-pandemic, American consumer spending has shifted markedly from services to goods, a trend reinforced by economic policies. This enduring shift impacts supply chains and retail strategies, as spending on goods now surpasses pre-pandemic levels. For retail executives, this signals a strategic opportunity, especially for the upcoming holiday season. 

It's clear, shopping carts are the new travel bags! 

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Highlights: 

• US spending has shifted from services to goods post-pandemic, with a significant increase in the purchase of goods compared to pre-pandemic levels.
• Retailers experienced inventory challenges due to this shift, but have adapted, aligning closer to pre-pandemic levels.
• This change in consumer behavior indicates a promising outlook for retail sales, especially for the upcoming holiday season.