University of Economics, Prague
Master’s Thesis
Year: 2021 Name: Raoah Marghalani
University of Economics, Prague
Faculty of Business Administration
Masters field: Management
Title of the master’s thesis:
The Impact of Covid-19 on Consumer Purchase Decision of Luxury Products in
the Kingdom of Saudi Arabia
Author: Raoah Marghalani
Supervisor: doc. Ing. Václav Stříteský, Ph.D.
Declaration of Authenticity
I hereby declare that the master’s thesis presented herein is my own work, or fully and specifically acknowledged wherever adapted from other sources. This
work has not been published or submitted elsewhere for the requirement of a degree program.
Place, date Signatur
Prague, 12.05.202
Abstract:
The purpose of this study is to examine the effects of the covid-19 pandemic on luxury consumption and behavior in the Kingdom of Saudi Arabia. The study utilized a mixed methodology in order to gain more insights from the Saudi luxury consumers. This was done in the form of a quantitative method through an online questionnaire, and a qualitative method through an online focus group discussion. The online questionnaire collected a total of 216 responses, while the focus group discussion had 6 participants. The survey results show that Saudi luxury consumers were negatively financially affected after the pandemic justifying the changes in behavior and consumption. The findings also show a significant decrease in general spending and luxury spending. The decrease in luxury spending was more pronounced for upper-class, and young consumers. In addition, the study showed that social media following of luxury brands decreased, while shopping online increased. Furthermore, luxury shopping was the least preferred shopping category after covid-19. In addition, the focus group participants provided additional insights and further supported the results of the survey.
Limitations of the study include time constraints leading to a smaller than desired sample size.
Additionally, due to the covid-19 pandemic restrictions in movement, in-person interviews and in-person focus group discussions were not possible.
Key words: Covid-19, luxury, middle east, Saudi Ariba, change in consumer behavior
Table of Content
Introduction 1
1 Luxury Market Specifics 3
1.1 Global Luxury Market Industry 3
1.1.1 Luxury Market Segments 3
1.1.2 Major Global Fashion Luxury Brands 4
1.1.3 Global Luxury Fashion Products 5
1.2 New Trends in the Luxury Market 5
1.2.1 Slowly Increasing Adoption of Technology 5
1.2.2 Increasing Presence on Social Media 6
1.2.3 Increasing Importance of Millennials 6
1.2.4 Increasing Demand for Sustainability 6
2 Luxury Consumption in the Middle East 7
2.1 Luxury Market in Saudi 7
2.1.1 Luxury Fashion 8
2.1.2 Prestige cosmetics and fragrances 9
2.1.3 Luxury watches and jewlery 10
2.1.4 Leather goods segments 11
2.2 Consumer Insights in Middle East 12
2.2.1 New Trends for Luxury Market in Saudi Arabia 16
3 Impact of Covid-19 18
3.1.1 Coronavirus Disease 2019 18
3.1.2 SARS outbreak 18
3.2 Economic Impact of Covid-19 19
3.3 Impact of Covid-19 on the Luxury Market 20
3.4 New Trends in Consumer Behavior During Covid-19 22
3.4.1 Trends in Spending Habits 22
3.4.2 Trends in Shopping Habits
3.4.3 Fashion shopping trends during Covid-19 times 23
3.5 Communication of Luxury Brands During Covid-19 Pandemic 26 4 Factors Affecting the Perception of Luxury Products 28
4.1 Perception of Luxury 28
4.1.1 Perception of Price 29
4.2 Dimension of Luxury 29
4.2.1 Perceived Conspicuousness 29
4.2.2 Perceived Uniqueness 30
4.2.3 Perceived Hedonism 30
4.2.4 Perceived Extended Self 30
4.2.5 Perceived Quality 30
4.3 Factors Affecting the General Perception of Luxury 31
4.4 Perception of Luxury in Times of Crisis 32
4.4.1 Factors Affecting the Perception of Luxury in Times of Crisis 32
5 Methodology 34
5.1 Quantitive Research Development 34
5.1.1 Research Sample 34
5.1.2 Demographics of Respondents 37
5.1.3 Data Collection Methods 39
5.1.4 Questionnaire Design 39
Independent variable 40
Dependent variables 40
5.1.5 Quantitive Data Analysis 42
5.2 Qualitive research development 43
5.2.1 Online Focus Group Discussion Questions 43
5.2.2 Recruitment Process and Data Collection 44
6 Results 46
6.1 Quantitative analysis results 46
6.1.1 General Effect of Covid-19 Results 46
6.1.2 Effect of Covid-19 on Luxury Purchase Results 48
6.2 Qualitive Results Analysis 55
6.2.1 Themes and Categories Development 55
7 Discussion 59
8 Conclusion 63
Introduction
Luxury is defined “as a thing that is expensive and pleasant but not essential” by oxford dictionary (2021). Luxury has been a controversial topic throughout the history. Despite all of the criticisms it has received , the global luxury market is consistently growing at a rate of 6.4%
a year (Mehta et al., 2020).
The middle east and specifically the Kingdom of Saudi Arabia, has a great opportunity for growth in the luxury market. Due to its geographic location; it is in the center of three continents. In addition, the demand from Saudi consumer for luxury is increasing. The luxury market value in Saudi Arabia is estimated to be worth 5.166 billion Dollars in 2021 with an estimated yearly growth rate of 6.6 percent (Statista, 2021). This makes the growth rate of the luxury market in Saudi Arabia faster than the global growth rate. This is likely due to the attempt from Saudi Arabian Government to diversify the economy and transform the country to become the next destination for many tourists including shopping tourists from all over the world.
In light of the current pandemic and the wide spread of the covid-19 disease, consumer shopping behavior has been affected in different sectors including the luxury market. It has been estimated that luxury market decreased in revenue by 30% after the pandemic (Deloitte, 2020).
The aim of this study is to focus on the impact of the current situation on consumer purchasing decisions and behavior regarding the luxury market in the Kingdom of Saudi Arabia.
The findings of this research help to better understand the effect of Covid-19 pandemic on luxury consumption and consumer behavior in the Kingdom of Saudi Arabia. This would be significant for luxury brands to understand the needs and demands from Saudi customers in this critical time. In addition, it may help luxury brands to know their customers’ preferences and provide them with better, and more culturally suitable products for them.
The goal of this research is to identify the impact of the Covid-19 pandemic on luxury consumption and consumers behavior. However, first, the financial impact of the covid-19 pandemic on Saudi consumers was examined. For examples, changes in income, bills, spending, and loss of employment due to covid-19 were tested. This helps to explain the reasons for changes in behavior and consumption. Additionally, the consumption aspect was tested. The consumption aspect of the research examined the degree at which the spending on luxury is affected. Finally, the behavioral aspect of the research was assessed. It included testing preferred shopping categories, preferred shopping channels, and social media following.
The study utilized a mixed methodology. This was done in the form of a quantitative method through an online questionnaire, and a qualitative method through a focus group discussion.
The online questionnaire collected a total of 216 responses, while the focus group discussion had 6 participants.
The study had several work limitations and difficulties. The main limitation was related to the fact that this was a retrospective study, examining the behavior and consumption in the past and how it changed in the present. In other words, the results were collected only once after the pandemic, and never before the pandemic. This was unavoidable due to the unpredictable nature of any pandemic. Another limitation is that the pandemic is far from over. Therefore, a complete understanding of the effects of the pandemic was not possible. Additionally, there was no research done on this particular topic in Saudi Arabia. This made it difficult to compare the results obtained with the literature review. In addition, the sample size could have been bigger, and several more focus group discussions could have been done. However, due to time constraints, this was not possible.
1 Luxury Market Specifics
Prior to discussing specifics about the middle east consumer, an overall understanding of the global luxury market is necessary. Firstly, the luxury market size and growth will be assessed.
The size of the market illustrates the importance of research in this topic. Then the different segments, main brands and products will be discussed, each in a separate heading. Finally, new global trends will be analyzed. Understanding these global trends will help in comparing the middle east consumer to the rest of the world.
1.1 Global Luxury Market Industry
The global luxury market is worth billions of Dollars. According to an in-depth review conducted by (Mehta et al., 2020), the luxury market is expected to grow 6.4 percent a year reaching a value of about 388 billion dollars in 2025. However, since the pandemic started and travel restrictions were introduced globally, it is expected that the actual growth will be much smaller. It is possible though, that since China is showing signs of economic recovery, the effect of the pandemic might not be significant. This is also partly because China is the largest consumer of luxury products. Other important players in this market include North America, Europe, and the Middle East.
1.1.1 Luxury Market Segments
The luxury market industry can be divided into nine main segments. They are luxury cars, personal luxury goods, luxury hospitality, luxury cruises, designer furniture, fine food, fine wines, private jets and yachts, and fine art. As illustrated in Figure 1 the top three categories are luxury cars, personal luxury goods and luxury hospitality. Together they form 80% of luxury market (EtailBoston, 2021). The Luxury cars is the largest segments in size, followed by personal luxury goods that includes fragrance, watch, cosmetics jewelry and bags. However, not all segments have seen growth. There was a decline in the private jets and yacht segment.
In addition, the luxury cruises is the least growing segments in the luxury market industry.
Figure 1 Luxury market segment growth
Source: EtailBoston (2021)
1.1.2 Major Global Fashion Luxury Brands
In the following Figure 2 we can see that out of 100 luxury brands only 10 brands generate the highest profits (Deloitte, 2020). In addition, the top ten luxury brands dominate half of the market and were able to generate high sale growth and higher net profit margins than any other brand in the market. The net profit margin from the top ten companies is 70% of the total revenue of the whole market. The top ten luxury brands dominating the market are LVMH, Kering, Estee Lauder, L'Oréal, Richemont, Essilor Luxottica, Chanel, Chow Tai Fook Jewelry Group, and Swatch Group.
Figure 2 Luxury brand revenue
Source: Deloitte (2020)
1.1.3 Global Luxury Fashion Products
The personal luxury market products are divided into several categories. They include:
• Cosmetics and fragrance.
• Jewelry and watches.
• Bags and accessories.
• Clothing and footwear.
The top ten companies mentioned previously, were able to generate the highest sale growth and net profits of any other category. The cosmetics and fragrance generate 3,7 billion US dollars.
The jewelry and watches are the third highest performing sector that generates 2.4 billion dollars. Bags and accessories sector have slower net profits in compared to other sectors. Some brands in this sector have declared losses because of their exit from the retail sector. Although, the clothing and footwear have the highest number of companies it generated the lowest sale and the lowest revenues compared to other categories since last year.
1.2 New Trends in the Luxury Market
1.2.1 Slowly Increasing Adoption of Technology
The current Covid-19 pandemic has increased luxury brand e-commerce compared to previous years (Deloitte, 2020). The reason for this is the current lockdowns, travel restrictions and the limitation at shopping in the duty-free shops around the world. Thus,
making it crucial for luxury brands to adapt new frameworks in order to stay profitable and relevant for their customers. Many luxury brands have adapted to new technologies to improve their online shopping experience.
1.2.2 Increasing Presence on Social Media
Many have debated the role of social media in the luxury market industry. Nevertheless, it has been able to provide many benefits. First, it is a source of information of the consumer.
Companies are able to gather and analyze information about their customer from social media to better understand consumer behavior. Second, social media enable to build a community for the brand that would increase brand loyalty. Third, social media is able to present marketing activity in effective and sustainable approaches (Colella et al., 2019).
In order to better understand the role of social media in marketing for the luxury brands. A study has been done Arrigo (2018). The study results support the significant importance of social media channels in building brand equity. Social media marketing activity has a positive relationship between customer relation and purchase activities. Customers appreciated social media content that was interactive and entertaining for them. Moreover, social media improved customer retention through engagement with the brand. This results in higher customer satisfaction and the willingness to revisit a luxury brand website.
Lastly, social media channels are able to provide the possibility of co-creation and innovation with the brand. This enables customer to play a crucial role in sharing their shopping experience with the brand and create customer generated content.
1.2.3 Increasing Importance of Millennials
Millennials are individuals who are between the ages of 23-38. Millennials play major role in the luxury market they will present 50% of personal luxury goods consumer worldwide in 2025 (Danziger, 2019). Making them the biggest generation segment in the luxury market. For this reason, they will have great power to shape the future of luxury market. Millennials tend to prefer casual street wear, online shopping and social media engagement. Moreover, Millennials value the overall experience over the items they purchase. Luxury brands needs to adapt to the new demands made by millennials in order to stay relevant to their consumer.
1.2.4 Increasing Demand for Sustainability
Sustainability has not been closely related to luxury products or luxury lifestyle. Moreover, some perceive luxury fashion brands as not using sustainable practices such as using leather and fur in their designs of handbags and accessories. Moreover, The consumption of recycled material does not represent luxury for some customers. However, many millennials are more attracted to luxury brand that use sustainability approaches and practices. Millennials demand sustainability from their favorite luxury brands and they refuse to buy products from luxury brands that their values dose not align with their own values and believes. It is important for luxury brands to adapt sustainable and ethical acts to improve their brand image and attract the younger generations.
2 Luxury Consumption in the Middle East
Although the research question is about the behavior of Saudi consumers, it is important to understand general trends that are not just relevant for Saudis but also the middle east in general.
Saudis share religious, cultural, and economic values with the rest of the middle east; thus, this chapter will first assess the current market situation in the middle east and then more specifically in Saudi Arabia. Additionally, the consumer behavior of the middle will be discussed.
The middle east region is not well known for its luxury retail. Nonetheless, according to Lipke (2007) the Middle east has a great potential for luxury consumer market for many reasons. First, is that fact of having the ideal geographic location in the center of three continents, which makes it a perfect destination for many people from all over the world. Second, the growing population of the Middle east and the increasing demand and desire from the millennial Arab consumer to obtain the latest luxury items available in the market. Third, the higher net worth for an Arab individual. Compared to other countries such as Germany it is considered higher than other consumers. Having a higher expendable income, increases the chance of expanding their purchase habits and their interest in luxury items. All of these factors contribute to make the middle east to have the potential growth for luxury market and become one of the most desirable shopping destinations for tourists worldwide.
Many luxury brands retails have already recognized the importance of the middle east market and have taken the opportunity to expand their presence there. These brands have noticed an increasing demand on various luxury products such as luxury cars, watches and jewelry. For example, the luxury brand department store Bloomingdales has already established a significant presence in Dubai. It has since become a main destination for shopping for local customers and tourist from all over the world (Kan, 2012).
2.1 Luxury Market in Saudi
The middle east and specifically Saudi Arabia, has a great opportunity for growth in the luxury market. Generally, the retail industry in Saudi is estimated to continuously grow to be worth 119 billion US dollars by 2023 (Al-Omar, 2020). More specifically, the luxury market value is estimated to be worth 5.166 billion Dollars in 2021 with an estimated yearly growth rate of 6.6 percent from 2021 till 2025 (Statista, 2021). It is also important to note that the growth rate of the luxury market in Saudi Arabia is slightly faster than the global growth rate of only 6.4 percent. This may be because Saudi is trying to diversify its economy and reduce its reliance on oil and is attempting to transform the country to become the next destination for many tourists including shopping tourists from all over the world.
However, the luxury market in 2020 compared to the previous year has seen a smaller annual revenue per capita than previous years in Saudi. In 2019, it was 139.65 US Dollars, while in
2020 it was only 127.59 US Dollars, an 8.6 percent decrease. The same report nonetheless shows a projected increase in revenue per capita in future years up to 179.29 US dollars in 2025 (Statista, 2021). This is likely to be a result of the current pandemic. In addition, Figure 3 also shows the different segments that make up the luxury market in Saudi. Here the top four will be discussed in more detail. The luxury eyewear segment represents only a very small fraction of the total revenue compared to the others, and therefore will not be discussed here. The segments are mentioned in order of most significant to least. It is also paramount to mention that the forecasted revenues and growth rates in this section were adjusted according to expected changes due to the pandemic.
Figure 3 Luxury goods revenue in Saudi Arabia
Source: Statista (2021)
2.1.1 Luxury Fashion
The luxury fashion segment can be further divided into apparel and footwear. Luxury apparel is the most significant part of this segment, representing 78 percent of the revenue coming from the fashion segment. In addition, LVMH, Kering, Ralph lauren and PVH are the most significant consumed brands in Saudi Arabia.
Overall, the luxury fashion segment in Saudi has been the most important revenue stream for the luxury market since 2012 according to Statista fashion luxury report (2021). Additionally,
as can be seen in Figure 4, the segment has seen continuous growth since 2012. An important exception to this is the year 2020, when the revenue decreased compared to the year before by 19 percent. Consequently, this segment was the hardest affected by the pandemic. Nonetheless, the yearly growth rate of this segment is about 9 percent faster than average growth rate of the whole luxury market. Therefore, although it was the hardest hit segment, it was one of the fastest to recover only second to the leather goods segment mentioned later.
Figure 4 Luxury fashion revenue in Saudi Arabia
Source: Statista (2021)
2.1.2 Prestige cosmetics and fragrances
Prestige skin care, fragrances and decorative cosmetics make up the prestige cosmetics and fragrances segment. Skin care accounts for almost 603 million dollars in revenue in 2021 as illustrated in Figure 5, making it the most important part of this segment according to Statista Prestige Cosmetics & Fragrances report (2021). It is also relevant to mention that significant brands include, L’Óréal’s Luxe division, Estée Lauder, and LVMH’s perfume and cosmetic brands.
Figure 5 prestige cosmetics and fragrances revenue in Saudi Arabia
Source: Statista (2021)
Furthermore, prestige cosmetics and fragrances are the second most important segment of luxury in Saudi Arabia. In 2021, it is estimated to be worth 1.194 billion dollars. Unlike most other segments, this one did not suffer from decreased revenues in 2020 compared to the prior year. Instead, it increased slightly from 1.06 billion in 2019 to 1.072 billion in 2020. However, the per capita revenue decreased slightly from 30.93 to 30.8 dollars.
2.1.3 Luxury watches and jewlery
The luxury watches and jewelry are also referred to as “hard luxury”. All the other segments of luxury are considered “soft” due to their physical nature. Interestingly, the jewelry part of this segment generates most of the revenue. In 2021 for example, 78 percent of the revenue from this segment can be attributed to jewelry sales. In addition, LVMH, Richemont, Kering, Swatch, Chow Tai Fook and Rolex are the main brands dominating this segment.
Generally, the luxury watches and jewlery segment are worth about 588 million dollars in 2021, making them the third most important luxury segment in Saudi according to Statista Luxury Watches & Jewelry report (2021). It is however, slower than other segments in yearly growth.
It has also been affected signficantly by the pandemic and the economic slowdown. Compared
to 2019, 2020 revenues were 16.5 percent lower. 2021 shows better numbers, but is still roughly 1 percent lower than 2019 numbers as seen in Figure 6. The recovery of this segment is much slower than other segments and revenues are only estimated to recover completely in 2022. The per capita revenue in this segment follows the same trend seen with total revenue in the past few years.
Figure 6 Luxury watch and jewlery revenue in Saudi Arabia
Source: Statista (2021)
2.1.4 Leather goods segments
The leather goods include handbags, suitcases and briefcases. Additionally, important brands in Saudi are LVMH, Kering, Coach, Michael Kors, Hermès and Tumi.
Overall, leather goods segment is the smallest of the four mentioned previously. It was nonetheless valued at 462 million US dollars in 2021 alone according to Statista luxury leather report (2021). As with other segments, in the year 2020, this segment witnessed a decrease in revenue of about 12 million dollars as seen in Figure 7. This decrease however was one of least significant. Along with the cosmetics and fragrances segment, these segments are the most resilient to the global restrictions introduced in 2020. In addition, the leather goods segment is estimated to grow the fastest at rate of 7.82 percent a year.
Figure 7 Luxury leather goods revenue in Saudi Arabia
Source: Statista (2021)
2.2 Consumer Insights in Middle East
In order for the luxury market to expand in the region, it is necessary to understand the middle east consumer habits. A survey done by Price water house Coopers (Pwc, 2020) have showed many key consumer insights from different cities in Saudi Arabia, United Arab Emirates and Cairo. The main objective of the survey is to explore several areas of modern middle east consumer behavior such as preferred shopping channel, online purchasing and personal spending habits, in store shopping and social media effect on their shopping decisions.
Generally, middle eastern consumers prefer the in-store shopping experience as shown in Figure 8. Furthermore, it shows that the percentage of these consumers shopping frequently in- store has been increasing steadily from 37 percent in the year 2014 to 54 percent in the year 2019. The year 2020 however shows a decrease of 4 pecent when compared to the year before.
Although other channels are not as preferred by middle eastern consumers, the percentage of them using those channels is increasing. This has resulted in 12% increase in the spending that
is performed on personal computers, tablets and smart phones. However, despite that luxury e- commerce has improved and have adapted new methods to provide customers with unique services, consumers tends to shop in-store for items such as jewelry, watch and furniture in order to indulge the overall experience. Additionally, consumers still fear some technical or connection problems while using these different channels. Therefore, exclusive online purchasing is still mainly reserved for airline tickets, hotel bookings and entertainment tickets as it is illustrated in Figure 9.
Figure 8 Shopping channel
Source: Pwc (2020)
Figure 9 Online purchase
Source: Pwc (2020)
As discussed previously, middle east consumers prefer to shop at physical stores They prefer the in-store experience for a number of reasons. First, they tend to indulge the in-store brand experience. Second, the in-store experience provides them with eye catching displays and attractive visuals. Third, the ability to inspect the details of the products more closely is enhanced. Fourth, they tend to enjoy the social interaction done during instore shopping experience. In addition, when consumers were asked how to improve their in-store shopping experience, many customers believe that it can be enhanced by providing personalized offers sent to them in advance.
As for the personal spending habits, consumers expected to increase their overall spending in the year 2020 compared to previous years as shown in Figure 10. Only 13% were expecting to spend less than previous years. Additionally, compared to results from global consumer, Arab consumers tend to be less cautious when it comes to spending in some categories such as medical needs, groceries and entertainment.
Figure 10 Personal spending habits
Source: Pwc (2020)
The PWC study also assessed the role of social media platforms in consumer purchase decisions. According to Figure 11, the effect of social media on middle east consumers has increaesed in 5 aspects out 7 in 2020 compared to 2019. For example, in 2020 middle east consumers are more likely to buy a product shared by others in social media than in 2019.
Additionally, celebrity posts on products affected the purchase decisions of 27 percent of people in the study in 2020. The percentage of people affected by such posts was only 19 percent in 2019. The graph also shows that they are more likely to monitor the review of different products on social media. They are also less hesitant to express their minds using online platforms about certain dissatisfaction they have encountered with products.
Nonetheless, 2 out of the seven aspects of social media influence on middle east consumers have decreased in percentage. For instance, 44 percent of middle east consumers in 2019 used social media platforms in order to get inspiration for their next purchase especially in clothes items and technology devices while only 39 percent did in 2020 Another example is an 8 percent decrease in the number of people in the study making purchases directly through shoppable posts or pictures on social media.
Figure 11 Social media effect on shopping decisions
Source: Pwc (2020)
In summary, the PWC study shows an increase in influence of social media on purchase decisions of middle east consumers, increase in their spending habits, and changes in the preferred type of channel they use to purchase their products in 2020 compared to the previous year. The PWC study shows general changes in shopping behaviour in 2020 compared to 2019 in the middle east, while the purpose of this research paper is to study the behavioural changes specifically in luxury shopping in Saudi Arabia. In other words, similar aspects will examined in this study but only concerning luxury and Saudi Arabia.
2.2.1 New Trends for Luxury Market in Saudi Arabia
For many years people have believed that digitalization and e-commerce cannot be implemented effectively in the luxury markets. Nevertheless, the luxury e-commerce is expected to continuously grow. It is expected to triple its size by the year 2025 to reach 74 billion Euros (McKinsey, 2018). This indicates the improvement of the online shopping
experience as well as the acceptance and the willingness of the luxury customer of the digitalization process.
New trends have emerged regarding the luxury consumption in the middle east. In order to better understand the luxury Saudi Arabian customers a study have been done by (Debs, 2021).
This study has showed that three out five responders are influenced by influencers promoting for luxury products. Four out five responders are interested to see online ads on their computer or smart phones. These findings illustrate the importance of digital marketing regarding luxury brands. Moreover, customers are accepting the online advertisement from their favorite luxury brands and are interested to watch the advertisement instead of blocking or skipping it while browsing online on their electronic devices. Another important aspect is that the majority of Saudi luxury shoppers prefer the instore experience. Nonetheless, 69% of luxury shoppers in Saudi Arabia are satisfied to shop online from their favorite luxury brands. This has resulted in the emergence of many luxury e-commerce websites. They offer a unique collection of local and international luxury designer’s items. Moreover, these websites provide competitive pricing that customers enjoy. Nevertheless, some customers fear the low-quality products while shopping online. For that reason, they tend to limit their spending budget on luxury websites.
Other new trends in luxury shopping in Saudi Arabia include Personalization. The shopping experience is an essential factor when it comes to luxury. Modern luxury consumer is not interested in the mass market products. Instead, they desire their products to be tailored to their preference from choosing the desired leather color or having their initials printed on the products. This will ensure that customers will receive the most excellent experience that they desire.
Some luxury brands have utilized chatbots on their website. This digital tool allows the customer to have a unique experience that is similar to what they expect when they are in-store.
Chatbots will be able to enhance and customize the shopping experience for the customers.
Moreover, it collects and analyze the data from the users to better understand customers’ needs and preferences. Thus, able to present the customer with better choices and alternative as they would at physical stores.
3 Impact of Covid-19
Covid-19 pandemic has reshaped the global economy and consumer behavior in all segments.
Nevertheless, this crisis is far from over; thus, a comprehensive analysis may not be valid yet.
In other words, the effect and duration of the pandemic is still unknown for many countries, and it will take time to know the full effects of such a crisis. Therefore, a comparison with prior crises will help to predict the effects the current one. Another important section of this chapter is the economic impact of Covid-19 thus far. Additionally, this chapter will discuss new behavioral shopping trends, and new communication strategies emerging after Covid-19.
3.1.1 Coronavirus Disease 2019
To better understand this current pandemic, covid-19 has started in December 2019 in China, with a matter of few months, it was able to spread around the globe. According to the world health organization covid-19 is a widely infectious disease that have spread over 223 countries causing the death of over two million people around the world (2021). The world has never witnessed a similar crisis situation since the Spanish Flu in 1918 and SARS outbreak in 2003.
The wide spread of the covid-19 virus has made countries react to the situation by developing new regulations that restrict human contact and freedom of movement. These new regulations include staying at home, maintaining social distancing, and preventing the traveling across countries. Other advised restrictions include forcing shops and stores to close in order to prevent the spread of covid-19. However, the complete consequences of this situation are still unknown.
The only hope to slow down the likely effects of covid-19 on the world economy is supplying the world’s population with enough vaccinations. Unfortunately, this process has been extremely slow. Consequently, it has been difficult to notice improvement in public health and reduced number of infections. With this slow improvement, it could take years for things to get back the way they used to be before the covid-19 pandemic.
3.1.2 SARS outbreak
Although SARS outbreak and covid-19 are both highly infectious respiratory diseases, the comparison between them is invalid for many reasons. First, the economic situation is different this time. The economy around the world is more connected and integrated than it was in the past. Moreover, China plays a more significant role now than back in 2003. Currently, China’s economic growth represents 40% of the economic growth worldwide. In addition, it is considered the world’s largest exports and imports. Essentially, global companies from different industries rely heavily on China for their production process (Fernandes, 2020).
3.2 Economic Impact of Covid-19
As a result of this situation the economy has been affected severely in many sectors. To further explore the economic impact of this pandemic, a research has been done by Maital and Barzani (2020). The main findings were that covid-19 had a major effect on the economy in both the supply and demand side. The supply relies heavily on China. China is currently facing the limitation of raw martials and different resources due to the travel and shipping restrictions.
This has led to a slower production process. In addition, many factories in China were forced to shut down to limit the spread of covid-19. This resulted in increased unemployment rate. The demand is affected as much as the supply. The disruption in demand was most likely caused by unemployment and lack of financial resources. Unemployment has made individual reduce their spending due to the lack of income.
Different sectors in the economy have been affected by the global wide spread of covid-19, but some more severely than others. The stock returns for different industries shown in Figure 12 indicate the negative returns in all categories. The most affected sector was the oil, gas and coal sector. This sector suffered a 50% negative stock returns in 2020. This was due to the decrease of oil prices and the reduction in consumption worldwide. Additionally. the travel and leisure sector were the second most affected by the pandemic. This is due to the current travel restrictions and quarantine measures around the world. This sector includes dining in restaurants and entertainments and hotels as well which were also severely affected.
Figure 12 Different sectors return in 2020
Source: Fernandes (2020)
3.3 Impact of Covid-19 on the Luxury Market
Like other industries affected, the luxury market has witnessed the impact of covid-19. The pandemic originated first in China which is the biggest consumer of luxury in the world. The purchasing power Chinese consumers hold is significant as they currently represent 35% of the personal luxury goods market (D'Arpizio et al., 2020). Then the pandemic spread over different countries such as France and Italy where many luxury brands headquarters and factories are located. In other words, both supply and demand of luxury products were significantly affected by the pandemic. Therefore, the luxury market was estimated to decrease in revenue by up to 30% in 2020.
Although the luxury market was estimated to decrease in revenue by 30 percent in 2020, according to Deloitte (2020), the luxury market was still able to increase in value. However, the growth rate was lower than previous years.
Unfortunately, the luxury market will still be affected by covid-19 for many years to come.
Nevertheless, the eventual recovery from the effects of the pandemic depends on factors such as the duration of the pandemic, travel restrictions and other macroeconomic factors. The recovery of the market in different countries was predicted to behave in two different ways as shown in Figure 13. Some countries will show a rapid rebound while others will suffer from dip and stabilization. China and other Asian countries such as South Korea will be able to have a strong recovery due to their rapid market growth. The increasing demand from the millennials and generation Z consumers for personal luxury products in China is the main reason for their rapid growth, and potentially speedy recovery. On the other hand, countries such as Japan, European and North American countries will suffer from slower recovery. This is due to their reliance on tourism especially from the Middle east and Russia.
Figure 13 Luxury market recovery
The effect of covid-19 on fashion spending has been significant. In times of crisis and uncertainty many customers are prioritizing their expenses and cautiously spending on fashion items. Only 6% of customers are spending more on fashion items in the current covid-19 pandemic. On the other hand, 64% of customers have somewhat decreased their spending on fashion items. This is due to the recommendation to stay at home and self-isolation rules, the prevention of social gatherings and canceling of many formal and social events. Moreover, people have switched to work from home. Additionally, only 39% of customers experienced no change in their spending on fashion items (Grilec rt al., 2020).
This unexpected time of crisis requires companies to react in a manner that would transform these challenges into opportunities that they can benefit from. The luxury market industry is on the edge of facing two options to return to their previous levels of growth. They either keep the current business models or transform into a new business model that considers the current pandemic situation and the changes in consumer behavior. In an attempt to counteract the impact of the pandemic, some brands have already taken the opportunity to transform some of these shows and events into virtual form, in order to keep their customers updated with the latest trends in luxury (Deloitte, 2020).
The changes occurring around us require adapting new mindset while purchasing luxury. This new mindset should consider emotions and customer experiences as described by Manthiou (2020) in his study. The current pandemic has caused many emotions to affect consumers some are negative while other are positive. This have made consumers to have more empathy, compassion and gratitude towards other members of the society who suffered from loss of their loved ones or have been through unemployment. The shift in consumer emotions had made them to reduce their purchase to essential items in order to increase their savings. Resulting in appreciating what they have and decreasing purchasing that would only satisfy their hedonistic desires.
The perception of luxury may change in the future for luxury market. However, it is difficult to change the basic human nature, after long periods of self-isolation and travel ban. Luxury consumers would like to return to their normal activities and indulge in different luxury services. However, will the current situation follow previous recovery processes seen in the 2008 financial crisis, or is it going to be different? A clear change in the perspective is difficult to determine due to the recency of the crisis and this is why this study is significant. Suggestions about the luxury brands should consider for the recovery of the luxury market include to build brand competencies in different areas such as design and marketing that are resistant and adaptable to recover from future risks. Second, this current pandemic can offer an opportunity for brands to grow especially with technology regarding luxury. Third, it is crucial to understand the shift in consumers’ needs. With new behavior in shopping and spending in this crisis luxury brands should take into consideration these changes (Achille and Zipser, 2020)
3.4 New Trends in Consumer Behavior During Covid-19
The current covid-19 pandemic has forced people to stay at their homes for longer times than they were used to in the past. The current restriction rules have limited different services that were available and accessible anytime. In addition, the restrictions resulted in people doing more cleaning and cooking activities at home. Therefore, they tend to run out of household products such as toilet paper sooner. Furthermore, the demand for different cleaning products, detergents and anti-bacterial products has increased significantly due to the recommendation of constantly washing hands. Consequently, some of the consumer good companies have increased their sales in this period according to Dow Jones institutional news (2020).
Although covid-19 has caused many shifts in consumer behavior and preferences. Many brands still have great opportunity to grow (Knowles et al., 2020). To further understand new consumer trends a survey has been distributed in the United states after two weeks in lockdown.
Participants were examined on two main areas. First, the loyalty of consumer in times of the pandemic regarding their favorite products and brands. Second, the shift in consumer mindset and attitude. Main findings were 85% of respondents shopped at new physical stores to them and 76% shopped at new online stores. Moreover, 54% of consumers shopped from new brands they have not purchased before. These results demonstrate the willingness of consumers to try new products in this time of crisis due to the unavailability of their desired products. Thus, creating an opportunity for other small brands to thrive in this difficult time.
3.4.1 Trends in Spending Habits
The current covid-19 pandemic has caused changes and new consumer behavior to emerge as described by Newswire (2020). Spending habits have changed for individuals depending on how they were affected by the current situation. For some they were severely affected by the current pandemic situation and lost their employment. While others were able to maintain their spending habits. Therefore, spending habits in times of covid-19 pandemic have been divided into four catagories. First category is “Cut deep”. Individuals who are cutting most of their expenses due to lack of employment in this current situation or other financial issues. Second category is “Stay calm”. They are individuals who their spending habits has not been affected much and continue to carry on with their purchasing habits as prior to the pandemic. Third category is “Save and stockpile”. They are individuals who are saving their money due to the uncertainty and unexpected events of the current covid-19 pandemic situation. The last category is “Spend”. They are individuals who have increased their purchase spending habits. Also, the people in this category tend to be young. These different categories make the anticipation of customer needs more difficult for companies. Nonetheless, companies should consider the changes in the market situation and consider the consumer new spending habits while designing or marketing their products.
3.4.2 Trends in Shopping Habits
New trends in shopping habits in times of covid-19 have been examined by (Loxton et al., 2020). The new trends are panic buying and herd mentality.
Panic buying occurs when customers purchase large quantities of goods more than they usually do at the same time. Causing problems and shortages in the supply chain. The main reason for panic buying is fear of the unknown. The current situation has many possibilities and outcomes that are uncertain for individuals. Thus, encouraging them to stockpile. Another reason for individuals to panic buy is using it as a coping behavior. It is triggered when people have no control over the situation. This is related to the human psychology and the way people process the stress of unknown situations causing negative feelings such as doubt and skepticism.
Another new trend in shopping habits is the herd mentality. It occurs when individuals act together in a similar way without the manipulation or authority of an external power such as the government. Herd mentality considers self-interest over the collective interest. In addition, it motivates unnecessarily stockpiling of different goods which leads to many purchases in areas where there is insufficient supply. Thus, affecting allocation of assets and pricing of products.
These new trends are related to the covid-19 pandemic. In times of uncertainty and fear of the unknown individuals tends to behave against logic. This results in stockpiling of nondurable goods, in order to provide themselves with the feeling of safety and control in difficult times.
3.4.3 Fashion shopping trends during Covid-19 times
Some additional changes in purchase behavior has been adapted by customers during this time of crisis. These changes will have a long-time effect on the customer purchase behavior before they can return to their old spending habits on fashion items. In general, the cancelation of many social events and have made the urge to purchase fashion items to decrease as illustrated in Figure 14. In addition, during the covid-19 pandemic customers tend to purchase more durable fashion items that would last them for longer periods of time. This shows that customers are willing to invest more in fashion items to keep them for longer time periods, so they do not need to re-purchase items frequently in times of uncertainty. Moreover, they tend to keep and maintain fashion items they already have. Instead of donating or disposing them like they use
to prior to the covid-19 pandemic. In fact, 71% of customers are keeping their current fashion items.
Figure 14 Changes in purchase behavior after covid-19
Source: Mckinsey & Company (2020)
The current lockdowns related to covid-19 pandemic has forced stores and shops to close their doors. Therefore, customers have switched to using different e-commerce channels to make their purchase as shown in Figure 15. 43% of respondents who did not use e-commerce prior to the crisis have purchased products online after the covid-19 pandemic. In addition, the increase in e-commerce is noticed in different age categories, especially the younger generations. Millennials and generation Z are doing most of their shopping online. Moreover, 29% of respondents expected to purchase less items at physical stores after the crisis is over.
Figure 15 Trends toward online channels
Source: Mckinsey & Company (2020)
Customers have been more careful at spending on different fashion items. Moreover, they have made some major cutbacks in spending on different categories as seen in Figure 16. These categories include jewelry, accessories, traveling, theater, and concert tickets, dining out, spa and massages and electronics. However, the only category that customer tends to purchase more in the time of covid-19 crisis is the apparel and footwear.
Figure 16 Effect of covid-19 on fashion spending
Source: Mckinsey & Company (2020)
These findings suggest the importance of brands to adjust their marketing strategies in critical times. For example, the switch to online channels is needed more than ever before. In addition, customers are increasingly appreciative of higher quality fashion and are willing to invest in fashion items that would last them for longer time. Therefore, brands need to focus on durability when designing their products.
3.5 Communication of Luxury Brands During Covid-19 Pandemic
It is crucial for brands to adapt new communicating strategies that consumers are valuing the most. During covid-19 times, consumers are increasing their demand for demonstration of acts of social responsibility and sustainability from their favorite brands. As seen by a survey that was done in the United Kingdom and Germany by Mckiensy (2020), 55% of respondents believe that it is important for brands to take care of their employees’ health and provide them with safe working environment during these difficult times. Other important actions expected from fashion brands include, assisting workers in factories in Asia, adopting more environmentally friendly policies, and increasing the hygiene standards at physical store. The following Figure 17 illustrates these expected actions.
Figure 17 Actions of fashion brands to help during covid-19 pandemic
Source: Mckinsey & Company (2020)
Responding to the previously mentioned expectations, some brands have shifted their communication strategies with their customers. For example, LVMH, Burberry and Gucci have increased their social reasonability acts to enhance their brand image and show their contribution for the society. Before the pandemic these brands used social media platforms to promote the visual attractiveness of their products and engage with their audience to increase traffic on their website. After the covid-19 pandemic these brands are focusing on their online marketing strategies to support the fight against covid-19. They did so by urging their customers to stay at home using different campaigns and encouraging them to follow the self-isolation and social distancing regulations. Moreover, luxury fashion brands have made donations to support the process of vaccine development against covid-19. In addition, they have been supporting medical institutions by providing them with free hand sanitizers and face masks to their medical staff (Grilec et al., 2020).
Consumer are looking into the role of brands in regard of the current pandemic. For luxury brands having clear line of communication is essential, it is the time to gain or lose their consumer’s trust. This unlocks new ways to reach out to the customer while ensuring their safety and gaining their trust. Building a resilient community and focusing on empathic thinking will help to contribute to the overall consumer wellbeing in critical times (Buheji and Ahmed, 2020)
4 Factors Affecting the Perception of Luxury Products
This chapter aims to discuss the definition of luxury, its dimensions, and factors affecting how its perceived for consumers in different cultures. In addition, the main objective is to consider similar crisis situation and the resilience of the luxury segment.
4.1 Perception of Luxury
The concept of luxury lacks a clear definition. However, most authors agree that it is related to the pleasure received from consuming unnecessary goods. Luxury is no longer related to a specific group of the society or affluent individuals. In other words, the luxury market has been able to expand and modernize luxury to include other members of the society such as the middle class. This is reflected in the growth of the luxury market in different segments for the past few decades.
In order to understand how young consumers, perceive luxury a study has been done (Godey et al., 2013). Additionally, this study examined the cross-cultural differences in the perception and definition of luxury. The study examined university students from different countries and cultures. Those countries include Italy, France, Germany, China, Japan, and the USA. When asked to define luxury the most common answers amongst all students from different countries were that luxury is related to “expensiveness”, “quality”, “exclusiveness”, “uniqueness” and
“desire”. These are the key elements for the definition and perception of luxury regardless of the cultural background. However, there were some minor differences across different regions and cultures. For instance, for some cultures the perception of luxury is related to its emotional significance. While in other countries such as China, consumers are more oriented towards the physical aspects of luxury. They tend to acquire luxury products in order to demonstrate their power and status in the society. Not only were there differences between countries, but also amongst individuals of similar backgrounds. Therefore, the perception of luxury is highly individual. This means that luxury cannot have a clear definition or unified perception.
4.1.1 Perception of Price
Luxury is associated with different characteristics such as the rarity of products, authenticity, and high price. Nevertheless, is price the most important attribute to luxury? this question is often debatable regarding luxury. Some perceive luxury as timeless and priceless, while others value high prices of luxury to show off their status symbol.
This question of importance of price was answered by Gutsatz and Heine (2018) in their study.
Their findings suggest that the high price is associated with the perception of high number of hours invested in order to make a luxury product. Therefore, the paper suggests that new pricing strategies should be adopted by luxury brands. The pricing should depend solely on the number of work hours put into making an individual piece, instead of having one absolute price for all identical pieces. In other words, the same luxury watch, or bag could be priced differently depending on the amount of work hours.
However, another argument suggests that price is not the main indication of luxury, and customers appreciate other characteristics of the products. A research has been designed by (Sjostrom, 2016) to measure what characterizes luxury products and the importance of price for consumers. The product's category used in the study were wine, spirits and perfume due to their availability at lower and higher price points. In addition, consumers can access these categories easier than other luxury product categories such as high fashion, jewelry, watches, or luxury cars. The respondents were asked to select characteristics that are most related to luxury. In their opinion, “premium quality”, “authenticity and trustworthy brand” and “good brand reputation and status” were consumers top choices in all three categories. However, “premium price” was not a top choice of any of the categories.
4.2 Dimension of Luxury
The perception of luxury is broad, and it differs from one person to another. The five different dimensions of luxury and the motivation behind it were described by Vigneron and Johnson (2004) in their study.
4.2.1 Perceived Conspicuousness
The first dimension is the perceived conspicuousness. For this dimension consumers perceive and appreciate luxury for the social aspects it represents. They define luxury as a tool or a symbol to present their social and economic power. Moreover, consumers perceive the high price of products as important indication of luxury. The perceived conspicuousness is considered the most important dimension in some countries according to a study done by Jain
(2019). The results suggests that young Indian consumers for example, are willing to spend more on luxury items to boast their social status.
4.2.2 Perceived Uniqueness
The second dimension is the perceived uniqueness. The perception of luxury in this dimension is closely related to scarcity and the limitation of materials used in the making of the luxury product. Consumers are looking for items that are hard to obtain to differentiate themselves from others, so they can represent their own unique individual style. However, some consumers have reservations regarding the extent of uniqueness. The importance of uniqueness in luxury purchase decisions was measured by (Miremadi et al., 2011). The uniqueness dimension was examined in three different aspects “creative choice”,” similarity avoidance” and “unpopular choice” in Iran and United Arab Emirates consumers. The similarity between “similar avoidance” and “unpopular choice” is that they both represent the unique individual style however the unpopular choice is disapproved by the society norms. The findings suggest that the respondents from both countries appreciate the uniqueness of luxury products but within acceptable and recognized societal norms.
4.2.3 Perceived Hedonism
The third dimension is the perceived hedonism. It is connected with consumers personal value for luxury. In addition, it is related to the emotional benefit rather than the functional benefits of luxury. For an example, the individualistic and collective perspective of luxury products is described by Aliyev and Wagner (2018). They suggest that individualistic perception which is the same as hedonism leans toward standing out from the social norms. This requires higher level of emotion and self-awareness. The collective perspective, however, is about consumers buying expensive luxury products just show off their wealth. In other words, the collective perspective is the same as the conspicuous perspective discussed first in this section.
4.2.4 Perceived Extended Self
The fourth dimension is the perceived extended self, it is defined by the person and the possessions they own. Consumers use luxury products that represent symbolic meaning for them to be able to distinguish themselves from others. In addition, their perception of luxury is seen as a reflection of their success and accomplishment. They seek social acceptance of the affluent members of the society by acquiring luxury products.
4.2.5 Perceived Quality
The final dimension is the perceived quality, it is related to the basic benefits received form the consumption of luxury products (Wiedmann et al., 2007). Hand-made luxury products is often
dimension perceive the higher quality of materials used, intricate design and craftsmanship skills to be associated with luxury products. In addition, higher price of luxury products is not only perceived well for its social status aspects, but also as an indicator of higher quality.
4.3 Factors Affecting the General Perception of Luxury
Before discussing the effect of covid-19 on the perception of luxury, the factors affecting it will be explored. To understand these factors, a study was conducted by Farrag (2017) on young Qatari consumers. These factors include social aspects of brands involvement, brand consciousness, social comparison and experiential needs. These factors have a crucial role in the perception of luxury, thus influencing Qatari consumer purchase decisions.
The most important factor in the study was the experiential needs, which is a concept related to emotional and hedonism dimensions discussed previously. The young Qatari consumers have become more educated and exposed to luxury from a very young age than they used to be many years ago. In addition, the effect of individualism from western culture can be noticed in their perception of luxury. This has been also noticed by Kim (2018) in the study to understand the luxury experiential consumption. The findings suggest that consumers desire for more exclusivity which will appeal towards luxury experiential consumption.
The second most important factor of the perception of luxury is the social aspects of brands involvement. This includes the luxury brands presents on different online platform such as social media. Qatari consumers are more affected by online channels other than other channels such as magazines. This influences consumer perception of luxury and help to aid their final purchase decisions as described before in previous chapters.
Third factor is brand consciousness, although Qatari consumers are leaning more towards the emotional aspects of perception of luxury. However, they still exhibit some tendencies towards the functional aspects of luxury perception. They value luxury to demonstrate social status and prestige. This is confirmed by previous studies done by Jain (2019) that reflects the importance of reflecting the social status in luxury consumption by Indian consumers.
The final factor is the social comparison, this factor is related to the comparison among family members and the influence of peers while consuming luxury products. This concept is deeply rooted in the mind and behavior of Qatari consumers. Nevertheless, it is the least factor influencing the young Qatari consumer who seek uniqueness to stand out from the crowd. To further examine the impact of social comparison a study has been done by (Tak et al., 2017) in Indian luxury consumer. The finding suggests that unlike the Qatari consumers, Indian consumers are positively affected by ostentation that is presented in media when it comes to the social comparison of luxury brands.
4.4 Perception of Luxury in Times of Crisis
The perception of luxury was difficult to determine in normal times. Now it is harder than ever to determine the factors affecting the perception of luxury. However, it is important for this study to focus and understand consumer perception of luxury in times of crisis and compare the situation to a prior crisis and look into the current one.
4.4.1 Factors Affecting the Perception of Luxury in Times of Crisis
The importance of luxury has been seen throughout the highs and lows of the economic situation in history. Looking back in time a similar economic situation that recently occurred was the economic crisis back in 2008. The economic effect of the 2008 crisis was significant in the global economy affecting many sectors including the luxury market. Many were skeptical of the ability of the luxury market to recover and described the challenges it would encounter during this crisis. Luxury markets were facing many challenges include the change of perception of luxury that would have a long-time effect on consumer view on the importance of luxury. In fact, some consumers were concerned to carry luxury items as their morality would be questioned in the time when many were spending less and searching for less expensive products to purchase. Nonetheless, the conspicuous factor of luxury consumption was even more attractive for consumers regardless of the difficulty of the economic situation. A study done by Nunes et al., (2011) illustrated that fact. For example, luxury brand manufacturers such as Louis Vuitton and Gucci were able to release new product lines of handbags with increased prices and few discounts during the economic recession. These luxury brands used unusual approaches and strategies in times of crisis. They were trying to separate consumers who prefer affordable luxury than those who do not. They were targeting consumers who need to feel extraordinary in difficult times and were not afraid to show it off (Kapferer, 2010).
Nonetheless, maintaining the attractiveness of the luxury market is a challenge during times of crisis. The impact the crisis has on the luxury brands depend on the position of the brand. For an example, established luxury brands with strong brand position rely on high income individual, while other brands that are established in the affordable luxury position will suffer the most from crisis situations. Some brands have used different strategies to remain profitable that go against the luxury marketing strategies. These brands would never reduce their prices, but during the 2008 crisis they did. They also used promotions and discounts to remain profitable. In times of crisis, globalization is what makes the luxury market resilience. The tendencies of luxury aspiring consumers remain similar in all over the world. Globalization of the luxury market plays a major role to recover from crisis as described by Hassan et al., (2015).
Their findings suggest that global luxury brand remain more attractive than local luxury brands in times of crisis. Thus, globalization of luxury brands plays major role in the perception of luxury in times of crisis.
No previous studies have been conducted in regard to measuring the impact of covid-19 on luxury market consumer behavior in Saudi Arabia. This study will fill this gap in research and contribute to the understanding of the growing Saudi luxury market. Additionally, it will provide insights with regard to the Covid-19 pandemic, which could be used by marketers to set customized marketing, positioning and targeting strategies appropriate to Saudi consumers.
In this paper, we will try to answer a research question of the impact of covid-19 on the consumption of luxury products in the Kingdome of Saudi Arabia. Based on the literature review we pose a hypothesis of: Covid-19 pandemic has a significant impact on consumer purchase decisions of luxury products in the Kingdom of Saudi Arabia.
