COVID-19 Contingency Planning : Luxury

Trends

In our fourth feature from the Covid-19 Contingency Planning report we explore the impact the outbreak is having on the Luxury sector.

Luxury has been far from immune from the impact of Covid-19. Its reliance on global tourism and spend in and from China, combined with producing nations such as Italy and Spain on lockdown, means luxury brands are rethinking business forecasts. ‘From manufacturing to PR and personal service, luxury must embrace more considered ways of working, especially in anticipation of leaner demand and discounting in 2020,’ says Kathryn Bishop, foresight editor at The Future Laboratory.

In fact, Altagamma and Boston Consulting Group have adjusted initial forecasts for luxury sales, saying these could now decline by 25% in 2020 – equivalent to £78bn ($93bn, €87bn) in value. Furthermore, with cities silent and high-touch luxury service being avoided, overstock is becoming rife, with many luxury houses already resorting to discounting.

In turn, discussions about the meaning of luxury are emerging. ‘[The impact of Covid-19] may open up a whole new conversation about luxury that will be more experiential, authentic and provide healing,’ Martina Olbertova, founder of Meaning.Global, tells Forbes.

Published by:

20 April 2020

Author: Kathryn Bishop and Victoria Buchanan

Image: Carcel AW20 digital fashion show

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Luxury Impacts

In recent years, LS:N Global has tracked the luxury market’s shift towards sustainable practices and purpose-led brands, alongside Western luxurians’ growing awareness of meaningless consumption. The pandemic could exacerbate this further, with luxury brands stepping forward to be industry leaders demonstrating supportive, people-orientated behaviours, and innovations that future-proof the sector.

Civic Brands: As a non-essential sector that attracts its fair share of scrutiny for how it behaves, luxury brands are on a moral mission. LVMH tasked its beauty and perfume suppliers to speedily produce hand sanitiser for French hospitals, while Prada, Saint Laurent and Balenciaga are making masks.

Manufacturing: Cities on lockdown and a lack of tourism will hit luxury sales in major cities and airports. In response to dwindling demand – and to support their workforce – Chanel, Hermès and Gucci are among brands pausing work at factories in France, Switzerland and Italy to limit the spread of Covid-19.

Customer service: The intimacy and expertise of luxury customer service is being challenged as affluent shoppers socially isolate and stores are ordered to close. British jeweller Annoushka Ducas is navigating this time by using Hero and WhatsApp to uphold personal communication and retain the production of bespoke pieces with global clients.

Digital collections: With public gatherings cancelled, the luxury events calendar is taking a hit. Digital tools, however, are allowing brands to experiment with new ways to present collections and products. Shanghai Fashion Week is transforming its runway shows into digital experiences, live-streaming new collections via e-commerce platform Tmall.

'Globally, luxury goods sales could decline 25% in 2020 – equivalent to £78bn ($93bn, €87bn) in value'

Altagamma and Boston Consulting Group

What This Means

1. As affluent consumers seek refuge away from major cities, luxury brands will soon follow suit, exploring suburban operations or hyper-local services that bring them closer to their customers.

2. Themes of Resilience Culture, wellness and longevity will feed into future luxury products and experiences as well-heeled shoppers pursue brands that can support then in achieving a life that's holistically healthier.

3. Luxury retail's personal service and detailed presentation of goods will translate into virtual experiences that allow brands to have a hyper-personal relationship with clients, while also opening them up to global audiences.

4. In the years ahead, the impact of Covid-19 will drive a sense of Uneasy Affluence among global luxurians, who in turn will take a more conscious approach to luxury consumption and their expectation of brands.

Next week, we will be exploring how Covid-19 is affecting the Food & Drink sectors.

We’re all facing new challenges and pressures as a result of the coronavirus outbreak. So, due to high demand, we have decided to open up our new Covid-19 Future Planning webinar to the public. Click here to watch our 30-minute webinar hosted by senior futures analyst Victoria Buchanan.

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