What Will be The Impact of Coronavirus on The Luxury Industry?

One of the most common questions that you can hear doing the rounds in the luxury world currently is ‘What will be the impact of Coronavirus on the luxury industry?’ Since the global economy was already in a bit of turmoil before the pandemic struck, the onset of the Coronavirus pandemic has only multiplied the challenges for the luxury market exponentially. Also the challenges are like ‘shifting goal posts’ and to take aim with a fixed solution will not help.

The answer to the above question would therefore be the incorporation of flexibility and consumer convenience as two key factors in every luxury brand’s comeback strategy response.

Helping all stakeholders:

Every luxury brand whether big or small has numerous stakeholders within its ecosystem that thrive and survive on its performance. Right from employees to the company owners to the vendors, suppliers, workers, service providers and of course the customers; all have been impacted in varying degrees. As a prudent measure each luxury brand will have to look out and get the back of each of its team members in the best possible way. Right from taking care of their health needs as well as taking care of their basic living facilities, each luxury brand has to do its best possible to help each team member. Apart from the immediate team members, every luxury brand will have to plan to minimize the adverse impact on its trusted source of service providers as they battle this pandemic.

There could be a phase wise response in terms of recovery, planning, sales, marketing based on how the entire Coronavirus story unfolds wherein again every stakeholder and the customer’s interest will have to be kept in mind.

For the time being though the focus has to be on survival and to tide over this menacing storm. And it is important to remember that although we are all in the same storm, we are in different boats. Therefore the impact of the storm could be mild on a few but catastrophic on others. Thus each luxury brand will have to adopt a very empathetic yet practical approach while helping its stakeholders.

Doing the larger good

If ever a luxury business could deliver performances that could really help society when it really mattered, it is now.

Honestly the extreme nature of the Coronavirus crisis will demand an equally strong response. It is time for luxury brands to indulge in all possible CSR initiatives that could alleviate the sufferings of the society. Of course this has to be done with the sole purpose of helping but it will have its by-products in terms of eliciting more respect and goodwill towards a luxury brand.

The Covid 19 crisis is a peculiar one and the lockdown across major locations means that a brand can do literally nothing in terms of sales.

However by helping by allocating manufacturing facilities for making sanitizers, face masks, other protective clothing useful in the fight against Covid 19, many luxury brands are creating shining examples for the luxury industry as a whole. There are many luxury brands that have donated monetarily and also helped in other ways to help authorities deal with the situation.

What should be the Marketing Strategy of luxury brands during and after the coronavirus crisis?

Like all other major industries, the luxury industry as a whole has to negotiate this extremely challenging phase on one hand and at the same time chart out a very well planned ‘bounce back’ plan keeping adaptability as one of the prime values.

It would be crucial for the management teams of luxury brands to adapt a holistic approach towards this totally unknown and unexpected global crisis. Like discussed earlier, the recovery could be planned in phases and by keeping a very flexible plan in place. Aspects of financial planning,

• Focus on consumer convenience
• Focus on value
• Brand building
• Survive, Sustain and Strike (When markets rebound)
• Be prudently frugal
• Focus on hygiene
• Highlight things like animal free testing and other ecofriendly factors
• Understand and adapt to the changing mindset of the consumer.
• This slowdown is the right time for luxury brands to equip themselves to digitize their processes and upgrade their systems and technology.
• Integrate robust and flexible payment methods
• Improve delivery
• Majorly Enhance UI / UX of their luxury websites

This would put the brands on a different pedestal and the goodwill generated will last for years to come. Post the lock down of course the focus has to be on CONSUMER CONVENIENCE.

Is the Impact on the Luxury industry going to be a long term one?

As the world reels under the unprecedented impact of the Coronavirus pandemic, the global luxury industry has definitely been jolted a big blow undoubtedly.

Many of the changes due to this blow could be irreversible, unfortunately. Some of the core aspects of the luxury market globally in terms of sales, marketing, and consumption could be disrupted forever. There might be a staggering decrease in luxury purchases in the short term and in the long term the way luxury has been bought erstwhile could be redefined to a large extent.

Luxury sales decline during the lockdown

Many reports suggest that the year 2020 could see approximate decline in luxury sales in the range of 15% to 40%. Of course this would also depend on the way the Coronavirus pandemic finally subsides. These are all approximate estimates but the final outcomes could be less or more severe based on various factors that cannot be known at this point in time.

The ramifications of the Covid 19 pandemic on the global luxury markets have been witnessed since the outset of this disease. Luxury buyers from China contribute a major chunk towards the luxury industry globally. When their buying dropped there was an immediate impact felt by global luxury markets. Combined with the effect that the virus has had on Italy (a global hub of luxury), the entire luxury ecosystem underwent a major turbulence across its entire spectrum indeed.

Pre-Coronavirus scenario for the luxury industry

The recent times have anyways been full of challenges for many players in the luxury industry due to many factors including global economic turmoil, business consolidations and the rapid growth of online luxury.

The Covid 19 crisis could accentuate the decline of many such luxury businesses into oblivion and also challenge many luxury brands that are newly set up. The growth and expansion of many luxury startups could be nipped in the bud or at least slowed down considerably. Deep discounting might be adopted by a few luxury brands and that could actually hurt their brand values. Overall the challenges before the Coronavirus crisis were big enough and the pandemic might just prove to be the proverbial straw on the camel’s back.

The demand for local luxury will increase

Imagine some of the glitziest malls in Dubai and take a look at the luxury buyers. Take a glimpse into the sales patterns of luxury hotspots across Europe. One will realize very easily that international luxury buyers and consumers constitute a huge amount into these luxury spending. With the wings clipped of the globetrotting luxury consumer during the global lockdown the luxury buying of international buyers has indeed come to a halt. Post the lifting of travel restrictions, it is anticipated that there would still be a lot of challenges for international travelers thereby discouraging international travel on the whole. With the trauma of the pandemic many international travels would hesitate to travel depleting a major source of revenue for luxury businesses globally. Therefore luxury brands will have to focus on nurturing local luxury consumers and developing a deeper connect with luxury buyers within their regions. They will have to ramp up their online presence and tweak their service offerings to suit the tastes of the local consumer.

The age of being Omni Channel or Phy-gital

Every luxury brand will have to expand digitally while maintaining a meaningful physical presence. This would be especially true for sectors like retail luxury where an engaging experience through actual touch & feel can be the only way to gratify a luxury consumer.  Therefore such retail luxury brands will have to enhance their in store experiences along with proving them to be safe in terms of health too. It is expected that post the pandemic luxury retail shopping experiences will pick up from where they were, it will be prudent for brands to highlight the hygiene and health safety standards that they have integrated to instill further confidence in the consumer.