Will the luxury market survive the Covid challenge
The luxury market had almost two decades of tremendous growth in Europe, China and the Middle East that saw some of these brands reach a new height never experienced before. But in the past few months, luxury brands (comprising apparel, Beauty, fashion, watches and jewelry) witnessed strong decline in a number of sectors due to slow growth, underperforming financial markets affecting the high earning consumers and the rising political turmoil, which was exacerbated by the current Corona virus crisis is threatening to wipe more than €40 billion of the global luxury market estimated to be €330 billion (with Asian market accounting for 35% of the market).
and Jimmy Choo stand to lose between 20-40% of its revenue from the Far East alone and some of the brands may have to scale down.
As the heart of luxury Milan was hardest hit after China, Brands have closed their offices and production sites in line with government restrictions. The number of countries and cities under a lock down is growing daily, and airlines have been forced to cancel flights to major European and global cities which is having a severe impact on luxury brand sales.
With luxury buyers feeling psychologically vulnerable and the general economic conditions, the stock market on a free fall it does not look promising, it is very hard to see any growth in the next 2 years.
For Luxury brands to turn a corner and leave these trouble times behind they need to turn and embrace new channels they shyed away from in the past few years in an attempt reach baby boomers, millennials and high net worth customers in order to drive sales and compensate for the shrinkage of revenues.
In order for brands to overcome their difficult trading conditions they should put more emphasis on customer experience and move gradually from brick and mortar boutiques to digital advertising as an effective channel to reach your target customers, combined with social media and influencer marketing to generate awareness, brand values and help increase sales volumes and finding new niche markets and customers to focus on.